Is Solar Worth It in Tennessee in 2026?
Tennessee gets a fair amount of sun — about 205 sunny days a year and roughly 1,302 kWh of production per installed kilowatt near Nashville. Electricity prices have also climbed steadily: Tennessee homes paid about 13.2 cents per kWh in 2025, up roughly 89 percent since 2005. Rising rates usually help the case for solar. The catch is what happens to the power your panels make that you don't use right away.
Tennessee sits almost entirely inside the Tennessee Valley Authority's footprint, and TVA's buyback rate for exported solar is low — often 2 to 3 cents per kWh, a fraction of retail. Add a federal tax credit that disappeared for anyone completing an install after December 31, 2025, and Tennessee's math looks different than a state with strong net metering. Solar can still be worth it here, especially on a sunny roof with high usage and a system sized to your own consumption rather than to sell power back. This page gives you Tennessee's numbers, honestly.
Tennessee Electricity Prices Keep Climbing
Solar is a bet that future electricity costs more than what you pay today. So before anything about panels, it helps to see where Tennessee rates have actually gone. Here's the last 35 years, from federal EIA data.
Full Tennessee electricity price data (1990–2025)
| Year | Tennessee (¢/kWh) | US avg (¢/kWh) |
|---|---|---|
| 1990 | 5.7 | 7.8 |
| 1991 | 5.7 | 8.0 |
| 1992 | 5.7 | 8.2 |
| 1993 | 5.8 | 8.3 |
| 1994 | 5.9 | 8.4 |
| 1995 | 5.9 | 8.4 |
| 1996 | 5.9 | 8.4 |
| 1997 | 6.0 | 8.4 |
| 1998 | 6.3 | 8.3 |
| 1999 | 6.3 | 8.2 |
| 2000 | 6.3 | 8.2 |
| 2001 | 6.3 | 8.6 |
| 2002 | 6.4 | 8.4 |
| 2003 | 6.6 | 8.7 |
| 2004 | 6.9 | 9.0 |
| 2005 | 7.0 | 9.5 |
| 2006 | 7.8 | 10.4 |
| 2007 | 7.8 | 10.7 |
| 2008 | 8.9 | 11.3 |
| 2009 | 9.3 | 11.5 |
| 2010 | 9.2 | 11.5 |
| 2011 | 10.0 | 11.7 |
| 2012 | 10.1 | 11.9 |
| 2013 | 10.0 | 12.1 |
| 2014 | 10.3 | 12.5 |
| 2015 | 10.3 | 12.7 |
| 2016 | 10.4 | 12.6 |
| 2017 | 10.7 | 12.9 |
| 2018 | 10.7 | 12.9 |
| 2019 | 10.9 | 13.0 |
| 2020 | 10.8 | 13.2 |
| 2021 | 11.1 | 13.7 |
| 2022 | 12.3 | 15.0 |
| 2023 | 12.2 | 16.0 |
| 2024 | 12.4 | 16.5 |
| 2025 * | 13.2 | 17.3 |
Source: US EIA, average residential retail electricity price. Values in cents per kWh. * 2025 is preliminary.
Tennessee's residential rate has climbed from about 6.98 cents per kWh in 2005 to roughly 13.18 cents in 2025 — up about 89 percent in twenty years, and about 2.5 percent a year over the last decade. Nobody can guarantee the next twenty years match the last twenty, but a fast-growing region drawing more power for data centers, manufacturing, and summer air conditioning is not a place where rates are likely to fall.
The Tennessee Sun, Month by Month
Panels respond to how high the sun climbs and how long it stays up, not to air temperature. Tennessee sits at about 35.8°N latitude — solidly in the mid-South, with strong spring and summer sun and a noticeably lower winter sun angle than Florida or Texas.
Tennessee monthly solar production data
| Month | kWh per installed kW |
|---|---|
| Jan | 87 |
| Feb | 89 |
| Mar | 110 |
| Apr | 122 |
| May | 126 |
| Jun | 124 |
| Jul | 123 |
| Aug | 123 |
| Sep | 112 |
| Oct | 113 |
| Nov | 98 |
| Dec | 75 |
| Year | 1302 |
Source: NREL PVWatts typical-year estimate (Nashville), per installed kW at latitude tilt.
The practical takeaway: April through August are Tennessee's strongest production months, tapering off through fall to a low point in December. If your bills spike in summer with the AC running, that's also when your roof produces the most — a decent natural match, even without a generous buyback rate to bank the surplus.
What Solar Costs in Tennessee in 2026
Most residential solar installs in Tennessee run about $2.80 to $3.20 per watt, a touch above the national average. Unlike Florida or a handful of other states, Tennessee does not exempt solar equipment from sales tax for typical homeowner installs — you'll pay the standard 7 percent state rate plus up to 2.75 percent local tax on top. With the federal credit gone too, the number an installer quotes is essentially the number you pay.
| System Size | Typical 2026 Cost | Roughly Offsets | Fits |
|---|---|---|---|
| 5 kW | $14,000 to $16,000 | ~6,510 kWh/yr (~$72/mo at 13.2¢) | Smaller home, lower usage |
| 8 kW | $22,400 to $25,600 | ~10,416 kWh/yr (~$115/mo) | Average Tennessee home |
| 12 kW | $33,600 to $38,400 | ~15,624 kWh/yr (~$172/mo) | Large home, heavy usage |
These are gross costs before any incentive. Since the only state-level financial benefit for a Tennessee homeowner is the property tax treatment below — not a rebate or sales tax break — the sticker price is close to your real out-of-pocket cost. Get at least three quotes and compare price per watt, equipment, and warranty length.
