Is Solar Worth It in Alabama? (2022 Homeowner's Guide)
Here’s a quick overview of solar viability in Alabama:
- Alabama ranks 28th in the country for solar installations*
- The average cost of electricity is 12.57 cents per kilowatt-hour (kWh)**
- The average solar payback period is 11 years.***
- Homeowners are eligible for a solar property tax exemption and the federal solar investment tax credit (ITC)
- The average homeowner saves $28,590 over the lifetime of their solar system***
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Our solar experts have conducted hours of research and collected dozens of data points to determine whether solar is a good fit for homeowners 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.
- Most efficient panels on the market
- National coverage
- Cradle to Cradle sustainability certification
- Great warranty coverage
- Customer service varies by local dealer
- Solar Panels
- Solar Batteries
- EV Chargers
- System Monitoring
Creative Solar USA
- Representatives are experts on local policies
- Comprehensive service offerings
- Many years of experience
- No leases or PPAs
- Limited brands of solar equipment available
- Solar Panels
- Solar Batteries
- EV Chargers
- Community Solar
- Electrical Work
Eagle Solar & Light
- NABCEP-certified technicians
- Offers products from leading manufacturers
- Locally owned and operated
- Award-winning company
- Relatively young company
- Limited information available on website
- Slightly limited service offerings
- Solar Panels
- Solar Batteries
- Community Solar
- Off-Grid Solar Solutions
Alabama ranks 28th in the country for solar installations, but still, the majority of homeowners find that converting to this clean energy source is a worthwhile investment. With high energy needs and more sunny days than most states throughout the country, even the high costs of solar power systems in the area are routinely paid for in savings and then some. Below, you’ll find an in-depth guide to help you determine if solar panels will benefit you and your home and save you money in the long run. We’ll also explain some of the upsides of installing panels in the Yellowhammer State and some things you should consider when moving forward with your home solar project.
How to Figure Out if Solar Panels are Worth It in Alabama
Alabama presents a great opportunity for most homeowners to save some money and reduce their carbon footprint, but the financial benefit won’t be there for every homeowner. Below are some things you’ll need to consider to decide if going solar is right for your home and your financial situation.
What’s Your Home Electricity Consumption?
Solar panel systems vary wildly in size, and the number of kilowatts you’ll need to have installed is largely based on your monthly energy needs. Your panels are typically sized to cover your electricity consumption, and, ultimately, your return on investment (ROI) will come primarily from the energy savings you’ll enjoy from an appropriately-sized system. Generally speaking, homes that use fewer than 500 kWh aren’t great candidates for solar conversion. Luckily, the average monthly energy consumption in Alabama is 1,145, so most homeowners won’t need to worry from a consumption standpoint if panels are a good investment. Still, it’s best to confirm that you have qualifying energy needs by checking your billing history on your electric bill.
How Much Is It To Go Solar in Alabama?
The price of solar panels in Alabama averages around $2.45 per watt, which is significantly below the national average of $2.66. This makes Alabama the fifth most affordable state for solar installations by watt. Most homeowners need around an 11.5-kW system to eliminate their energy bills, which equates to a total investment of $28,175, or $20,850 after the federal tax credit is considered. With per-watt prices lower than most states, Alabama is a great state for going solar and keeping upfront prices down. Additionally, solar panels provide more value where they can offset high electricity rates or high energy consumption. Alabama has below-average power prices, but the energy usage is well above the national average, meaning solar will be worthwhile for most Alabama residents.
What’s the Payback Period for Solar in Alabama?
Solar equipment is expensive, but the majority of purchased or financed solar systems pay for themselves over time by saving you money on electric bills. The time it takes for the payoff to occur is called the solar panel payback period, and it’s a crucial factor in determining how valuable panels will be for your home. You can use a solar calculator or contact a reputable solar panel installation company in your area to find out your estimated payback period. The typical homeowner in Alabama will find that their panels pay for themselves within 11 years, which is below the national average of 12 years. That means going solar is generally more worth it in Alabama than in the rest of the US. A decent payback period in Alabama is between 9 and 15 years, so if yours is longer, your ROI will be lower than the average.
What Are Average Buy-Back Rates in Alabama?
Most states offer solar customers net metering or an energy buy-back program where you get compensated for any excess energy you produce with your panels. These policies help offset electric costs, shortening your payback period and increasing your total ROI. Unfortunately, the Alabama Public Service Commission does not mandate net metering, so most local utility companies won’t offer it. In fact, regulators have tacked on a monthly fee for solar customers that ends up disincentivizing solar. In order to eliminate your electric bills, you’ll have to add a solar battery to your home solar project. Energy storage will prevent you from having to pull energy from the grid and pay for each kWh when you use electricity at night or on cloudy days.
