As of August 2026, Tennessee homes pay about 14.47 cents per kWh, below the US average of 18.44 cents (EIA, May 2026). Because most of Tennessee is served by TVA, which does not offer retail net metering, solar payback here is slower than in high-rate, net-metered states. Owning the system, not leasing, keeps the most value.
If you are weighing rooftop solar in Tennessee, the honest headline is this: solar still works here, but the math is different from what you read about high-cost states. Almost all of Tennessee gets its power from the Tennessee Valley Authority (TVA) through roughly 153 local power companies, and TVA does not run a traditional one-to-one retail net-metering program. Combine that with some of the lowest electricity rates in the country and your payback stretches out. This page lays out what is real, what to verify, and how to tell if your home is a good fit.
Tennessee solar at a glance
Tennessee has strong sun and low install-friendly weather, but weak state incentives and no retail net metering. Here is the shape of it before the details.
| Detail | What to know in 2026 |
|---|---|
| Residential electricity rate | About 14.47 cents per kWh, below the US average of 18.44 cents (EIA, May 2026) |
| Who supplies power | TVA through about 153 local power companies (NES, MLGW, KUB, EPB and more); a small northeastern area near Kingsport is served by AEP Appalachian Power |
| Retail net metering | Not offered. TVA has no one-to-one retail net metering; you buy home use at retail and any exported solar is bought separately at a set rate (verify current terms) |
| State solar tax credit | None. Tennessee has no residential solar income-tax credit and no SREC market |
| Property-tax treatment | A Green Energy Property Tax Assessment caps the taxable value of qualifying solar; verify how it applies to a home system (DSIRE Tennessee) |
| Federal residential credit | The 30% credit (Section 25D) ended for expenditures made after December 31, 2025 (IRS) |
According to MySolarFY’s analysis (August 2026), an 8 kW system in Nashville produces about 10,708 kWh per year and is worth roughly $1,550 at Tennessee’s 14.47 cents per kWh retail rate. That figure draws on NREL PVWatts v8 production and the EIA May 2026 residential rate, and it assumes every kWh offset home use at the retail rate.
The honest caveat: because TVA has no one-to-one net metering, only the share you use as it is produced offsets at that rate. Power you export earns TVA’s lower export rate, so your real bill savings land below that $1,550 figure. This is a MySolarFY estimate from public EIA and NREL data, not a quote. Your production and savings depend on your roof, shading, usage, and your local power company’s terms.
Why TVA changes the solar math in Tennessee
In most high-solar states, retail net metering means every kWh you send to the grid rolls back your meter at the full retail price. Tennessee does not work that way. TVA, the federal utility that powers almost the entire state through its local power companies, does not offer that one-to-one retail credit (DSIRE Tennessee). Instead you buy all the electricity your home uses at the normal retail rate, and any excess solar you export is purchased separately by TVA through your local power company at a set rate that is lower than retail. TVA has historically run distributed-generation programs for this (the older Green Power Providers program, and current dispersed-generation options), so verify the exact program and export rate available in your area with TVA and your local power company before you rely on any buy-back number (TVA Valley Renewable Energy).
Two things follow from that. First, sizing matters more here: a system tuned to what your home actually uses during daylight captures more value than an oversized array that dumps cheap exports onto the grid. Second, Tennessee’s low rates mean each offset kWh saves you less than it would in the Northeast, so payback takes longer. That is not a reason to skip solar, it is a reason to run your own numbers honestly. For a full breakdown, see Tennessee solar costs and payback. To see how bill offset works, read how solar lowers your electricity bill, and for the bigger picture see the financial case for whether solar panels are worth it. For the mechanics of export credits generally, see how net metering credits your solar exports.
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Tennessee solar incentives, and what is missing
Tennessee is a low-incentive state, so it is important to be clear about what does and does not exist. There is no state solar income-tax credit, no statewide rebate for homeowners, and no SREC market (DSIRE Tennessee). The main state-level item is a property-tax provision, and the federal homeowner credit has ended.
| Item | Status in 2026 | Source |
|---|---|---|
| State solar tax credit | Does not exist for residential solar | DSIRE |
| SREC market | None; Tennessee has no renewable portfolio standard driving one | DSIRE |
| Green Energy Property Tax Assessment | Caps the taxable value of qualifying solar equipment; verify how your county applies it to a home system | DSIRE |
| TVA export purchase | Exported solar bought at a set rate below retail, through your local power company; verify current program and rate | TVA |
| Federal residential (Section 25D) | Ended for expenditures made after December 31, 2025 | IRS |
How you pay changes what you keep
How you finance solar decides who owns the system, and ownership decides who captures the value. In a low-incentive state like Tennessee, this choice matters even more, because there are fewer credits to spread around.
