Is Solar Worth It in Kentucky? (2022 Homeowner's Guide)
Here’s a quick overview of solar viability in Kentucky:
- Kentucky ranks 47th in the country for solar installations*
- The average cost of electricity in Kentucky is 10.87 cents per kilowatt-hour (kWh)**
- The average solar payback period is 13 years***
- Homeowners are eligible for a net metering program and the federal solar investment tax credit (ITC)
- The average homeowner saves $20,247 over the lifetime of their solar system***
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Kentucky homeowners enjoy one of the lowest electricity rates in the entire country, and although residents use more energy than homeowners in most other parts of the country, many people in the area wonder if going solar is worth the investment. For most Kentuckians, solar panels will be a worthwhile and even profitable investment, but it’s certainly not for everyone. Below, you’ll find information on how to determine if your Kentucky home is a good candidate for solar panels. You’ll also learn about the benefits you’ll enjoy from converting your home to solar power and some things you should keep in mind as you adopt this renewable energy source.
How to Figure Out if Solar Panels are Worth It in Kentucky
Solar is typically a good investment for homeowners in Kentucky, but whether or not your panels will ultimately save or cost you money depends on quite a few factors. We’ll discuss the most important considerations below.
What’s Your Home Electricity Consumption?
First, prospective solar customers should verify that their energy needs are high enough to justify installing solar panels. Solar energy systems are most valuable because they offset your energy bills, so the more electricity you use monthly, the more money you’ll theoretically be able to save with a photovoltaic (PV) system. Generally speaking, homes that use more than 500 kWh in an average month will find solar conversion cost-effective. Most Kentucky homeowners consume around 1,073 kWh per month, which is well in excess of the 500 generally needed to make solar worthwhile. You can check your past electric bills for your average consumption over the past few months or year.
How Much Is It To Go Solar in Kentucky?
Another important factor to consider is the price of solar panels in Kentucky. Residents of the Bluegrass State enjoy the lowest solar equipment prices in the entire nation at just $2.34 per watt. With most homeowners in the area requiring a system size of 11 kilowatts (kw), the typical total for installation is around $25,740 before the federal tax credit or $19,048 after it’s considered. Solar is a better investment where energy costs are high. While Kentucky ranks in the top 10 states as far as affordable electricity goes, the incredibly low price per watt makes solar a good option despite the below-average per-kWh rates.
What’s the Payback Period for Solar in Kentucky?
Through ongoing energy savings, most residential solar arrays pay for themselves. The time it takes for this payoff to occur is called the solar panel payback period. This is an excellent metric for determining if solar is right for your home, especially when you compare your payback period to the average in the area and the country. The payback period also lets you estimate your total savings after your panels pay for themselves. The average payback period in Kentucky is 13 years, which is just above the national average of 12 years. Most Kentucky solar customers enjoy savings that pay for the solar panel installation costs in between 10 and 16 years. If you find that your estimated payback period is longer than 16 years, your total return on investment (ROI) will be below average. You can use a solar calculator or have an experienced solar installer estimate your payoff timeline for you.
What Are Average Buy-Back Rates in Kentucky?
Many states mandate a net metering or energy buy-back program, which forces utility companies to purchase excess energy you produce with your panels to offset your utility bills or even get paid for the excess. Kentucky’s Public Service Commission does mandate net metering, but it doesn’t set a precedent for the buy-back rate, so this will vary among providers. Some buy back energy below the retail rate, while others might offer the retail rate. Additionally, the net metering policy is only mandated for investor-owned utilities (IOUs) and electric cooperatives. Since the net metering program in Kentucky isn’t the best, many homeowners choose to install solar batteries to offset electric costs. These storage solutions will also provide electricity through power outages.
How Much Sun Does Your Roof Receive?
Many customers don’t consider whether their roof gets enough sunlight to make solar a good investment, which can definitely impact your ROI on solar panels. You should first check the direction your roof faces, as this plays a major role in solar panel efficiency. South-facing and west-facing roofs receive the most sun in the US. Additionally, you should check your roof for any shading during peak sunlight hours. Trees, buildings and other obstructions will decrease the production rate of your panels and, therefore, their total value. Generally speaking, if you confirm that the direction of and shading on your roof are suitable, Kentucky is a decent place for solar panels to thrive. The state receives 189 days of sunshine annually. While this is below the national average of 205 days, it’s still plenty of sun to make solar a good investment for most residents.
What’s the Outlook on Solar in Kentucky?
