If Alabama Power is your utility, there is no retail net metering. You pay the retail rate for the power you use, but Alabama Power adds a capacity reservation charge of about $5.41 per kW of installed solar each month under Rate Rider RGB, and it buys your excess generation at avoided cost, roughly 3 to 4 cents per kWh, not the full retail rate (Alabama Power Rate Rider RGB).
If Alabama Power is your electric utility, this page explains the two things that make solar different here: a monthly fee tied to the size of your system, and the absence of retail net metering. Alabama Power serves most of the central and southern part of the state, including the Birmingham and Montgomery areas. Solar can still lower your bill, but the math depends on a back-up fee called the capacity reservation charge and on how the utility credits the power you export. This page lays out the fee honestly, how excess solar is paid, how to interconnect, and how to tell if your home is a good fit.
Alabama Power solar at a glance
Alabama Power runs the interconnection and crediting process in its territory. The details below reflect its current published tariffs, which change over time, so treat any dollar figure as a snapshot to confirm before you sign.
| Detail | What to know |
|---|---|
| Utility | Alabama Power, a Southern Company utility serving central and southern Alabama |
| Alabama residential rate | About 16.77 cents per kWh, just below the national average of about 18.44 cents (EIA, May 2026) |
| Net metering | No retail net metering; excess is bought at avoided cost, roughly 3 to 4 cents per kWh |
| Solar fee | A capacity reservation charge of about $5.41 per kW of installed solar per month under Rate Rider RGB (secondary service) |
| Before you switch on | Alabama Power must approve interconnection and grant permission to operate |
| Source | Alabama Power Rate Rider RGB |
The Alabama Power solar fee: the capacity reservation charge explained
The fee is about $5.41 per kW of solar per month, charged no matter how much power you make. Alabama Power charges solar homes this monthly fee based on the size of their system, not their usage. Under Rate Rider RGB, its back-up and supplementary power tariff, a residential customer with on-site generation pays a capacity reservation charge of about $5.41 per kW of installed capacity each month for secondary service, applied to the nameplate size of your solar system (Alabama Power Rate Rider RGB). The charge is the same whether your panels produce a lot or a little in a given month, because it is a reservation fee for grid back-up, not a charge on energy. In plain numbers, a 5 kW rooftop system pays about 5 times $5.41, which is roughly $27.05 a month, on top of the normal fixed and energy charges on the bill. Confirm the current figure on the tariff before you plan around it, since the amount has changed over time.
This fee has been challenged, and regulators have let it stand. The Southern Environmental Law Center filed a complaint with the Alabama Public Service Commission arguing the charge unfairly singles out solar customers. In September 2020 the Commission dismissed that challenge and approved the charge, and the SELC later pursued a federal petition under the Public Utility Regulatory Policies Act (Southern Environmental Law Center). We are giving you the fee straight so you can budget for it: it is real, it is monthly, and it scales with the size of your array, so a smaller system that closely matches your own usage keeps the fee down. For the mechanics of how export credits work in general, see how net metering credits your solar exports.
| System size | Approximate monthly capacity reservation charge |
|---|---|
| 5 kW | About $27 per month (5 x $5.41) |
| 8 kW | About $43 per month (8 x $5.41) |
| 10 kW | About $54 per month (10 x $5.41) |
What a typical Alabama Power system produces. According to MySolarFY’s own analysis (August 2026), a typical 8 kW rooftop system in Birmingham produces about 10,900 kWh a year (NREL PVWatts), which at Alabama’s residential rate of about 16.77 cents per kWh (EIA, May 2026) is roughly $1,830 of grid electricity your panels would offset in a year, before the roughly $43 a month capacity reservation charge on a system that size. The catch is that you capture the full 16.77 cents only on the power you use in your home as you make it, because exported surplus is bought back at a much lower avoided-cost rate. Your own number depends on your roof, shade, and usage, so treat this as a planning estimate and get a site-specific production figure from an installer. Estimate your roof’s likely output with NREL’s free PVWatts calculator.
