Solar incentives and rebates in Alabama: what homeowners can actually get in 2026

Solar incentives in Alabama are among the thinnest in the country. As of November 2026 there is no state rebate, no state solar tax credit and no statewide net metering, and Alabama Power charges home solar owners a monthly capacity fee. What remains is the chance to sell surplus power at utility buyback rates, plus a few local utility options in the Tennessee Valley.

• No state money: we found no Alabama rebate, grant or income tax credit for home solar, and the state has no renewable portfolio standard.
• Federal credit gone: the IRS says the 25D residential clean energy credit is not allowed for expenditures made after December 31, 2025, and a solar expenditure counts as made when installation is complete.
• Alabama Power fee: Rate Rider RGB includes a capacity reservation charge of $5.41 per kW of installed capacity each month for typical home service.
• Buyback, not net metering: Alabama Power buys surplus from systems up to 100 kW under Rate PAE at set per-kWh prices that are lower than what you pay for power.
• North Alabama is different: Huntsville Utilities introduced a Solar Connect program in spring 2026 that credits surplus at TVA's wholesale rate.

What solar incentives does Alabama offer in 2026?

Very few. The DSIRE incentive database lists no state-run residential solar incentives for Alabama. It notes that the state does not have net metering policies or a renewable portfolio standard. A portfolio standard is the kind of rule that, in other states, often pays for rebates or renewable credit programs. Alabama never adopted one.

DSIRE does list one utility option: buying renewable energy certificates from Alabama Power. That supports clean energy, but it does not pay you to put panels on your roof. If someone selling solar in Alabama tells you about a "state solar program," ask for the program name and the agency running it, and check it yourself.

That leaves three things that actually shape a solar purchase in Alabama today:

1. The rules of your electric utility, especially whether it charges a fee on solar and what it pays for surplus power.
2. How much of your own solar output you can use in the house as it is produced.
3. The installed price you negotiate, since no rebate will bring it down.

The federal solar tax credit has ended for new home systems

Until 2025, many Alabama buyers relied on the federal residential clean energy credit (Section 25D) to cover a large share of the cost. That has changed. In its FAQs on the 2025 tax law, the IRS says the credit "will not be allowed for any expenditures made after December 31, 2025." It also explains that an expenditure is treated as made when the original installation is completed. So paying a deposit in 2025 does not help if the system was finished in 2026.

For a home system bought and installed in 2026, plan your budget with no federal credit at all. Our guide on solar savings without the federal tax credit walks through how that changes the math.

Alabama Power's solar fee and buyback rate

Alabama Power serves roughly two-thirds of the state, so its rules matter most. The company does not sell or install home solar, but every customer who connects a system must follow its process. You submit an interconnection application through its online PowerClerk portal and get approval before you buy or install panels.

The capacity reservation charge

All customers who run their own generation connected to the grid fall under Rate Rider RGB (Supplementary, Back-Up, or Maintenance Power). The current rider, effective with April 2022 billings, lists a capacity reservation charge of $5.41 per kW for secondary service. Most homes take secondary service. Birmingham public radio station WBHM reported that one plaintiff with a 6 kW system pays about $32 a month, and that the charge on a 7.2 kW array comes to about $38.95 a month. The charge is based on system size, not on how much power you use or export.

Solar groups challenged the fee for years. In late March 2026, a federal judge in the Middle District of Alabama granted a motion by Alabama Power and the Alabama Public Service Commission to dismiss the lawsuit, WBHM reported on March 31, 2026. The Southern Environmental Law Center, which represented the plaintiffs, said it was examining the decision and its clients' options. For now, plan as if the charge will stay.

Selling surplus under Rate PAE

Systems of 100 kW or less can sell surplus energy to Alabama Power under Rate PAE (Purchase of Alternate Energy). Larger systems use Rate CPE. The Rate PAE sheet posted on Alabama Power's website (a revision effective April 2023 billings) pays fixed amounts per kWh that change by season and time of day, plus a small monthly base charge of $0.97 for single-phase service. A few examples from that sheet:

Rate PAE option	Season	Weekday peak payment	All other hours
Time of Day	June to September	7.44¢/kWh (10 a.m. to 9 p.m.)	5.23¢/kWh
Time of Day	October to May	4.86¢/kWh (7 a.m. to 9 p.m.)	4.41¢/kWh
Residential Demand (FD-D)	April to October	6.73¢/kWh (1 to 5 p.m.)	5.29¢/kWh

These payments are well below the retail price you pay per kWh. Alabama Power says the rates are reviewed by the Public Service Commission, so check the current sheet before you sign anything. The practical effect is simple: in Alabama, a kWh you use at home is worth much more than a kWh you send to the grid.

