Are you a Tennessee resident considering installing solar panels? If electricity bills have you feeling trapped by high costs and helpless about environmental impact, solar can provide not just savings but freedom. As a 20-year Tennessee solar panel owner myself, I‘ve found renewable energy to be one of the best investments I‘ve ever made.
In this comprehensive guide, I‘ll walk you through everything you need to know about solar energy in Tennessee:
- Rapid growth of solar panel adoption and why it‘s accelerating
- Precise costs to expect for purchasing and installing a solar array
- How to calculate exactly how many solar panels your home needs
- All the incentives, rebates, tax credits and cost offsets available
- Detailed investment payback periods and long term profit projections
- Key factors to consider before deciding if solar is right for you
I‘ve also included easy-to-read comparison tables, links to solar reports with original data, and examples tailored specifically to Tennessee.
My goal is to equip you with the insights of an energy expert so you feel 100% confident evaluating solar investment pros and cons. So let‘s get started exploring how solar power can literally pay you back for decades to come!
Surging Solar Energy Growth Across Tennessee
While environmental advocates have promoted alternative energy in Tennessee for years, only recently has solar power adoption truly started surging throughout the Volunteer State. Fueled by quickly declining prices and supportive federal incentives, installed solar capacity has soared over 1000% since 2016:
| Year | Total Solar Energy (MW) | % Change |
|---|---|---|
| 2016 | 90 MW | – |
| 2018 | 240 MW | +166% |
| 2021 | 1100 MW | +358% |
| 2022 | 1480 MW | +34% |
Data Source: Tennessee Valley Authority Solar Reports
This momentum continues building despite Tennessee having no Renewable Portfolio Standard or broad state tax credits like neighboring states. While state policy lags behind, the economics of residential solar energy in Tennessee still make sense thanks to:
- Low solar panel equipment and installation costs
- Decent sun exposure and solar potential across much of state
- 30% Federal Investment Tax Credit offsetting upfront purchase expense
- Generous TVA rebates further discounting overall system pricing
In fact today, roughly 4500 Tennessee homes now have rooftop solar panel systems producing clean, renewable energy and saving money long term. Next let‘s explore precisely what kind solar power setup costs in 2023.
Cost Breakdown of Installing Solar Panels in Tennessee
When considering switching to solar energy yourself, clearly one the first questions will be "How much is this going to cost?" Unfortunately there is no single figure due to differences in regional equipment pricing, system sizes for individual homes, panel types, and installer markups. However reviewing statewide median rates can provide a helpful cost baseline.
According to the most recent study by EnergySage involving thousands of installation quotes, the average gross price per watt of solar panels in Tennessee is $2.49. Compared to the national median of $2.77 per watt, Tennessee ranks among the more affordable states thanks to plentiful installers and suppliers concentrated in bordering states.
To translate into full system costs, let‘s examine typical pricing for three different solar array sizes:
| System Size | Gross Cost | Net Cost After Incentives |
|---|---|---|
| 4 kilowatts | $9,960 | $5,072 |
| 8 kilowatts | $19,920 | $10,432 |
| 12 kilowatts | $29,880 | $11,952 |
These system sizes cover the spectrum needed for most single family homes. I‘ve also shown net costs after accounting for the 30% federal tax credit and TVA‘s cash rebate – which I‘ll explain shortly how you qualify for.
First off however, how do you determine just how many solar panels are required for your home?
The answer involves understanding your historical electricity usage and available sunlight.
Calculating Your Home‘s Solar Panel Needs
Figuring out the optimum solar array size for your roof (measured in kilowatts) requires combining two key data points in this simple formula:
Your Average Daily Electricity Usage ÷ Peak Sun Hours = Solar System Size
So first, you‘ll analyze your home‘s total electric usage over the past 12 months – data easily available from monthly power bills. Simply sum the monthly kilowatt hours (kWh) used across an entire year and divide by 365. This gives you the average energy consumed per day.
For example‘s sake, let‘s say your annual analysis revealed 2,800 kWh over the past year. Divide by 365 days for an average daily usage of 7.7 kWh.
Next we factor in Tennessee‘s solar potential, using a measurement called peak sun hours. This represents the max number daylight hours when sunlight is most direct and intense. Tennessee averages 4.0 to 4.5 peak sun hours depending on your location in the state.
Plug this into our panel sizing formula:
- 7.7 Daily kWh Usage ÷ 4.5 Peak Sun Hours = 1.7 kilowatts
So based on this household‘s electricity profile, a 1.7 kilowatt solar system would fully supply their total annual power needs. To allow room for future energy growth, installers typically oversize 25-30% giving us a final recommended solar array of 2.2 kilowatts for this home.
Using the median gross prices listed earlier, a 2.2 kW solar panel system would cost this family roughly $5,500 prior to incentives. Thanks to sunnier conditions, installing equivalent solar capacity is almost 15% cheaper in Tennessee than the US average. Now let‘s explore how federal and state credits can help you save even thousands more.
Maximizing Tennessee Solar Incentives and Credits
While upfront prices of solar panels in Tennessee fall below national averages, installation costs still represent a major investment for most families. Thankfully a pair of generous financial incentive programs provide significant savings:
1. Federal Solar Investment Tax Credit
The federal solar tax credit, also called the ITC, gives you back 30% of the total system cost as a deduction on your IRS tax filing.
For example on a $10,000 solar purchase, you would get $3,000 credited back after submitting your next tax return following the solar array‘s installation. For higher income filers whose annual tax bill exceeds $3000, it directly reduces taxes owed by 30%. For lower income filers, deductions can rollover year to year until the full offset is claimed.
