2022 Alabama Solar Incentives, Tax Credits, Rebates (And More)

Here’s a quick look at the solar incentives in Alabama:

  • Federal Solar Tax Credit
  • Property Tax Exemption
  • Energy-Efficiency Incentives 
  • Additional City & Utility Rebates
Ecowatch Author Karsten Neumeister

By Karsten Neumeister, Solar Expert

Updated 5/18/2022

Why You Can Trust EcoWatch

Our solar experts have sifted through hundreds of local governments’ and utility companies’ websites to find accurate information about current solar incentives in each state. We’ve also unbiasedly ranked and reviewed hundreds of solar installers to empower you to make the right choice for your home.

How Much Can You Save With Solar Incentives in Alabama?

Jump To Section:

  1. Current Solar Rebates, Tax Credits and Incentive Programs in Alabama
  2. Net Metering in Alabama
  3. Federal Solar Tax Credit
  4. FAQ: Alabama Solar Incentives

In this article, we’ll discuss the solar incentives and rebates available to Alabama homeowners. When you’re ready to speak with a qualified professional, follow the links below. Each of these companies can help you identify and apply for incentives available in Alabama.

Best National Provider
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SunPower

  • Pros icon Most efficient panels on the market
  • Pros icon National coverage
  • Pros icon Cradle to Cradle sustainability certification
  • Pros icon Great warranty coverage
  • Con icon Expensive
  • Con icon Customer service varies by local dealer

Services Offered

  • Service icon Solar Panels
  • Service icon Solar Batteries
  • Service icon EV Chargers
  • Service icon System Monitoring
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Creative Solar USA

  • Pros icon Representatives are experts on local policies
  • Pros icon Comprehensive service offerings
  • Pros icon Many years of experience
  • Con icon No leases or PPAs
  • Con icon Limited brands of solar equipment available

Services Offered

  • Service icon Solar Panels
  • Service icon Solar Batteries
  • Service icon EV Chargers
  • Service icon Community Solar
  • Service icon Electrical Work
Outstanding Regional Installer
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Eagle Solar & Light

  • Pros icon NABCEP-certified technicians
  • Pros icon Offers products from leading manufacturers
  • Pros icon Locally owned and operated
  • Pros icon Award-winning company
  • Con icon Relatively young company
  • Con icon Limited information available on website
  • Con icon Slightly limited service offerings

Services Offered

  • Service icon Solar Panels
  • Service icon Solar Batteries
  • Service icon Community Solar
  • Service icon Off-Grid Solar Solutions

More and more Alabama residents are turning to solar energy systems to eliminate their electric bills and reduce their carbon footprint. While renewable energy sources are becoming increasingly affordable throughout the country, the average cost of a solar panel system in Alabama is still around $28,175. This estimated total is based on an average cost per watt of $2.45 in Alabama and a typical PV system size of 11.5 kilowatts being needed to offset energy consumption in the state.

In an effort to reduce the financial burden of going solar, the federal government and state governments offer some solar incentives. Below, we’ll discuss the most substantial financial incentives available to Alabama homeowners, how each could affect your total cost of going solar, and the total estimated savings you could enjoy as a result.

Disclaimer: This article is for informational purposes only. It should not be relied on for and is not intended to provide accounting, legal or tax advice.

Current Solar Rebates, Tax Credits and Incentive Programs in Alabama

The table below gives a brief overview of all of the solar incentives available to Alabama residents and the prospective savings offered by each.

Alabama Solar Incentive Description
Federal Solar Tax Credit The federal solar tax credit is a credit on your federal income taxes owed. It’s one of the most substantial benefits of going solar and totals 26% of the total cost of your solar energy system.1 In Alabama, the average credit amount is $7,326.
Property Tax Exemption for Renewable Energy Facilities Most home improvements that increase your property value also bump up your property taxes. While installing solar panels will increase your home value, this exemption prevents your property taxes from increasing as a result, which could save you thousands of dollars in the long run.
Local Efficiency Incentives In addition to state incentives, local municipalities and certain local utility companies in Alabama offer incentives for solar and other energy-efficiency home improvements. These typically come in the form of rebates, the amount of which depends on the cost of the upgrade. More expensive improvements like installing energy-efficient windows will yield a higher rebate than installing LED lighting, for example.