How Alabama Power credits your excess solar
Alabama does not offer retail net metering, so exports are worth much less than the power you use at home. With one-to-one retail net metering, every kWh you export cancels a kWh you later import at the same retail price. Alabama Power does not do that. Instead, the power you send back is credited at an avoided-cost rate, which runs roughly 3 to 4 cents per kWh and varies by season and time of day, well below the roughly 16.77 cents you pay for power you draw from the grid (EnergySage). The practical takeaway is simple: solar you use the moment you make it is worth full retail to you, while surplus you push to the grid is worth only a few cents, so sizing your system close to your own daytime usage, and shifting usage into daylight hours, matters more here than in a net-metering state. A battery can raise your self-consumption, though it adds up-front cost, so weigh it against your usage pattern.
Going solar with Alabama Power? See what you qualify for
Alabama Power’s solar fee, the avoided-cost buyback, installer availability, and electric rates all shape the math. Enter your ZIP and we’ll match you with licensed installers who serve your area.
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How to connect solar to Alabama Power
Connecting a home system follows a set order, and the key rule is that you cannot turn the system on until Alabama Power grants permission to operate. The exact forms and fees can change, so confirm the current process with Alabama Power before you start. The general path is:
- Interconnection application. You or your installer apply to Alabama Power to interconnect the system and to be placed on the applicable rider for on-site generation, including the Rate Rider RGB back-up service that carries the capacity reservation charge.
- Review and agreement. Alabama Power reviews the application and, once approved, provides an interconnection agreement to sign and return.
- Install and inspect. The system is installed and passes your local electrical and building inspection.
- Meter set. Alabama Power installs or reconfigures the meter needed to measure what you draw and what you send back.
- Permission to operate. Alabama Power gives written permission to operate. The system may not run on the grid before this.
A licensed installer normally manages this whole process for you, including the paperwork for the rider and the buyback. For the questions to ask, see the right questions to ask a solar installer. You can also compare more utilities in our Solar by Utility guides.
What changed federally, and what it means for Alabama Power customers
The 30% federal credit is gone in 2026, so your return now rests on bill savings alone. The federal Residential Clean Energy Credit (Section 25D) ended for expenditures made after December 31, 2025, under the One Big Beautiful Bill Act, so an Alabama Power customer who buys solar with cash or a loan in 2026 cannot claim it (IRS OBBB FAQ; SEIA). Alabama does not have a state solar income-tax credit to replace it, so the return on a purchase in Alabama Power territory comes from the retail power your panels offset, minus the capacity reservation charge and the low buyback on exports. For the full timeline, see what the federal solar tax credit change means in 2026.
One federal exception exists, and it is not yours to claim. A separate commercial credit, Section 48E, is claimed by the business that owns a leased or power-purchase-agreement system, not by the homeowner, and it runs for projects placed in service through 2027, with a begin-construction safe harbor by July 4, 2026 (IRS Clean Electricity Investment Credit; SEIA tax policy). On a lease or PPA in Alabama Power territory you do not file for a federal credit yourself; the company that owns the panels does, and it typically keeps the buyback credits too, while your benefit is a lower or fixed power price with no up-front cost. The 25D homeowner credit, by contrast, ended after December 31, 2025.
How to choose a solar installer in Alabama Power territory
Rather than chasing a “best installer” list, screen any installer against objective criteria, and make sure they are honest about the fee and the buyback that shape the Alabama math:
- NABCEP certification, the industry’s professional standard for PV installers.
- Proper Alabama licensing and any required local electrical and building permits.
- A clear workmanship and equipment warranty in writing.
- Real experience with Alabama Power interconnection and the Rate Rider RGB paperwork, so the rider, the meter, and permission to operate go smoothly.
- A written production estimate and a transparent quote that is honest about the capacity reservation charge and the avoided-cost buyback, not just the gross savings. For a checklist, see the right questions to ask a solar installer.
