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Alabama - Energy tax credit, solar rebates and incentives

Alabama Renewable and Solar Energy Incentives

Generation Partners Program – TVA (Residential/Commercial)

The Tennessee Valley Authority along with affiliated utility companies grant a power generation incentive for homeowners and commercial businesses that utilize renewable energy systems.

  • Qualifying systems: biomass, small hydropower, solar panel installation and wind power.
  • Incentive amount is dependent upon the type of system.  For solar systems, customers will receive a premium rate of $0.12/kWh on top of the standard retail rate.  All other renewable energies are offered $0.03/kWh plus retail rates (small hydropower, biomass and wind energy systems).
  • New subscribers will receive a $1,000 bonus for joining that can be put toward installation costs of a given system.
  • There is currently no maximum incentive for this program.

Reimbursement is represented in the form of credit on the participant’s monthly electric bill.  For net excess generation produced, energy distribution companies will issue payment based on their company’s pre-established rates.

Systems must be greater than 500 watts and no larger than 999 kilowatts to participate.

Alabama Energy Incentives                          

Alabama has lots of sunshine and some laws that are favorable for solar power.  

Keep in mind that the Federal Government currently offers a 30% tax credit for the whole installed cost of your system  That's a huge benefit available to you no matter where you live in the US!  The Tennessee Valley Authority offers rebates and incentives.  Talk to a local installer about the rebates and incentives available in your area.

Alabama Renewable Portfolio Standards

Alabama has no RPS (Renewable Portfolio Standards).  This is a regulation that requires utilities to increase their production of energy from renewable energy sources, such as wind, solar, biomass, and geothermal by a certain date. Utilities must meet the standards by either producing their own renewable energy or by purchasing it from customers.  They must pay high fees if the standards are not met.  Rather than paying high fees, utilities in strong RPS state offer solar incentives to homeowners.

Alabama RPS Solar Carve Out

Solar carve outs require a certain percentage of the Renewable Portfolio Standards to be met with solar energy.  Alabama has not solar carve out.

Alabama State Electric Rates

Alabama's electric rates rank 25th out of the fifty states. A state's electric rates are one of the key factors in predicting whether an investment in solar panels makes sense.  The reason for this is simple:  solar power is in direct contention with electric rates.  Low electric rates make it hard for you to achieve significant payback from your solar power investment.  Higher electric rates make an investment in solar energy much more feasible. Alabama's low electric rates make investing in solar power less attractive.

Alabama Net Metering

Alabama does not offer net metering laws.  Net metering is a system in which solar panels or other renewable energy generators are connected to a public-utility power grid and surplus power is transferred into the grid, allowing customers to offset the cost of power drawn from the utility.  When you generate electricity from your solar array for your home or business, it reduces the amount of energy you purchase from your electric utility.  it also lowers your monthly electricity bills.  If your system produces more energy than you need, the excess power is sold back to the grid.  That amount of energy is deducted from your monthly bill or credited toward a future bill.  

Alabama Interconnection Standards      

Interconnection standards are requirements for connecting solar and other electrical generation systems to the grid.  These rules apply to both electricity customers and utilities.  Alabama has no statewide interconnection standards which makes the interconnection process less complex and expensive. This can be a definite benefit when trying to bring a solar energy system online and makes it easier for a solar power system to make financial sense.

Alabama State Energy Rebates

Solar power rebates are incentives federal or state governments offer to reduce the cost of going solar.  Alabama offers state solar rebates through the Tennessee Valley Authority -- $1000 rebate upon installation to offset initial costs.  You can get a lump sum payment or your installer will take the amount off the final installed price.  Rebates require paperwork to be filed. Many times installers will handle the paperwork.  Talk with an expert solar installer to see how to qualify.  And don't forget, the Federal rebate for installed solar systems is 30%.

Alabama State Energy Tax Credits

Alabama does not offer state income tax credits.  As a credit, you take the amount directly off your tax payment, rather than as a deduction from your taxable income.  You can claim the credit for your primary residence, vacation home, and for either an existing structure or new construction.  

Alabama Solar Power Performance Payments (Performance-Based Incentives)

Alabama offers Solar Power Performance Payments, also know as production incentives through the Tennessee Valley Authority -- TVA's Green Power Providers Program. Solar Power Performance Payments provide small cash payments based on the number of kilowatt-hours (kWh) or BTUs generated by a renewable energy system.  Payments based on a system's actual performance are much more effective than payments based on a system's rated capacity.  Electricity produced is credited as Solar Renewable Energy Credits (SRECs).  SRECs are a great way to help your Solar PV system pay for itself.

Alabama Property Tax Exemptions for Energy

Alabama does not offer property tax exemptions for installed solar systems.  Property tax exemptions allow businesses and homeowners to exclude the added value of a system from the valuation of their property for taxation purposes.  A Solar PV system can increase the value of your home by a multiple of 20 times your annual electricity savings (a 5kW system increases the value of your home close to $17,000).  A property tax exemption makes it more economically feasible for a taxpayer to install a solar system on a residential or commercial property.  

Alabama Sales Tax Exemption for Energy

Alabama does not offer sales tax exemptions.  A sales tax exemption means that homeowners and businesses would not have to pay any state sales tax on their solar panel system. Combine the falling costs of solar equipment and installation, the TVA incentive and the 30% Federal tax rebate and you have good reasons to go solar in Alabama!

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