Tennessee solar rebates and incentives: 2024 guide

Want to power your home with clean, renewable energy? Tennessee has plenty of sunshine, plus a handful of rebates and incentives that can help you save thousands on the cost of installation, and on your energy bills for years to come.

The single biggest solar incentive in Tennessee is actually a federal tax credit.

Residential Clean Energy Credit

The Residential Clean Energy Credit, formerly known as the federal investment tax credit (ITC), can reduce your solar panel system's cost by 30%. Your entire system qualifies for this incentive, including equipment, labor, permitting, and sales tax. 

When you file your federal income taxes, you can claim this incentive as a credit towards your federal tax bill. Just keep in mind that to qualify for the ITC, you need to purchase your system either with cash or a solar loan – if you lease your system, you won't be eligible. 

You also need a high enough tax bill, though you can roll over any remaining credit year-to-year until the end of 2034 when the ITC expires. The only time you might be eligible for a direct payment for the ITC is if you're a tax-exempt entity, like a nonprofit organization. 

Low-interest loans

Several utility companies in Tennessee offer incentives and loans with favorable rates. 

For example, if you’re a customer of Bristol Tennessee Essential Services (BTES) in East Tennessee, you can receive up to a $15,000 loan with a 10-year term for items such as heat pumps or updated doors and windows. 

Or if you’re a customer of the Appalachian Electric Cooperative, you have the option to apply for a 10-year loan at a 5% interest rate for the same types of energy efficient home upgrades. 

Try searching your utility company’s name and “energy efficient loans” or “solar loans” to see what’s available in your area. 

Some homeowners are also eligible to apply for property assessed clean energy (PACE) financing through private lenders.

Tennessee’s solar property tax exemption is called the Green Energy Property Tax Assessment. It gives you a tax break by allowing you to pay property taxes on just 12.5% of the value added to your property by solar. So even though your property value has gone up, your taxes will only go up very slightly.

Although Tennessee has a solar sales tax exemption for businesses, homeowners can’t claim it. 

Nearly all of the utility companies in Tennessee are tied to the Tennessee Valley Authority (TVA), and unfortunately none of them have a net metering policy. This means that you won’t get much financial credit for sending extra solar power back to the grid. 

TVA utilities do offer the Dispersed Power Production Program to some customers, but the terms of the program are not very favorable—typically just a few cents per kWh sent to the grid, which is a fraction of the retail rate you pay for buying that power back at a different time of day.

However, if you install a solar battery alongside your solar panels, it’s easier to get credit for your solar power production—more on that below.

Tennessee doesn't offer any state-specific battery incentives. However, all batteries above 3 kWh in size are eligible for the 30% federal tax credit. 

Since utility companies in Tennessee generally do not offer net metering, a solar battery is one of the best ways to get your money’s worth from a rooftop solar system. 

Instead of letting the utility company take your excess solar energy at a steep discount through the Dispersed Powder Production Program, you can use your battery to hoard that energy when the sun is shining, then use it as needed at another time of day. And of course, it also works as a backup power source for your home during blackouts.