To see how the bill credit lowers your monthly cost, read how solar lowers your electricity bill, and to weigh payback with the fee and the low buyback in mind, see the financial case for whether solar panels are worth it. MySolarFY matches you with licensed installers that serve your area so you can compare real local quotes side by side, with no obligation. For the statewide picture beyond Alabama Power, see our Alabama solar guide and what to expect on Alabama solar costs.
Frequently asked questions
What is the Alabama Power solar fee?
It is a capacity reservation charge under Rate Rider RGB, and it is about $5.41 per kW of installed solar per month for secondary residential service, applied to the nameplate size of your system (Alabama Power Rate Rider RGB). A 5 kW system pays roughly $27 a month and an 8 kW system about $43 a month, regardless of how much energy the panels make. The amount has changed over time, so confirm the current figure on the tariff before you plan around it.
Does Alabama Power offer net metering?
No. Alabama does not have retail net metering. Instead of crediting your exports at the full retail rate, Alabama Power buys your excess generation at an avoided-cost rate that runs roughly 3 to 4 cents per kWh and varies by season and time of day, well below the roughly 16.77 cents you pay for grid power (EnergySage). Because of that, solar you use on-site is worth far more than surplus you export, so sizing to your own usage matters.
How is the capacity reservation charge calculated?
It is your system’s nameplate size in kilowatts times the per-kW rate, currently about $5.41 per kW for secondary service. So a 5 kW array is about 5 times $5.41, or roughly $27.05 a month, and a 10 kW array is about $54 a month. It is a fixed monthly amount based on system size, not on the energy you produce or use, so a smaller system that matches your own usage keeps the fee lower.
What happened to the federal solar tax credit?
The 30% federal Residential Clean Energy Credit (Section 25D) ended for expenditures made after December 31, 2025, under the One Big Beautiful Bill Act. An Alabama Power customer who buys solar in 2026 with cash or a loan cannot claim it, and Alabama has no state solar income-tax credit to replace it. A separate commercial credit (Section 48E) can apply to leased and PPA systems, but the business that owns the system claims it, not the homeowner.
How do I connect solar to Alabama Power?
You or your installer file an interconnection application with Alabama Power and get placed on the applicable rider, including the Rate Rider RGB back-up service, then Alabama Power reviews and approves it, you sign an interconnection agreement, the system is installed and passes a local inspection, the meter is set, and Alabama Power grants permission to operate. You cannot turn the system on until you have that permission, and a licensed installer usually handles the paperwork for you.
Do I qualify for the buyback if I lease or sign a PPA?
On a lease or PPA the company that owns the panels typically keeps the avoided-cost buyback credits, while your benefit is a lower or fixed power price with no up-front cost. If you want the bill offset and the buyback in your own name, owning the system through cash or a loan is the path that captures them. Either way, the capacity reservation charge still applies to the interconnected system.
Reviewed by the MySolarFY team. Figures were verified against the linked Alabama Power (Rate Rider RGB tariff), Southern Environmental Law Center, EnergySage, EIA, and IRS sources as of August 2026. The capacity reservation charge, the avoided-cost buyback, rates, and tax rules all change over time, so confirm current terms with Alabama Power and the Alabama Public Service Commission before you decide. MySolarFY does not provide tax or financial advice; consult a licensed professional about your own situation. Learn more about the MySolarFY team and how we work.
MySolarFY is a free service that matches homeowners with licensed solar installers. We are not an installer, financing company, or government program. “No up-front cost” refers to qualifying lease or PPA financing, where eligible homeowners may have no out-of-pocket cost at installation. Lease and PPA terms typically run 20 to 25 years, may include an annual price escalator, and total payments may exceed the cost of a cash purchase; on a lease or PPA the buyback credits often go to the company that owns the system, not the homeowner. Homeowners do not get the federal residential credit that ended after December 31, 2025. Solar panels are not free and monthly payments apply. Eligibility, savings, incentives, and rates vary and are not guaranteed. See our full disclaimer.
