Kentucky severely gutted financial incentives for residential solar panels in 2019 by slashing net metering payback rates in half. Combined with no state tax credits or renewable portfolio standards, the Bluegrass State offers very little support.
But savvy shoppers can still potentially save $15,000 to $20,000 over 20 years through federal tax credits and what remains of net metering payouts. Homeowners able to purchase solar panel systems outright stand to benefit the most.
This guide will explore multiple strategies Kentucky residents can use to maximize solar savings, despite worsening state policies:
- Leveraging the 30% federal solar tax credit
- Understanding changes to Kentucky‘s net metering law
- Considering incentives offered in leading solar states
- Reviewing impacts of advocacy group efforts
Follow along as we compare data and analyze all options available to Kentucky solar buyers looking to save.
Changes to Kentucky‘s Solar Laws Reduce Financial Benefits
First, let‘s review recent policy shifts that negatively impacted residential solar incentives in Kentucky.
In 2019, the state legislature passed a bill allowing utility companies to gut net metering buyback rates previously mandated. Where households with solar panels once received the full retail electric rate for sending excess power back to the grid, utilities can now pay as little as 50% less.
On top of that, Kentucky is one of just 12 states with no renewable portfolio standard (RPS). An RPS requires utilities to source a percentage of their electricity from solar or wind. The lack of this regulation demonstrates the state‘s general disinterest in supporting renewable energy growth.
The combination of these two policy factors creates an uncertain and disjointed landscape for solar shoppers.
Federal Tax Credit Can Still Save Over $4,000
While state support wavers, the federal solar tax incentive offers a reliable 30% credit on the cost of new solar systems for all Kentucky residents.
- For a 6 kW solar panel system costing around $14,500 installed, Kentuckians can deduct $4,350 off their federal tax bill
- For larger 10 kW installs averaging $24,000, the 30% credit saves $7,200
To receive the full 30% credit, homeowners must purchase systems upfront rather than leasing from a solar provider. While paying upfront costs more initially, owned systems tend to pay off in under 10 years through energy bill savings.
Unfortunately buying vs leasing remains the only option in Kentucky, since the state prohibits leasing contracts used to avoid upfront fees.
Other States Incentivize Solar Through Tax Credits
In solar-friendly states like California, customers enjoy state and utility tax credits providing thousands in additional savings:
- California‘s $3,000 state tax credit
- Sacramento utility Sacramento Municipal Utility District (SMUD) offers up to $3,500 credit
- Total potential credits up to $6,500 on top of federal amount
| State | State Tax Credit | Utility Tax Credit | Total Possible Credit |
|---|---|---|---|
| California | $3,000 | Up to $3,500 | $6,500 |
| Kentucky | $0 | $0 | $4,350 |
Kentucky would do well to model successful incentive structures that facilitate solar growth like leading renewable states.
Gutting Of Net Metering Slashes Bill Savings
Previously, Kentucky residents generating surplus solar power could sell it back to the grid and offset their electric bill at full retail rates through net metering.
- For context, the average Kentucky household uses 1,100 kWh costing $123 monthly
- A 6 kW solar array could offset 85-90% of use, saving $100+ per month
Under 2019 changes, utilities now buy back excess power at up to 50% less value.
- Retail rate may drop from $0.12 per kWh to $0.05 per kWh
- Net metering savings decrease by $400+ per year
- Adds 1-3 years to system payoff period
While still an important piece of long term savings, weakened net metering harms the economic picture for Kentucky residents considering solar panels.
Advocacy Groups Lobby For Better Standards
Solar advocates continue pushing representatives to improve incentive structures. Two major groups driving the charge are:
- Kentucky Solar Energy Society (KYSES): Key force behind 2019 opposition to net metering cuts. Remains active in lobbying for new legislation.
- Solar United Neighbors (SUN): Leading national co-op focused on solar rights helped 642 Kentucky households go solar in 2021 alone. Also advocates for friendly policy.
While the overall landscape remains challenging, Solar shoppers should support these organizations in their ongoing efforts to convince lawmakers that increased renewable energy benefits all Kentuckians.
Given the political climate, Kentucky residents will need to take initiative to research optimal savings strategies on their own.
- Leverage federal tax credit – Up to 30% off solar costs is major plus
- Understand weakened net metering – Still helps but payments and savings fall short of potential
- Purchase vs lease – Buying is a must for best lifetime value
- Support solar advocacy groups – Push representatives for standards comparative to leading states
Hopefully this guide gives you a better understanding of both the challenges and savings opportunities still accessible for Kentucky households interested in switching to solar power. Reach out with any other questions!
