How Much Do Solar Panels Cost in Alabama? (2023 Savings Guide)

Which Solar Financing Options Will Help You Save the Most in Alabama?

Homeowners in Alabama should have access to all four of the major solar panel payment options, including cash purchases, solar loans, solar leases and power purchase agreements (PPAs). The option you choose will have an impact on your upfront and long-term system prices.

Paying in cash is the least accessible option no matter where you live, but cash purchases are even less accessible than normal in high-cost areas like Alabama. However, this option leaves you with the lowest overall cost — since you won’t be paying interest — the shortest payback period and the highest long-term savings.

Cash purchases and solar loans both let you take the federal tax credit, a perk from the federal government that holds an average value of just under $8,500 in Alabama. A solar loan is much more accessible in AL, given that they often have no down payment requirements. The interest you pay, however, will extend your payback period and decrease your savings over time.

A solar lease might suit you if you can’t make a cash purchase or a solar loan work. In a lease agreement, you pay a monthly fee to rent your panels and get to use the energy they generate to offset your high electricity costs.

Solar leases don’t have any down payment requirements and usually don’t have the same minimum credit score requirements that loans do. This makes them more widely accessible. However, they don’t let you take the federal credit, and the savings you’ll see are often significantly lower than what a loan would yield.

PPAs are generally the last option we recommend. They are about as accessible as leases since they don’t have down payment or credit requirements. However, they provide even fewer savings than leases in many cases, and they also preclude you from taking the federal credit.

If you’re not sure which payment option works best for you but you still want to get the process of getting solar quotes started, we suggest you look at SunPower or Tesla. Most local providers don’t offer leases or PPAs, but these two national installers offer all four payment options.

Additionally, we suggest you use our solar calculator to see what a solar system customized for your home is likely to cost. Once you know the total price, you can figure out which payment options are likely to suit your budget. You can use the information in the table below to determine which options you can afford and which of those will suit you best.

What Are Other Ways You Can Save When Going Solar in Alabama?

Since the typical price of solar panels in Alabama is so high, it’s natural that homeowners would look for ways to save money in the process of converting to renewable energy. Thankfully, there are some things you can do to help keep your costs down, including the following:

• Consider installing solar batteries
• Choose high-efficiency panels
• Take advantage of Alabama solar incentives

We’ll explain how these tips can save you money and how much they save on average in the following sections.

Consider Installing a Solar Battery

Installing a solar battery alongside your panels will usually bump up your installation costs by $10,000 or more. However, we expect that it will save most Alabamans money over time.

Solar batteries can pay for themselves and end up saving money in areas where net energy metering isn’t available. Net metering lets you overproduce energy during peak sunlight hours and bank the excess electricity for later use. With net energy metering, a good portion of the energy you consume when your panels aren’t producing energy — like at night or on cloudy days — can still be offset if you overproduced during the day.

Net energy metering (NEM) isn’t mandated in Alabama, so many customers won’t have access to the program. Those that do will likely get credited at a below-retail rate per kWh. Since local energy needs are so high, it’s often worth it to pay $10,000+ to have a battery installed to get access to effective net metering.

It’s hard to say exactly how much a solar battery is likely to save you over time, but we expect it would pay for itself and then some, given the high energy demands in Alabama.

Choose a High-Efficiency Panel Brand

We also strongly recommend you choose a panel brand with a high efficiency rating, like Maxeon. High-efficiency panels usually cost more on a per-watt basis, but in areas with above-average energy needs, like Alabama, they’re often worth the added investment.

High-efficiency panels will generate more energy in all conditions, which means you’ll be more likely to offset your high energy demands. Since Alabamans have higher electric bills than most Americans, a high-efficiency panel can also mean a better chance of offsetting your expensive utility bills.

Although they’ll very likely cost you more upfront, panels with an above-average efficiency rating can pay for themselves several times over in Alabama.

Take All of the Solar Incentives You Can

One of the fastest ways to save on your solar energy system is to take advantage of all of the solar incentives you can. Unfortunately, Alabama state incentives are few and far between, but you can still take the federal tax credit and the property tax exemption.

The federal credit is available to all Alabama residents and credits your income tax liability with 30% of your system price. Based on average system sizes in your area, the average credit value is $8,453, which is more than $1,000 higher than the national average.

The property tax exemption doesn’t technically save you money on your system, but it does prevent your property taxes from increasing just because your clean energy system bumps up your home value.

There are a bunch of cities and utility companies — like Birmingham and Alabama Power — that offer energy efficiency incentives as well. These won’t bring down your system totals, but they can help you save on other energy efficiency upgrades you make to your home. You can check out our guide to solar incentives in Alabama for more information.

What Are the Typical Costs of Alabama’s Solar Installers?

The solar panel installation company you choose to handle your solar project will play a role in your total conversion costs. Every installer charges different prices for equipment and labor, so equivalent systems from different installers can differ by thousands of dollars in some cases.

The table below includes some relative cost information for what we believe are the five best solar companies in Alabama.

How Are Solar Costs and Regulations Trending In Alabama?

The Solar Energy Industries Association (SEIA) reports that the price of solar panels in Alabama has dropped by around 53% over the last decade. The average system today that costs $19,723 would have totaled nearly $42,000 ten years ago.

A big part of PV systems getting more affordable is the mass production capabilities, thanks in large part to the increase in demand nationwide across the entire solar industry. We expect the prices to continue to dip in the coming years, even in areas like Alabama, where the cost per watt is already well below average.

As far as solar incentives and regulations go, we don’t foresee any changes in the coming years. Alabama currently doesn’t have a renewable portfolio standard (RPS) goal, which is often the impetus for new solar incentives and rebates being offered. Without an RPS goal, we don’t expect any new perks to pop up.

Additionally, the state currently doesn’t mandate a net metering program, which is the single incentive that is changing most readily across the country. As such, we don’t feel that any of the currently available incentive programs are at risk of getting downgraded or discontinued in the near future.

With the price of equipment lower than it ever has been and incentives looking like they’re going to stay stagnant, now is an excellent time to go solar in Alabama, in our opinion. You can use the tool below to start getting solar quotes for your system and get the process underway to start saving.