| How you pay | Up-front cost | Who owns it | Who keeps the value |
|---|---|---|---|
| Cash | Full system price | You | You keep the bill savings and any export payments |
| Solar loan | Little or none, financed over time | You | You keep the savings and export payments; you owe the loan |
| Lease or PPA | $0 up front where you qualify | A third-party company | The company owns the system and its payments; you get a lower or fixed power price |
If you own the system with cash or a loan, you keep the full bill savings and any TVA export payments. If you lease or sign a PPA, the company that owns the panels keeps those, and your benefit is a lower or fixed power price with no up-front cost. Neither path gives a 2026 Tennessee homeowner the federal residential credit, because that credit ended after December 31, 2025. Lease and PPA terms typically run 20 to 25 years and may include an annual price escalator, so read the contract closely. For help comparing offers, see the right questions to ask a solar installer and the solar incentives that still apply in 2026.
What changed federally, and what it means in Tennessee
In short, no: the federal homeowner credit is gone. A Tennessee homeowner who buys solar with cash or a loan in 2026 cannot claim it. The 30% federal Residential Clean Energy Credit (Section 25D) ended for expenditures made after December 31, 2025, under the One Big Beautiful Bill Act (IRS; SEIA). Because Tennessee never had strong state incentives, this change hits the payback math here harder than in states with their own credits and SRECs. 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 PPA system, not by the homeowner. For a leased system in Tennessee you do not file for a federal credit yourself; the company that owns the panels does. The 25D homeowner credit, by contrast, ended after December 31, 2025.
How to choose a solar installer in Tennessee
Tennessee has a growing installer market. Rather than chasing a “best” list, screen any installer against objective criteria:
- NABCEP certification, the industry’s professional standard for PV installers.
- A valid Tennessee contractor license and proper electrical licensing.
- A clear workmanship and equipment warranty in writing.
- Real experience with your local power company’s interconnection and TVA’s export process.
- A written production estimate and a transparent quote you can compare side by side.
MySolarFY matches you with licensed installers that serve your area so you can compare real local quotes, with no obligation. To understand how we source rates and production, see our data sources and how we research each page, and for our model see how MySolarFY works and how we choose installers. You can also browse solar costs and incentives by state.
Frequently asked questions
Does Tennessee have net metering? Not in the traditional retail sense. Almost all of Tennessee is served by TVA through its local power companies, and TVA does not offer one-to-one retail net metering. You buy the power your home uses at the retail rate, and any excess solar you export is bought separately at a set rate that is lower than retail. Verify the current program and export rate with TVA and your local power company before you count on any buy-back number (DSIRE Tennessee).
Is solar worth it in Tennessee? It can be, but the payback is slower than in high-rate, net-metered states. Tennessee’s residential rate is about 14.47 cents per kWh, below the US average of 18.44 cents (EIA, May 2026), so each offset kWh saves less. With no state credit and no one-to-one net metering, a Tennessee system leans on direct bill savings from the power you use as you make it. Owning the system with cash or a loan captures the most value.
What solar incentives does Tennessee offer in 2026? Very few. Tennessee has no residential solar income-tax credit, no statewide rebate, and no SREC market. The main state-level item is the Green Energy Property Tax Assessment, which caps the taxable value of qualifying solar equipment, though you should verify how your county applies it to a home system. The 30% federal residential credit (Section 25D) ended for expenditures made after December 31, 2025 (DSIRE Tennessee).
How much does an average solar system produce in Tennessee? A typical 8 kW system in Nashville produces about 10,708 kWh per year, based on NREL PVWatts using average weather. Actual output depends on your roof’s pitch, direction, and shading. At Tennessee’s 14.47 cents per kWh rate that output would be worth roughly $1,550 a year if every kWh offset home use at retail, but because TVA has no one-to-one net metering your real savings depend on how much of that power you use as it is produced.
Do I get the federal tax credit if I go solar in Tennessee in 2026? No. The 30% federal Residential Clean Energy Credit (Section 25D) ended for expenditures made after December 31, 2025, so a Tennessee homeowner buying with cash or a loan in 2026 cannot claim it. A separate commercial credit (Section 48E) can apply to leased and PPA systems, but the company that owns the system claims it, not you.
By the SolarFY Editor. Reviewed August 2026. Figures were verified against the linked EIA, NREL PVWatts, DSIRE, TVA, IRS, and SEIA sources. Rates, export terms, and incentives change, so confirm current terms with each source and your local power company before you decide. MySolarFY does not provide tax or financial advice; consult a licensed professional about your own situation. See our data sources and how we research each page.
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 export payments and any incentives 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, export rates, and electricity rates vary and are not guaranteed. See our full disclaimer.
