Kentucky Solar Rebates, Tax Credits, and Incentives
Stabled stallions, ready to run
2012 Update
State legislators here have kept a pretty low profile on renewable policy, though in the little time they have spent focused on renewables, solar power seems to be at the forefront of legislators’ minds. In the last few years legislators have passed solid net metering law and a small personal tax credit (highest for solar power). That’s a decent start to strong solar policy, but it’s not nearly enough. First and foremost, we need a strong statewide RPS in place to ensure that utility companies do their part (mostly by providing free cash to you in the way of rebates and performance incentives) to help push smart renewables like residential solar power to the forefront of energy production.
Kentucky’s (Lack of A) Renewable Portfolio Standard
A Renewables Portfolio Standard (“RPS”) is a law or other piece of regulation that mandates that a certain percentage of at state’s energy production comes from renewable resources by specified target dates. A strong RPS is important because it forces utility companies to promote conversion to renewable energy. That generally means free money for you in the form of solar power rebates and performance payments when you switch to solar power.
Unfortunately Kentucky lacks any state or local Renewables Portfolio Standards. As we’ve seen in other states that lack an RPS, failing to set a minimum bar for renewable energy production allows utility companies to keep on coasting, turning huge amounts of fossil fuel burning into even bigger profits. Kentucky lawmakers are missing easy opportunity to make the Bluegrass State one of the regional leaders in solar policy, simply by passing a strong RPS for the utilities to comply with.
Solar Performance Payments in Kentucky
Kentucky’s only solar performance incentive comes through the Tennessee Valley Authority (“TVA”). TVA sells power to tens of thousands of Kentuckians, usually through municipal utility distributors. Distributors of TVA power serve all or a portion of the following counties in south central and western Kentucky: Adair, Allen, Barren, Butler, Caldwell, Calloway, Carlisle, Christian, Clinton, Cumberland, Edmonson, Fulton, Graves, Grayson, Hickman, Livingston, Logan, Lyon, Marshall, Metcalfe, Monroe, Muhlenberg, Ohio, Simpson, Todd, Trigg, Warren and Whitley.
If you’re lucky enough to be TVA customers, your new solar power system is eligible for TVA’s Generation Partners Program. TVA offers a ten-year contract to purchase 100% of the energy produced by your solar power system for a premium of $0.12 on top of the retail electricity rate.
Kentucky Solar Power Rebates
Participants in TVA’s Generation Partners program are also eligible to receive a $1,000 solar panel rebate to offset initial costs of your solar power system. Unfortunately the TVA program is the only solar rebate available in Kentucky.
Kentucky Solar State Tax Credits
While there are no solar power rebates besides the TVA program, everyone here can get a bit of extra cash to help pay for your new solar power system when April rolls around. The state offers a personal tax credit of $3/watt (DC), up to a maximum of $500. If your state tax bill is already low, any excess credit can be carried over to succeeding years.
Kentucky Solar State Tax Exemptions
Unfortunately the state legislatures generosity has not yet extended to the rest of the tax code. In many states we’ve seen both sales and property tax exemptions for new residential solar power systems. No such exemptions exist here. Lawmakers in Frankfort can improve solar policy here significantly with a couple of laws; tax exemptions can save you thousands without ever actually draining the state’s coffers.
Utility Prices in Kentucky
Kentucky pays an average of 9.41 cents per kilowatt-hour of electricity. That’s the cheapest electricity in the region. In fact it’s one of the lowest rates in the country, and well below the national average of 11.43 cents/kwh.
The important part is to remember why most electricity is currently produced by burning fossil fuels. All that earth-killing oil and coal may still be cheap, but the long-term costs associated with fossil fuels will far outweigh those monthly bill savings. When all those long-term costs really start to kick in, monthly electricity bills are going to inevitably rise as well. When that happens, you’ll be patting yourself on the back for having already switched over to clean efficient solar energy.
Kentucky Net Metering and Interconnection
Net Metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume, and make sure you get credit for any surplus. A strong net metering law ensure that you will be able to take advantage of all potential savings and profits from your solar power system and is an integral part of sensible state solar policy.
Legislators have seen that wisdom as well; net metering is likely the best individual law in the state with regard to solar power. Net metering must be offered by all utilities in the state except TVA distributors (whose customers can take advantage of the Generation Partners program described above). All surplus electricity generation will be credited to your next month’s bill at your utility’s full retail rate. Unused credits may be carried over indefinitely.
That’s a good solid net metering law. The only improvements we’d like to see are the removal of the current 30 kw system size limit, to allow larger commercial and industrial customers to meet all on-site electricity generation needs. More important to you and your residential solar power system, we would also approve of an amendment requiring the utility to write you a check for any cumulative surplus, at least once a year.