Solar energy is pretty widely accepted in Kentucky and is one of the most popular renewable energy sources in the state. Although KY doesn’t have a Renewable Portfolio Standard (RPS) goal, the state looks on solar energy favorably and provides an abundance of state incentives to promote solar adoption. While solar conversions are less prevalent in Kentucky than in most other states, the industry is on the rise in the Bluegrass State. Over the past decade, residential solar systems have become more popular year over year. Commercial solar installations are also gaining popularity throughout the state. The likelihood is that the solar market in Kentucky will continue to expand, leading to even greater affordability and accessibility.
Benefits of Solar Energy in Kentucky
Going solar in Kentucky provides homeowners with a number of benefits that are difficult to pass up. We’ll discuss the most appealing upsides to installing solar in KY below.
Electricity Bill Savings
The biggest benefit of going solar, by far, is the amount your panels will save you on your electric bills. In most cases, home solar panel systems in the area will pay for themselves in around 13 years, and energy savings over the 12+ years of equipment life thereafter will total an average of $20,247! If your payback period is shorter than 13 years, the savings will be higher for you, and the reverse is also true. Your actual savings could also be higher than the average of $20,247, as electricity rates have been on the rise and are expected to go up in the future. Saving over $20,000 by going solar in Kentucky is based on current electricity prices, but you could save more if the rates continue to increase.
Lower Taxes & Access to Other Incentives
The State of Kentucky and the federal government both provide a number of solar incentives that help make solar more affordable, appealing and accessible. One of the most substantial incentives is the federal solar tax credit (ITC), which provides a credit to your federal income taxes for the year your panels are installed and turned on. The ITC amounts to 26% of your total system cost or an average of $6,692 in Kentucky. There are additional solar incentives available in Kentucky as well, which we’ll list below:
- Net Metering: As mentioned above, Kentucky mandates net metering for IOUs and electric cooperatives. Depending on your electricity provider, you might be eligible for the program, which helps reduce panel payoff time and increase your total ROI.
- Property Assessed Clean Energy (PACE) Financing: Kentucky participates in PACE Financing, which provides accessible and low-interest rate solar loans to qualifying low-income households.
- Local Solar Rebate Programs: While the State of Kentucky doesn’t have any rebate programs, some utility companies privately offer solar rebates and incentives for going solar.
- Incentive for Energy Independence: This perk provides enticing tax incentives for solar customers that reduce their dependence on fossil fuels. This incentive is for commercial customers only.
Home Resale Value Increase
A massive benefit to going solar that many homeowners overlook is that solar panels make your home more valuable. Data from a research study done by Zillow suggests that solar conversion will boost your home value by 4.1%.3 In Kentucky, where the average property is valued at $188,463, this incentive adds an average of $7,727 of value when you install solar.4 Your value increase could be even higher if you live in more expensive areas, like Louisville or Lexington. Solar leases and power purchase agreements (PPAs) will not provide this same financial incentive, so you’ll have to purchase your panels with cash or solar financing if you want to take advantage of this benefit.
Clean, Renewable Energy
A non-financial incentive for converting to solar energy is that you’ll be less dependent on fossil fuels and traditional utilities. By reducing your carbon footprint, you’ll also reduce your contribution to global warming and pollution, which are massive eco-friendly benefits. Increasing your energy independence also means you won’t be subject to the same energy rate hikes that are expected in the future.
What to Look Out For When Considering Solar in Kentucky
Navigating the solar industry and finding a solar installer that will do right by you can be complicated. We’ve put together a list of things to consider before converting to solar that will help you have the best experience possible.
The upfront cost of solar panels will be an important thing to consider, even in Kentucky, where residents enjoy the lowest equipment costs in the country. You can keep your upfront investment amount down by choosing a loan option that requires no money down, limiting your equipment choices to panels only and avoiding add-on products and selecting one of the more affordable solar panel brands.
As mentioned above, the payback period is a crucial consideration to make, as it not only determines how suitable your home is for solar conversion but also how much you stand to save in the long run by converting. The typical payback period in Kentucky is between 10 and 16 years, with an average of 13 years. If your estimated payoff timeline is longer than 16 years, your total return on investment will be below the average for the area.
Net Metering Policies in Kentucky
Net metering is mandated in Kentucky for all investor-owned utilities and electric cooperatives. The rate for buying back excess energy isn’t set by the state, and many customers won’t have access to net metering at all if they use public utilities for power. Given that the policy can vary among electric companies, we recommend you reach out to your provider to see what net metering program is available before you sign anything. Remember, you can always add a solar battery to your home solar project if you have a sub-optimal net metering program or none at all.