How Much Sun Does Your Roof Receive?
Solar panels use sunlight to produce energy, so the more direct sunlight your roof receives, the more efficient your panels will be and the more electricity they will generate. Alabama residents as a whole enjoy around 213 sunny days per year, which is just above the national average of 205 days. As such, photovoltaic equipment will typically be worth it in AL. However, there are some individual factors to consider for your home, like the direction your roof faces. In the US, south- and west-facing roofs receive the most sun and are best for solar conversions. Additionally, you’ll want to consider any shading on your property from trees, buildings or other obstructions, as these will impede sunlight and reduce the overall value provided by your system.
What’s the Outlook on Solar in Alabama?
Alabama ranks 28th overall in the country for solar energy installations, and that’s almost entirely due to utility-scale solar installations. Unfortunately, residential solar conversions haven’t quite gained the popularity they have in most other states. This is partially because there are so few statewide incentives available and because Alabama is one of the few states that doesn’t have a Renewable Portfolio Standard (RPS). Some optimists will look at the minimal hold the solar industry has in Alabama and say there’s only room for improvement. While this is true, it’s very possible that the state will be slow to adopt and incentivize residential solar, if it does at any point. One very positive aspect of going solar in Alabama, however, is the low cost of equipment, which is about $0.20 lower per watt than in the rest of the country.
Benefits of Solar Energy in Alabama
Despite the State of Alabama not providing much incentive to go solar, there are some significant benefits you can enjoy when you make the switch to this renewable energy source. We’ll discuss the most substantial upsides of installing solar panels below.
Electricity Bill Savings
Even though there is no net metering mandate in Alabama, residents will still enjoy savings on their electric bills when they convert to solar energy. Solar panels produce energy that you would otherwise pull from the grid and pay for. Given the high energy needs of Alabamans, the reductions on monthly utility bills can be substantial. The average savings for solar customers throughout the state is around $28,590, and that’s after the panels pay for themselves! Additionally, your savings could end up being even higher, as electricity rates have gone up year-over-year in the past and are likely to increase in the future. Installing solar panels effectively lets you secure a lower cost for electricity for the estimated 25+ years of panel life.
Lower Taxes & Access to Other Incentives
Although Alabama isn’t the best state for solar tax credits and rebates, there are some incentives afforded by the state and federal governments to make solar more affordable and accessible. Most notable in Alabama is the federal solar investment tax credit (ITC). The ITC is for 26% of your total system cost, which is an average of $7,326 in Alabama. This amount gets credited to your federal income tax liability for the year your equipment is installed and turned on. Some other Alabama solar incentives are listed below:
- Property Tax Exemption for Renewable Energy Facilities: This property tax exemption prevents your property taxes from being affected by your solar conversion. Your panels will increase your home value but won’t cause a spike in your taxes.
- Local Efficiency Incentives: There are no solar-specific rebates for solar equipment in Alabama, but there are some rebates for related energy-efficiency upgrades. You might be eligible for these incentives depending on your power company. Alabama Power and the Tennessee Valley Authority (TVA) are two companies that provide such incentives.
Home Resale Value Increase
One of the most significant benefits to going solar in Alabama, where there are so few statewide perks, is the bump in home value your panels will provide. Research done by Zillow suggests that solar panel installation will increase your property value by around 4.1%, on average.3 Given the typical home value of $194,371, that’s an average value increase of $7,969.4 In areas like Birmingham and Montgomery, this value bump could be even higher. Coupled with the property tax exemption in Alabama, this is a wonderful benefit. Although solar leases sometimes seem appealing because of low upfront costs, this is one benefit that you’ll miss out on if you lease your panels or sign a power purchase agreement (PPA), which we recommend against.
Clean, Renewable Energy
Aside from the financial benefits of going solar, you’ll also be reducing your reliance on fossil fuels that are detrimental to the environment. Installing solar panels will reduce your carbon footprint and contribution to pollution, and you’ll be helping to reduce the progression of global warming as well. Plus, going solar makes you less dependent on your electricity provider, meaning you won’t have to deal with electricity rate increases that have been occurring nationwide over the past few decades.
What to Look Out For When Considering Solar in Alabama
Figuring out that going solar is a worthwhile investment for your home is the first step to enjoying massive energy savings and becoming more energy independent. However, that’s just the first step in the process. Below are some additional things you need to consider throughout the whole process.
