Alabama

Alabama Solar Incentives and Rebates

Alabama residents looking to switch to solar energy may be wondering about the available incentives and rebates. While the state does not offer any state-level incentives for solar adoption, there are still several options for financial assistance. This article will provide an overview of the federal investment tax credit, state tax credit, net metering policies, and financial incentives available in Alabama.

The Federal Investment Tax Credit in Alabama

One of the most significant incentives available to those looking to install solar panels in Alabama is the Federal Investment Tax Credit (ITC). The ITC is a federal tax credit for individuals and businesses that install solar systems on their properties. The credit is equal to 30% of the cost of the system, and it can be claimed on the federal income tax return for the year in which the system was installed. This credit is available to all taxpayers, regardless of where they live, and it can help to offset the initial cost of installing solar panels in Alabama. The 30% ITC expired on December 31, 2022 and the credit will be reduced to 26% for 2023, 22% for 2024 and will return to 10% for commercial properties and 0% for residential property after that.

State Tax Credit in Alabama

Unfortunately, according to the Alabama Department of Revenue, there are no state-level tax credits or exemptions available for solar energy systems. However, the federal ITC is still available to Alabama residents.

State-Wide Solar Initiatives in Alabama

There are a few reasons why Alabama has not implemented any state-wide solar initiatives. One reason is that the state’s energy mix is heavily reliant on fossil fuels, particularly coal and natural gas. This has historically kept electricity prices low, making the economic case for solar less compelling. In addition, Alabama has not set any renewable energy goals or standards, which means there is no mandate for utilities to increase their use of renewable energy sources.

Another factor is the state’s political climate. Alabama has a conservative political leaning, and some politicians may be resistant to policies that support the adoption of renewable energy sources. However, with the increasing awareness of the environmental and economic benefits of solar energy, it seems inevitable that Alabama will eventually adopt more solar-friendly policies in the future.

State-Wide Tax Exemptions in Alabama

In addition to the lack of state-level solar incentives, Alabama does not offer any state-wide tax exemptions for solar energy systems. This means that homeowners and businesses must pay full property and sales taxes on their solar installations. However, the federal ITC can help offset some of these costs by providing a credit on federal tax returns.

In Alabama, there are several grant programs available to help with solar projects, such as the Alabama Power Solar and Wind Grant and the Alabama Solar Grant. There are several loan programs available as well, such as the Solar Loan Program and the Alabama Solar Loan Program. 

Solar Easements in Alabama

Solar easements are legal agreements that allow a property owner to ensure that their solar panels will receive adequate sunlight, and are necessary if a neighboring property owner plans to build something that could block the sun from reaching the solar panels. In Alabama, solar easements are governed by state law, and property owners can create solar easements by including specific language in their property deeds or by entering into a separate contract with their neighbors.

Net Metering in Alabama

In the United States, federal law requires that every state offer net metering to individuals with solar panels. However, Alabama is one of only four states that does not have statewide policies on net metering. Alabama is known as a “grid parity” state, which means that solar power tends to be less expensive here compared to other states. Grid parity is a comparison of the standard cost of traditional electricity to the cost of solar power, also known as “socket parity.” Currently, Alabama has seven financial incentive programs for people considering solar power, including the AlabamaSAVES Revolving Loan Program and the Local Government Energy Loan Program. If you are thinking about investing in solar power, it is worth looking into these programs to see what savings are available.

Benefits of going solar in Alabama

There are many benefits to going solar in Alabama. Solar energy systems can reduce electricity bills, increase property values, and even improve home resale values. Additionally, many local utilities offer incentives to customers who choose to install solar energy systems, such as net metering, which helps offset the cost of electricity generated by the solar energy system. 

Conclusion

Going solar in Alabama can be a great way to save money, reduce your environmental impact, and increase the value of your property. While there are no state-wide tax exemptions for solar energy systems, there are still many incentives available to make solar energy systems more affordable and beneficial for homeowners. With the right incentives and assistance, going solar in Alabama can be a great investment for any homeowner.

FAQs

The cost of installing solar in Alabama varies depending on the size and type of system you choose but typically ranges from $3 to $4 per watt of solar capacity, making a 6kW system cost between $18,000 and $24,000. Check out our expert reviews of solar companies in Alabama. 

Unfortunately, according to the Alabama Department of Revenue, there are no state-level tax credits or exemptions available for solar energy systems. However, the federal ITC is still available to Alabama residents.

Yes, there are several financing options available, including solar loans, solar leases, and power purchase agreements (PPAs). Get more info on financing options at SolarEmpower.com.

The amount of energy you can generate from solar in Alabama depends on several factors, such as the amount of sunlight your home receives, the size of your solar array, and the efficiency of your solar panels. However, a typical residential solar array in Alabama can generate between 4,000 and 6,000 kilowatt-hours (kWh) of energy per year.

Yes, it is important to check with your local government before installing a solar system in Alabama. You can find out more on SolarEmpower.com!