Clean Energy Select

If you want to support solar without panels, Alabama Power's solar page points to Clean Energy Select, which lets you buy renewable energy certificates (RECs). It supports renewable energy; it is not a way to cut your bill.

Solar incentives in North Alabama TVA territory

Much of North Alabama gets power from local utilities that buy wholesale power from the Tennessee Valley Authority (TVA). These utilities do not follow Alabama Power's rate riders. Huntsville Utilities, for example, says plainly on its solar FAQ page that it "does not do net metering or net billing."

In spring 2026, Huntsville Utilities introduced Solar Connect for residential and small commercial customers, according to an April 30, 2026 report by local news site 256 Today. Key points from that report:

• Systems up to 50 kW can take part, with the final size set by the local inspection agency.
• Credits for surplus power are based on TVA's wholesale rate, reported at $0.064270 per kWh.
• The program has a participation cap, so space is limited.
• It is open to new solar owners and to existing owners whose systems are aging out of older TVA-run programs.

Huntsville Utilities also requires a NABCEP-certified installer, local permits and inspection, and its own testing before you connect. Its solar FAQ says systems over 10 kW and up to 50 kW need liability insurance of at least $1,000,000. If you are served by a different TVA power company or an electric cooperative, ask it directly about its rules, since they vary.

How Alabama solar incentives compare at a glance

Program or rule	Who it applies to	What it does	Status (Nov 2026)
Federal 25D credit	All U.S. homeowners	Was a federal income tax credit	Not allowed for expenditures after Dec 31, 2025
State rebate or tax credit	Alabama homeowners	None found	Not offered
Rate Rider RGB	Alabama Power customers with solar	$5.41/kW per month capacity charge	In effect; court challenge dismissed March 2026
Rate PAE	Alabama Power, systems up to 100 kW	Buys surplus at set per-kWh prices	Open
Solar Connect	Huntsville Utilities customers	Credits surplus at TVA wholesale rate	Introduced spring 2026; capped

How to judge payback for solar in Alabama without incentives

With no rebate, no tax credit and a monthly fee, payback in Alabama depends heavily on how you use your power. Start with these steps:

1. Get 12 months of bills. Look at your usage by month. Summer cooling loads are usually the best match for solar output.
2. Size for self-use. Because surplus sells for a few cents and the RGB charge grows with every kW you add, a smaller system that you use almost entirely at home can pencil out better than a large one.
3. Add the fee to the quote. Multiply your system size in kW by $5.41 and by 12 to get the yearly charge on Alabama Power. Make sure any savings estimate subtracts it.
4. Check the rate outlook. In early December 2025 the Public Service Commission approved a freeze that holds Alabama Power's rates at 2025 levels through 2027, WBHM reported. A freeze means fewer surprises, but also no rising rates to speed up your payback in those years.
5. Compare more than one quote. Line the offers up side by side and compare cost per watt, equipment and warranty terms. Ask each installer to show the yearly RGB charge as its own line.

Our Alabama solar panel page shows typical solar production for the state, and the Alabama electricity rates page shows how local prices compare with the national average of 18.16¢ per kWh.

How to apply and what paperwork to keep

Because there is no state rebate to claim, the paperwork in Alabama is mostly with your utility:

• Alabama Power: apply through PowerClerk, wait for approval, then install. Ask to be placed on Rate PAE if you want to be paid for surplus.
• Huntsville Utilities: submit the interconnection agreement (there is no fee to submit it) and apply for Solar Connect early, given the cap.
• Other TVA utilities and co-ops: ask for the interconnection agreement, any buyback rate and any monthly fees in writing.
• Keep records: save your contract, final invoice, permit sign-off and utility approval. You will need them if you sell the house or if an installer later goes out of business. If that happens, see our solar orphans guide.

Next steps

Read our companion guide to net metering in Alabama to see exactly how surplus credits and the capacity charge show up on your bill. Then gather your bills and test a real quote with the solar quote checker before you commit.