Alabama Solar Incentives

Unfortunately, Alabama provides no statewide solar tax incentives or rebates. However, the Yellowhammer State does promote energy efficiency using some rebates and incentives for efficient equipment and home improvements rather than solar in particular.

federal solar investment tax credit tipsIn accordance with Alabama’s general support of clean energy, many local governments and electric utility companies offer loan programs that make energy-efficient improvements more accessible to homeowners. Low-APR financing options for efficiency upgrades in AL can significantly reduce the cost of making your home more sustainable. You can check with your local municipality or utility company for financing options for electric water heaters, heat pumps, energy-efficient windows, insulation upgrades and more.

The Alabama Power Residential Heat Pump Loan Program is one example. A heat pump can significantly improve the efficiency of your home heating system, saving you money on electric bills and reducing your carbon footprint. Many solar panel installation companies offer solar heat pumps for maximum efficiency. Another example is the Dixie Electric Cooperative Residential Energy Efficiency Rebate Program, which provides enticing rebates for upgrades like mini-splits and heat pumps and financing options for other efficiency upgrades.

Other Alabama Solar Incentives

Despite most of the incentives being aimed at energy efficiency in general, there are some solar-specific incentives in Alabama as well. 

Alabama Solar Tax Exemption

Alabama residents have access to the Property Tax Exemption for Renewable Energy Facilities. Most home improvements that increase your property value will also cause your property taxes to go up. This tax exemption guarantees that your property taxes won’t increase as a result of installing solar for between 10 and 20 years. This doesn’t decrease your upfront costs of converting to solar energy, but it can provide decent savings in the long run.

It’s worth noting that Alabama also had a Sales Tax Abatement for Renewable Energy Facilities up until 2018. This state tax abatement was available for commercial, industrial, agricultural and government sectors and applied to photovoltaic solar, geothermal, hydroelectric and other renewable energy systems.

Net Metering in Alabama

Net metering is a billing policy that helps solar customers eliminate their electric bills. Via interconnection, electricity can travel from your solar power system to the local power grid. Net metering reduces the cost of what you pull from the grid based on any excess energy you send to the grid.

Unfortunately, the Alabama state legislature does not mandate net metering for utility companies. However, some utilities provide their own net metering programs. One example is Alabama Power, which buys back any overproduction through credits that can be used toward your future electric bills. The downside is that each kilowatt-hour produced will be bought at an amount that’s lower than the retail rate, so it won’t be a 1:1 offset of your bill. Even still, this local policy can help significantly increase energy savings if you’re an Alabama Power customer.

Local Incentives

Although Alabama is still in the process of fully adopting and incentivizing solar conversions, the state as a whole is a major proponent of energy efficiency. Many utility companies and individual municipalities offer rebates and loan programs for energy-efficiency upgrades. These include solar heat pumps, mini-splits, energy-efficient windows, electric vehicle chargers and more.
federal solar investment tax credit tips

Federal Solar Tax Credit

One of the most significant incentives you’ll find for going solar in Alabama is afforded to residents across the country: the federal solar investment tax credit (ITC). The ITC is a credit on your federal income taxes, which means you can reduce the amount of income taxes you owe based on the cost of your solar panel system.

The federal tax credit is in the amount of 26% of your total system cost, so you can enjoy a more substantial credit with a bigger system. In Alabama, where the average cost of going solar is $28,175, the typical federal tax credit amount is a massive $7,326. The credit is set to reduce to 22% in 2023 and will be eliminated for residential systems in 2024 unless renewed by Congress.

Related Topics

FAQ: Alabama Solar Incentives

We’re happy to get questions about state and local solar incentives from Alabama homeowners looking to convert to clean energy. Below are some of the questions we see most frequently, along with our responses.

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Karsten Neumeister

Solar Expert

Karsten Neumeister is a solar energy specialist with a background in writing and the humanities. Before joining EcoWatch, Karsten worked in the renewable energy sector of New Orleans, focusing on solar energy policy and technology. A lover of music and the outdoors, Karsten might be found rock climbing, canoeing or writing songs when away from the workplace.