Pending Policies & Changes to Incentives
The solar industry is relatively young, and it’s still rapidly improving and expanding. This is especially true in states like Kentucky, where the solar market is just starting to pick up. As such, policies can change and incentives can be added or disappear without warning. While it’s not advisable to wait for better incentives to become available, you should check for updated incentives and policies before you commit to going solar.
Weather & Climate in Kentucky
Solar panels are more valuable in areas closer to the equator, where sunlight is most abundant and intense. As such, Kentucky’s location in the middle of the United States means it’s not the best place for solar conversion but far from the worst. Some prospective solar customers in Kentucky worry that the commonly cloudy weather will reduce solar panel efficiency and that the frequent and abundant rainfall will put their equipment or roofs at risk of damage. While cloudy days can lead to a reduction of efficiency to about 10%, Kentucky receives 189 sunny days on average, which is often plenty to make solar panel installation worth the money. Rain will help keep your panels clean, which improves overall efficiency. If you’re concerned about roof leaks, choosing a reputable solar installer that offers a good warranty should put your mind at ease.
Companies Pushing Solar Leases or PPAs
The final consideration you’ll have to make is the solar panel company you choose to handle your solar project. Not every solar installer is equally as invested in your best interests, so it’s important only to work with a reputable and vetted company. Generally speaking, you should avoid companies that advocate for solar leases or power purchase agreements (PPAs), as these options cause you to miss out on several solar incentives, including the bump in home value, the overall energy savings and the federal tax credit. Some companies sneak lease agreements into “free panel offers,” and solar panels are never actually free. There have been reports in the Northern Kentucky Tribune of even more nefarious solar companies using aggressive sales tactics and high pressure to push these less appealing solar options.5 The State of Kentucky also identified a solar-related phone sales scam where callers stated they were affiliated with local utility companies to increase their sales numbers.6 Working with a reputable solar installer will help you avoid these scams and others in KY.
Wrap Up: Is Solar Worth it in Kentucky?
Kentucky ranks 47th in the country for solar adoption, but installing solar panels is still considered a worthwhile investment for most Kentucky residents. Still, solar isn’t right for every home, so it’s important to have your home assessed to see if a solar power system will benefit you and save you money in the long run. Some things you’ll want to consider as you assess your home include your monthly energy bills, the orientation of your roof, how much sunlight your home gets during peak hours, the estimated panel payback period for your property, and more. Since determining if solar is viable for your home is convoluted, we recommend contacting an experienced and reputable solar company to help you decide.
Frequently Asked Questions
The EcoWatch team regularly gets questions about the viability of solar panels in Kentucky. Below are some of the questions we see most often, along with our responses.
Generally speaking, it will take around 13 years for your solar panels to pay for themselves in Kentucky, which is just a bit longer than the national average of 12 years. With an estimated panel lifespan of 25+ years, the remaining 12+ years of power generation saves the average resident around $20,247 in energy savings. It’s important to note that these numbers are averages, and your timeline can fluctuate quite a bit based on several factors. Things that can affect your solar panel payback period include the direction your roof faces, your home’s energy efficiency, how much energy your home consumes in an average month, shading on your property, the cost of your solar panel system, and more.
For most Kentuckians, yes, going solar does save money. Solar panels let you offset your electric bills, and if you have a good net metering policy from your utility company or couple your panels with a solar battery, you could eliminate your power bills altogether. On average, these energy savings amount to around $20,247 in Kentucky after the panels pay for themselves.
Yes! Installing solar panels will improve your home value by approximately 4.1% on average, according to research conducted by Zillow. In Kentucky, where the average home value is $188,463, that equates to a typical value bump of about $7,727. Unfortunately, Kentucky does not offer a property tax exemption for solar equipment, so your property taxes will increase as a result of going solar.
Yes, you will need permits to install solar panels in Kentucky. The permitting process is typically handled by your solar installer, so you won’t have to deal with your local permitting agency. The price of permits is also usually worked into the cost charged for your system, so they won’t need to be paid separately in most cases.
You can install rooftop solar panels yourself in Kentucky, but it’s not the best idea. While you stand to save some money on the labor, you’ll also be putting yourself at risk of injury and your property and equipment at risk of damage. We strongly recommend leaving the work to certified professionals.