This 30% ITC applies to any solar project as long as installation is completed before December 31, 2032. Starting in 2033, the ITC percentage begins phasing down incrementally over time. So act fast to maximize savings!
2. Tennessee Valley Authority Renewable Standard Offer
In addition to the federal solar tax credit, TVA also gives Tennessee residents cash back for installing solar panels through their Renewable Standard Offer program. This rebate started in 2015 and continues indefinitely.
You‘ll receive a payment of $1,000 per kilowatt worth of solar panels added, capped at half your project‘s gross costs.
For a 6 kilowatt array costing $15,000, a TVA customer would thus get $6,000 cash back – reducing the net expense of their new solar system by 40%! This further speeds up the investment payback timeline.
| Incentive | Overview |
|---|---|
| Federal Solar Tax Credit | 30% of system cost deducted from tax bill |
| TVA Solar Rebate | $1000 per solar kW installed, up to 50% of costs |
These two programs combined can reduce total solar power costs by 55-65% when leveraged fully. And as I‘ll cover next, they lead to payback timelines of 50-75% faster than the national average as well.
Solar Panel Payback Periods and Investment Returns
Given Tennessee‘s bargain solar panel pricing and financial incentives making systems even more affordable, what does return on investment look like for those switching to solar? How many years until your upfront costs have effectively paid for themselves through electricity savings?
The short answer is: 3-7 years – nearly 50% quicker than the US average. And that breakeven time frame just keeps improving as electricity rates rise across Tennessee year to year while your solar array keeps producing free renewable energy for decades.
To illustrate, let‘s revisit our earlier example of a 2 kilowatt solar system costing $5500 before incentives. After applying the 30% federal tax credit and maximum 50% TVA rebate, the true out-of-pocket dropped to only $1,650.
Now based on that home‘s average daily power usage of 7.7 kWh and Tennessee‘s electricity cost of ¢12.3 per kWh, their annual utility bills ran $340.
Simply divide net solar costs of $1,650 by $340 in annual savings starting Year 1 gives us solar payback in less than 5 years. Then for the remaining 20-25 year lifespan, that family enjoys free solar energy providing impressive 15-20% annual returns.
And again, payback periods can be even faster for households with greater power consumption. Businesses with commercial solar arrays achieve profitability often in just 3 years in Tennessee.
Let‘s compare how two different system sizes stack rank nationally on return metrics:
| System Size | Payback Period | Average Annual ROI |
|---|---|---|
| 2 kilowatts | 4-6 years | 16-20% |
| 8 kilowatts | 3-5 years | 18-25% |
As you can see, Tennessee is among the national leaders when it comes solar investment value right now. And our above economic modeling purposefully takes a conservative approach. Consider:
- Electricity rates continue rising 3%+ yearly in Tennessee long term
- Additional savings possible when combining solar with home batteries
- Future trade-in or reconditioning value for used solar panels
Is Solar Right for You? Key Factors to Consider
We‘ve covered everything from Tennessee solar costs to savings to long term profits. So should every home go out and install panels tomorrow?
As with any major home improvement, the decision depends greatly on your financial situation, property specifics, and personal tax situation. Not everyone may be ready yet. Here I‘ll summarize the most critical considerations as you weigh next steps:
Upfront Costs Still Significant – While incentives do lower solar pricing markedly, panels still represent one of the costlier household upgrades at $10K+ for most properly-sized arrays. If cash reserves are limited currently, financing options may assist short-term budgeting through loans and zero-money-down leases.
Roof Age & Condition – Solar panels can last 20-30 years. Ensure your current roof is in good shape and not needing full replacement itself in less than 10 years. Installing both simultaneously is recommended if possible.
Electricity Usage Levels – The more power your household consumes, the faster the payback timeline thanks to higher savings. Crunching usage over the past few years helps predict future value.
Sun Exposure – Areas like West Tennessee and the state‘s southern border tend to average 10-15% more peak sun hours annually vs. Northern Middle Tennessee. More free solar fuel = better cost efficiency.
Future Plans – Consider longer-tem intentions for your home. Solar arrays can deter some buyers if roof lease agreements / panel financing is still active. But for-sale value also rises for most homes with owned panels.
I always recommend Tennessee homeowners connect with one of the 60+ local solar companies operating statewide to address these home-specific variables. Now let‘s wrap up with some common questions I‘ve fielded over my years owning panels.
Frequently Asked Solar Questions
How long does it take solar panels to pay off in Tennessee?
With incentives factored in, most properly-sized solar systems achieve payback in 4-7 years in Tennessee. Given our electricity rates and sun exposure, payback happens 25-50% faster than the US average.
Are solar panels worth it in Tennessee?
Yes, solar makes increasing financial sense in Tennessee as equipment prices fall but utility rates keep rising 3% annually. Panels can provide homeowner investment returns of 15-22% based on free renewable energy savings over systems‘ 20-30 lifespans.
What does a solar panel system cost in Tennessee?
While $15K+ systems are common for average-sized homes after accounting for ideal capacity, incentives can reduce out-of-pocket costs to under $10K typically. On a per unit basis, solar panels in Tennessee cost a median $2.49 per watt – 10% below national benchmarks.
I hope this guide has helped explain solar energy‘s compelling benefits and great improving economics in our state. By leveraging the full 30% federal tax credit before it starts phasing down in 2033 combined with TVA rebates, Tennessee homeowners can start cashing in on free renewable power.
If you do proceed getting quotes for installation, be sure to ask any solar company you speak with for complete breakdowns on system costs, expected production metrics, available savings through incentives, and projected timelines for achieving payback through utility savings.
Wishing you the best as you evaluate joining the thousands of other Tennessee families deciding each year to start harnessing free energy straight from the sun!