No matter what incentives and benefits are available, the upfront cost of solar panels will always be a point of contention. Thankfully, in Alabama, the cost is less of an issue, thanks to the low per-watt cost. You can reduce your upfront costs by choosing a no-money-down solar loan, installing more affordable solar panel brands and limiting your equipment to panels and inverters and avoiding add-on products like electric vehicle chargers.
Every homeowner should calculate their solar panel payback period or have a reputable solar panel installation company estimate it for them before going solar. The time it takes you to pay back your panels using energy savings is a good indicator of overall solar value for your home, and it also determines when you’ll recuperate your upfront costs and start saving money.
Net Metering Policies in Alabama
Net metering is a great solar incentive in many states that helps reduce energy bills, pay back the solar energy system installation cost sooner and provide a greater ROI in the long run. Unfortunately, Alabama doesn’t mandate net metering. As such, most customers opt to install solar batteries alongside their panels. This will add to your upfront cost substantially but almost always saves you more than panels alone in Alabama over time.
Pending Policies & Changes to Incentives
As mentioned above, the solar market in Alabama is far smaller than in most other states in the country. It follows that the incentives and solar policies aren’t as beneficial as they could be, which only means that there is room for growth. It will likely take quite some time for incentives and rebate programs to be introduced for residents, but it’s worth checking for updates before going solar, as any budding industry is subject to change rapidly.
Weather & Climate in Alabama
The weather in Alabama is generally conducive to solar panel efficiency, with an above-average number of sunny days for energy production. However, residents are also well-acquainted with tornadoes and other extreme weather, so some worry about the safety of their panels. In most cases, a robust physical protection warranty provides all the peace of mind you need when going solar in Alabama. The state also receives around 56-inches of precipitation annually, which is well above the national average. While rainy and cloudy days will lead to reduced panel efficiency, the sun throughout most of the year is enough to make panels worth the investment. Additionally, the rain will help keep your rooftop solar equipment free of dirt and debris that can reduce efficiency even when it’s sunny.
Companies Pushing Solar Leases or PPAs
Finally, you should take some time to research which solar installer is right for you and understand that not all solar panel installation companies are created equal. Generally speaking, companies that advertise “free panels,” solar leases, or power purchase agreements (PPAs) probably don’t have your best interest at heart. Solar leases often appear like a good deal, but they’re often not much more affordable than no-money-down financing. Plus, they don’t increase your home value like a cash purchase or solar loan would, they don’t let you take advantage of the federal tax credit and they take far longer to pay off, reducing your ROI significantly in most cases.
Wrap Up: Is Solar Worth it in Alabama?
Solar panels are a worthwhile investment for most Alabamans, but that doesn’t mean they’re a good fit for everyone. Determining if solar is right for you will require you to consider the direction your roof faces, your monthly energy needs, the size of the system you’d need to install, and much more. You’ll also want to estimate your panel payback period to estimate your long-term savings and your break-even point. Even once you determine that panels are a good option for your home, you’ll want to think about your upfront costs in relation to your budget, your financing options, and which solar installer is right for your solar project. We strongly recommend contacting a reputable and vetted solar panel installation company to help you each step of the way.
Frequently Asked Questions
Despite the small market for solar panels in Alabama, the EcoWatch team still regularly gets questions about the value of solar panels from homeowners in your area. Below are some of the questions we see most often, along with our responses.
The answer to this question is highly individualized, as it depends on the size and price of your system, whether or not you choose to add backup power to your project, the direction your roof faces, shading on your property, your monthly energy bills and more. Most Alabamans’ solar panels pay for themselves in between 8 and 14 years, with the average sitting around 11 years. This is below the national average, meaning solar is generally more valuable in Alabama than in many other states.
In most cases, yes! Solar panels will reduce your energy bills, which makes them especially valuable in areas like Alabama, where energy consumption is high. These monthly savings typically add up to pay the system off in a little over 10 years. After that point, the lifetime savings in Alabama averages around $28,590.
Yes, solar panels will bump up your home value in Alabama. According to estimates from Zillow, the average home will go up in value by around 4.1%, which is an average of $7,969. Coupled with the property tax exemption in AL that prevents your property taxes from increasing as a result, this is a huge benefit to installing solar panels.
Yes, permits are required to install solar panels in Alabama. Your permitting agency uses permits to ensure that your home can structurally support the weight of solar panels and that connection to the grid is done safely. Your solar installer will likely handle permitting for you.
DIY solar panel installation is possible in Alabama. However, the process is inherently dangerous and can cause serious injury or death — not to mention thousands of dollars in equipment damage — if done improperly. We strongly recommend letting a professional solar installer handle the process for you.