5kW Example Return on Investment in Kentucky
Installing a typical 5kW solar system should start at about $25,000 in Kentucky. Don’t worry – even without state incentives, you can still knock a big chunk off the price.
- First let’s slice off that $500 you get back from the state on tax day, and drop your price down to $24,500
- You’ll also claim the much larger (30% of project costs) federal solar tax credit on tax day. Since the feds calculate their incentive based on actual out of pocket costs, no state solar power rebate means a bigger federal tax credit. Subtract $7,500 (30% of $25,000) for a new price of $17,000.
- After the solar tax credits we subtract your first year’s energy savings, which we estimate to be about $550. That brings your cost after the first year to $16,450.
- With a conservative estimate for the future rise of electricity prices, you can expect your new solar power system to pay for itself in about 19 years. Even with that somewhat slower payback time frame, you can still expect to get about 6 years of profits (yes, profits) out of your solar power system. We estimate those profits to be nearly $9,500 through 2036.
- In addition to those direct wallet-fattening savings, you also increased your home value by more than $11,000
- In addition to all that cash (and home value), you’ve created some green for the earth as well by not using all that fossil-fuel backed electricity. In fact, the fossil-fuel energy you’re not using is the carbon-saving equivalent of planting 103 trees a year, every year your solar power system is humming.
These numbers are estimates. Your home is unique and how much power you generate and how much money you save depends on that uniqueness. The best way to find out how much cash switching to solar can save you is to get one of our free quotes, and an expert installer in your area can draw up a home-specific estimate for you. Your quote is 100% free (yes, that’s right, 100% free) and you can get as many of them as that smart shopper in you desires!
Kentucky Solar Consensus
Unfortunately, the Kentucky legislature is currently squandering the state’s considerable solar power potential. Without any solar incentives in place (aside from the TVA Generation Partners Program) cost after year 1 remain higher than most other states, and the payback time frame here is a far (far) too slow 19 years. With strong net metering already in place and TVA already offering performance payments to tens of thousands of Kentuckians, a few strong laws from the Frankfort can go a long way. For now, we can’t give Kentucky anything stronger than a “D” grade in our solar ratings.
Are there any restrictions on who can and cannot have solar panels on their houses in terms of ordinances and such? I heard you can’t have them in certain counties, neighborhoods and cities. Is this true?
Scott,
Municipalities have their own rules when it comes to building codes. There are some neighborhoods that will not allow historic buildings to change much at all. Some owners in those areas have gone so far as to install solar flat on top of fireplace chimneys so you wouldn’t be able to detect them from the street!
Are there any grants for University\colleges that want to do solar?
John,
State grants for renewable energy are out there. I haven’t seen any in Kentucky for installation purposes. Instead, money has been for solar research and communication.
Check this out for more details.
How do we get the ball rolling in the right direction to increase residential solar tax credits?
Bob,
Last week the US House and Senate passed a law to remove the $2,000 cap from tax credits. This is huge. Further steps need to be taken though to enhance Kentucky’s standing relative to other more progressive states in the country. The best bet would be to contact your Kentucky state representative here and let them know you want better incentives.
Are there any start up grants for solar programs in residential homes in the Kentucky are
Sorry Peggy not sure… looks like Google time!
Hi, Dan I am ready to install a solar system at my home,do you Know the best place to buy a system? and Who do I contact about the hook up to the grid also about the incentives? I want to install the system right the first time!
Thanks!
I am doing a project on solar panels systems in Kentucky- in it I am proposing a way to make the solar tax incentive in KY easier to get and less loops to jump through- what do you suggest are the immediate things we could do, if such legislation were enacted?
When will cooperatives under TVA authority be required to offer net metering?
I’ve found a company that I would like to buy from but I’m not all that knowledgeable on all of the costs. The company is Solatron Technologies. Its a company out of California, so the question is, is there company here that deals with this same company cause of shipping costs?
I can’t find any intallers or distribitors in the area. If anyone else cares to join me on a quest to start our own company selling and installing solar panels, feel free to email me and we shall see what we can do.
We are recently working on solar energy in our project citizen group. I know that Kentucky is among the lowest for solar energy use in the United States but I really think that it is a problem we need to address. I think that this article is really going to help us in our project and I would like to thank you for your time writing it to share this information.
Shelby,
Please keep us updated on your progress. It means a lot to us that our article has helped inspire your group. You can do it!
- Dan
Are there no rebates or tax incentives to help a private homeowner (and customer of Kentucky Utilites) buy photovoltaic solar panels? That the state will help pay the cost of net metering after a person has figured out how to pay for the system is faint help. An estimate for getting a photovoltaic system for my home was $65000. Where is a person supposed to come up with this without help? This is about half a house!