Estimate Your Tennessee Payback
The calculator below starts from Tennessee's average electricity rate and typical local sun production. Enter your own monthly bill to see an estimated system size, payback period, and 25-year savings. Tennessee rates have grown about 2.5 percent a year over the last decade — a reasonable default for the inflation field, though you can drag it up or down to see how sensitive your payback is to future rate increases.
Tennessee Solar Incentives That Still Exist in 2026
Here's what's gone and what actually remains.
- Gone — the 30 percent federal credit: The federal Residential Clean Energy Credit ended for installations completed after December 31, 2025, with no phase-out. If an installer's pitch still assumes it, their numbers are out of date everywhere else too.
- Never existed — a state income tax credit: Tennessee has no broad state personal income tax, so there was never a mechanism to attach a state solar credit to, unlike South Carolina or New York.
- Doesn't apply to homeowners — the green energy sales tax exemption: Tennessee's sales-and-use tax exemption for "Certified Green Energy Production Facility" status (TCA §67-6-346) is scoped to commercial and industrial-scale facilities, not typical rooftop residential solar. A homeowner install pays standard state and local sales tax on the equipment.
- Still here — the Green Energy Property Tax Assessment: Tennessee caps the assessed value attributable to a solar system at 12.5 percent of its installed cost (Tenn. Code Ann. §67-5-601 et seq.), instead of taxing the full value increase like most home improvements. It applies automatically at the local assessor level in most counties. Learn how assessments work more broadly in our property taxes and home finances guide.
- Partially — leases and PPAs: Third-party-owned systems can still capture a separate federal business credit (48E) through 2027, but it belongs to the leasing company, not you. That may show up as a lower lease payment, or it may not show up at all.
Ask each installer which incentives currently apply to your address and your specific local power company — Tennessee's patchwork of LPCs means answers can vary by a few miles.
Net Metering and TVA's Local Power Companies
Net metering, where it exists, credits you close to the retail rate for extra power your panels send to the grid. Tennessee doesn't have a statewide net metering mandate, and the reason is structural: about 98 percent of the state is served by one of roughly 150 local power companies (LPCs) that buy wholesale power from the Tennessee Valley Authority, rather than by an investor-owned utility under full state Public Service Commission rate regulation. That means Tennessee's state regulators have limited authority over how solar gets compensated — TVA and each LPC largely set the terms.
TVA discontinued 1:1 monthly net metering under its old Green Power Providers program, which closed to new enrollment in 2019. The program most LPCs offer today is TVA's Dispersed Power Production (DPP) program — an avoided-cost buyback that typically pays roughly 2 to 3 cents per kWh, well below the 11 to 12 cent retail rate most Tennessee homes pay. Many LPCs also charge a monthly interconnection or standby fee that can eat into whatever DPP credit you'd otherwise earn.
Because there's no statewide guarantee of retail-rate net metering, and terms vary by which of TVA's 150-plus LPCs serves your home, always check directly with your local power company before signing anything. Two neighbors on different LPCs a few miles apart can face genuinely different economics for the same rooftop system — exactly why local installers ask "who's your power company" before quoting payback, and why sizing a system to minimize export is the dominant strategy among Tennessee solar buyers rather than betting on a favorable sellback rate.
How to Go Solar in Tennessee
Work through these steps in order before you commit to anything.
- Pull your last 12 power bills and calculate your average monthly usage and cost. The higher your usage, the more a right-sized system can save.
- Find out which local power company serves your address and ask them directly about their current Dispersed Power Production rate and any standby fees.
- Confirm your roof faces south, east, or west with minimal shade — north-facing or heavily shaded roofs rarely pay off anywhere, including Tennessee.
- Check that your roof has at least 10 to 15 years of life left, or plan to replace it before installing panels.
- Get at least three quotes and compare price per watt, equipment, and warranty — and make sure every quote reflects 2026 reality, with no leftover federal credit baked into the math.
- Size the system to your own usage rather than to maximize export, given how little Tennessee's LPCs typically pay for surplus power. A battery can be worth pricing out if you want to shift midday production into evening use instead of selling it back cheaply.
For the fundamentals of how solar works, sizing, and buying versus leasing, read our main solar panels guide — it covers the technology and the decision in depth, while this page focuses on what's specific to Tennessee. If your roof needs attention before or after an install, see our roofing guide, and for panel wiring, subpanels, and inspection basics, see our electrical guide.
Sources
Figures on this page are 2026-current and come from primary and verified secondary sources. Rates: US EIA, Electric Sales, Revenue, and Average Price (2025 values preliminary). Production estimates: NREL PVWatts. Net metering and DPP program: DSIRE — Tennessee Solar Programs and EnergySage — TVA Net Metering. State incentives and property tax assessment: Tennessee Department of Environment and Conservation — Green Energy. Sales tax treatment: Tennessee Department of Revenue — Sales and Use Tax on Green Energy. Cost estimates: EnergySage — Tennessee Solar Cost and SolarReviews — Tennessee. We review these figures every six months.