State solar guide
Tennessee solar economics in 2026 depend entirely on your utility rate, available state incentives, and net-metering rules. The federal residential credit expired December 31, 2025. We present the honest picture for your location.
Sources: ElectricChoice June 2026 via Electric Choice electricity-prices-by-state | Research dossier south-central.md June 2026 (lowest peak sun hours in this 10-state group) | EnergySage May 2026 (typical 13.64 kW system at $48,947 pre-incentive, averaging $3.59/W) | Federal residential credit: Section 25D expired December 31, 2025, H.R.1 (One Big Beautiful Bill Act).
Net metering
Tennessee has no statewide net metering law. Nearly all Tennessee residents receive power from local power companies that distribute TVA-generated electricity. For new solar homeowners, the TVA Dispersed Power Production (DPP) program is the current pathway. TVA pays avoided cost for excess generation, typically approximately 2 cents per kWh. In many cases a monthly DPP program fee can offset or exceed the small credit earned by a residential system, effectively reducing the net value of exported electricity to zero or negative. The TVA Green Power Providers (GPP) program, which offered enhanced rates under 20-year contracts, was closed to new applicants at the end of 2019. Existing GPP participants retain their contracts. The practical result is that Tennessee solar must be designed entirely for self-consumption.
TVA (Tennessee Valley Authority) sets export credit rates for the Dispersed Power Production program. Local power companies (Nashville Electric Service, Memphis Light Gas and Water, Knoxville Utilities Board, and approximately 150 others) distribute TVA power and administer the customer interface. Memphis Light Gas and Water is a direct municipal utility not under TVA for all purposes; verify its specific solar program. The DPP program fee structure means the actual value of exported electricity may be negligible or negative for small residential systems.
Program: NM3_variable_or_none. Last verified: June 1, 2026. DSIRE source (opens in new tab).
Verify with your utility
Net-metering rules change by utility and program cycle. Confirm current export credit rates and eligibility with your specific Tennessee utility before contracting. Current program details at DSIRE (opens in new tab).
State incentive stack
The federal residential credit expired December 31, 2025. The programs below are what remains for Tennessee homeowners. Amounts and availability change; every program is date-stamped and linked to its DSIRE source.
Federal residential solar credit (Section 25D): expired. The Section 25D residential investment tax credit expired December 31, 2025. The residential credit rate is 0%. State and local incentives below may still significantly reduce your net system cost. Commercial systems still qualify for Section 48E (30%).
| Program | Benefit | Eligibility | Status | Source |
|---|---|---|---|---|
| Tennessee Green Energy Property Tax Assessment Reduction property_tax_partial_reduction | 87.5% reduction in assessed value on solar-added home value Solar-added home value is assessed at only 12.5% of its actual appraised value (an 87.5% assessment reduction). This is not a full exemption but provides partial property tax relief on the solar-added value. | Residential solar installations in Tennessee | Active | DSIRE (opens in new tab) |
| Business Solar Sales Tax Exemption (commercial only) sales_tax_exemption | Standard Tennessee sales tax rate on equipment Tennessee businesses can claim a sales tax exemption on solar equipment. Residential homeowners cannot claim this exemption. | Tennessee businesses only. Not available to residential homeowners. | Pending | DSIRE (opens in new tab) |
Data last verified June 1, 2026. Incentive programs change; verify current amounts and availability at dsireusa.org (opens in new tab) before committing to a project.
Battery storage incentives in Tennessee
Tennessee has no statewide battery storage incentive or rebate program as of June 2026. No SGIP-equivalent or battery-specific state credit exists. TVA and local power companies do not offer battery storage rebates for residential customers. Given the near-zero value of exported electricity under the TVA DPP program, battery storage for self-consumption can modestly improve economics but must be funded without any state or utility support.
Savings example
This example uses real Tennessee market data. No federal residential credit is applied. Figures are illustrative; your in-home assessment uses your actual utility bills and the current rate schedule for your specific utility.
System size 13.6 kW at $3.59 per watt (EnergySage May 2026). Annual production estimated at 17,000 to 21,000 kWh based on Nashville area peak sun hours of 4.5 to 4.9. Assumes 85% self-consumption at 12.82 cents per kWh retail (grid export essentially zero value after DPP fee). Federal residential credit: $0 (expired). Figures are illustrative; your in-home assessment will use your actual utility bills and current TVA DPP fee and rate schedule.
Tennessee TVA / Nashville Electric Service customer (illustrative)
Illustrative example. Federal residential credit: $0 (Section 25D expired December 31, 2025). Your estimate will use your actual utility bills and current rate schedule.
Permitting
Tennessee does not have a statewide residential solar permit fee cap. Permit requirements and fees vary by local Authority Having Jurisdiction (AHJ). Nashville, Knoxville, Chattanooga, and Memphis have established permit processes with typical review timelines of 2 to 4 weeks. TVA Dispersed Power Production program enrollment adds time beyond the local permit. The DPP program fee structure should be fully understood before finalizing project economics. Contract to energization typically runs 10 to 16 weeks.
Enrollment in the TVA Dispersed Power Production program is required after local permit issuance. The monthly DPP program fee applies once enrolled. Confirm the current DPP monthly fee and export credit rate with TVA or your local power company before finalizing your project budget, as these parameters directly affect payback calculations.
Commercial solar in Tennessee
The commercial solar credit (Section 48E, 30 percent) remains available for qualifying commercial projects. Construction must begin by July 4, 2026 to qualify for the full placed-in-service window. Combined with MACRS accelerated depreciation and 100 percent first-year bonus depreciation, the combined first-year federal benefit can reach 45 to 55 percent of project cost for many Tennessee business owners. Direct Pay is also available for nonprofits, municipalities, and other tax-exempt entities.
Commercial solar overviewCommercial solar projects must begin construction by July 4, 2026 to qualify for the 30 percent Section 48E federal tax credit. After that date, the system must be placed in service by December 31, 2027.
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Frequently asked
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