Two questions, How far from a house can the solar panels be located? And, have you seen any larger projects to service a new development of approx. 30 homes?
I have been in sales for 25+ years and I would like to explore the idea of selling solar panels, etc. Do you know of any companies in Louisville selling these products?
OK, I meant to say…SOLAR and I am in Louisville, KY.
i am living in europe and am moving back to the good ole USA and have been looking at the KY area. over here the government is paying up to half of the cost to install with tax credits over 10 years with a fixed rate that the electric company can charge for used power and at the same time a fixed rate that they have to pay for any eccess energy set at 20 years. the system pays for its self in 10 years and has a garentee for 25. thats incentive!!
so when i install in KY i guess i will have to foot the bill myself but do it gladly to get away from green house gases
I also want to install a PV system and get off the grid by 2012. I live in Louisville and have recently built a solar friendly home (3200 s/f)and now want to install a system. Looking for others who have used system they would recommend. Bulk pricing works for me.
Hey, Steve. Our partner, 1bog.org currently doesn’t have a bulk pricing campaign going on in Kentucky right now, but that doesn’t mean they won’t in the future, especially if Federal or State incentives improve over the next year. That could happen with a new Clean Energy bill working its way through Congress. Sign up over there, and they’ll let you know when the lay of the land improves for solar over there.
So what I understand, is that the solar power that you get, the companies take that and re-route it back to you for a price?
So you are actually paying for your own solar power?
If so, that is a real rip off.
im checking with the ky dept for energy they said all they have are rebates you pay upfront and also get a tax credit i cant afford to put solor panels in checking on grants at this time maybe Godwilling i can find something out.Good luck all will ck bk on posts im not on pc everyday bit i will be back soon .
Is solar leasing available in Kentucky? If yes, please share company names.
I’ve been watching changes in solar technology for thirty years, and always planned on installing a system. We retired a year ago, to western Kentucky, and allocated some money whaen we made the move. With TVA’s “Green Partners” incentives and the 30% tax credits from the IRS, it was time. In addition, Enphase brought to the market micro inverters that make grid tie solutions much simpler than the traditional systems, that just about anyone can purchase and install themselves. It’s tough to find all the answers, but they are out there.
I designed a 3.8KW system that we expect to offset at least half of our annual power useage. I purchased a pallet of twenty panels(cheaper that way), inverters, and rails to mount on my self-made adjustable frame, purchasing all the electrical supplies and hardware locally, and did all the installation, with the hlep of my bride, of course!).
We went on-line Dec 28 at 3:37PM and have made 144KW of power in twelve days, half that was clody and half that was bright and sunny, albeit cold! With the Enphase inverters, we also added the internet interface that allows us to see how it is performing in almost real time. So far it is awesome!. Our plan is to take all the income and add to the system a piece at a time, for the next ten years. At that time, we will have around 10KW of poer generation , enought to be self-sufficent if we so chose. Startup costs were $15,761 or $4.15/watt. Paying retail and for labor will add at least $10,000 to the cost.
You can do it too! With new advancements, prices will continue to come down, be more efficent, and there will be more dealers/installers in Kentucky. If y.ou are seriously intereted send me an e-mail to mad.merv@yahoo.com
When installing a Net Metered system, Does the utility company meter base need to be changed to a different base to accommodate the net meter? Do they change the meter type that is typical on the house so it is a model that will turn backwwards?
I have two seperate meters. One for power in and a second for power out. If your power company pays you for energy generated, you need the second meter.
We had a barn damaged by the wind the other night We are considering solar panels for the new barn roof. can you recommend a company for grants or any help? thanks susan
There is a solar panel manufacturer in Danville KY now. Alternative Energies Kentucky. We are currently manufacturing 230KW PVP panels. Just letting you know we are here. We are awaiting our final UL approval which should be here any day. We have about 22KW of panels in stock currently.
in response to Susan,you should check out solar PV laminates that are designed to be installed on metal roofs, assuming your barn has a metal roof. The prices on-line seem lower than the traditional panels. I am investigating finding a reasonable starting point to begin adding solar energy to my city home in Louisville and am very interested about how much we are allowed to do ourselves.
I bought land & home in Lewis county KY I want try solar & wind power I plan to just do it. And spend 10.000 out of our funds I know I will get 30% back the first year from taxes .
Just bought a home in Smithfield, KY and would like to use solar power, I’ve heard there are roofing manufactures making shingles with solar systems built in, anyone know about this? if so, where can they be purchased? thank you for any response
I have noticed throughout the years that there is much sun and wind in the flat country. I realy don’t understand why we dont have more solar and wind generatoen in ky.
Also our country was built on the principal of indapendence. Why dont we have more small hydro plants, especialy in the mountains?
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