Man installing solar panels on rooftop

Kentucky Solar Incentives: Tax Credits & Rebates Guide (2022)

By Jacob L.

If you own property in Kentucky, you have probably noticed your utility bills skyrocketing in recent years. While it might feel like the cost of electricity is out of your hands, there are many ways to take back control of your energy bills. Specifically, by purchasing and installing a renewable energy system on your property, you can produce your own electricity and save thousands of dollars per year. Solar power, in particular, is one of the most popular sources of renewable energy and one that we highly recommend.

Now is an excellent time for residents of Kentucky to purchase a new solar energy system for their homes. Thanks to public and private initiatives, Kentucky residents have access to a number of tax credits, rebates, and financing options that will lower the costs associated with their purchases. Keep reading to learn all about how your purchase and installation of solar panels in the bluegrass state can be made more financially accessible.

Why Go Solar in Kentucky?

The state of Kentucky doesn’t usually come to mind when people think about solar power. But this perception of Kentucky energy production is changing rapidly. Solar energy has been on the rise across the United States for some time now, and Kentucky is beginning to catch up. By incentivizing industrial, commercial, and residential solar power projects, the government of Kentucky has helped spur the growth of the state’s solar market. With more public and private incentives on their way, it’s very likely that the Kentucky solar market will continue to grow for years to come.

Improved solar technology has also helped make this form of energy production widely accessible and effective in areas that receive less sunlight. But with nearly 189 sunny days per year, Kentucky is just below the national average of 205 days, meaning it gets more than enough sun to support solar energy. Plus, installing solar panels will reduce your reliance on fossil fuels, reduce your carbon footprint, and ultimately help mitigate the onset of climate change.

Finally, as Zillow reports, solar panels can make your home far more valuable. Across the United States, the average home experiences a 4.1% increase in its value after the addition of a solar power system. This means that, with an average home value of $188,463 in Kentucky, the average value increase from solar panels will be close to $7,727.

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Kentucky Solar Cost

Solar prices in Kentucky have been dropping for years. In fact, the cost of a new solar energy system has fallen by more than 80 percent over the last ten years. Today, the average cost of a solar panel installation in Kentucky ranges from $11,700 for a 5-kW system to $32,760 for a 14-kW system. On a cost-per-watt basis, solar panel installation in Kentucky is an average of $2.34, which is significantly lower than the national average of $2.66 per watt.

How Much Can You Save on Solar in Kentucky?

In a world with ever-rising costs, solar power is your saving grace. When you purchase a solar energy system in Kentucky, you can save lots of money on your electricity bills. By producing electricity for your home, solar panels can reduce the amount of energy that you pull from the grid, thus lowering your bills. On average, residents of Kentucky can save $20,247 in electricity bills over the lifetime of their solar energy system. This number is based on the assumption that solar panels purchased in Kentucky will have a payback period of 13 years—you will save enough money from your solar system over 13 years to make up the initial installation cost.

By purchasing solar panels now, you can enjoy savings for decades to come because of their durability. You will likely make use of lower electricity rates for 25 years or more, which will help you avoid future utility price hikes.

The Best Solar Incentives, Tax Credits, & Rebates in Kentucky

There are many public and private incentives in Kentucky that help you save on your purchase of solar panels in Kentucky:

Incentive Summary End Date
Federal Solar Tax Credit (ITC) Kentucky residents can take advantage of the Federal Solar Tax Credit and get a discount of 26% applied to their tax return. In Kentucky, residents benefit from an average ITC of $6,692. December 31st, 2022
Solar Sales Tax Exemption The state of Kentucky does not offer a sales tax exemption for the purchase of renewable energy systems like solar. None
Solar Property Tax Exemption Residents of Kentucky do not benefit from a solar property tax exemption, which means they pay additional property taxes on the increased home value that arises from the purchase of a solar energy system. None
Net Metering Net metering allows homeowners that create excess energy to use it as a credit on their next electric bill. All energy providers are required to offer this option to homeowners. None
Cumberland Valley Electric Customers can access rebates ranging from $50 to $1,370 for energy-efficient home upgrades. None
Taylor Country RCC This company will provide varying rebates for a number of residential energy-efficiency measures and new construction incentives. None
Property Assessed Clean Energy (PACE) Program The government of Kentucky offers access to financing for energy-efficient power systems and upgrades through the PACE financing program. This program allows property owners to finance their purchase of solar energy systems and to pay back the money owed through a voluntary property tax assessment. While it may not lower the cost of going solar, it can be a great means of financing for homeowners that can’t take out traditional loans. None
USDA REAP GRANT REAP assists agricultural producers and rural small businesses reduce their energy costs and consumption by providing loan financing and grant funding to purchase and install renewable energy systems. Eligible participants in the REAP program are agricultural producers, with at least 50 percent of their gross income coming from agricultural operations and small businesses in eligible rural areas. None
City of Louisville Go Green Loan Program Small businesses and agribusinesses in Louisville can access below-market-rate financing to increase energy efficiency and create green jobs. Small businesses in Louisville can get a loan of up to $50,000, and agribusinesses can get up to $100,000. None

 Federal Solar Investment Tax Credit (ITC)

The Federal Solar Investment Tax Credit (ITC) is a 26% federal tax credit that allows people who purchase home solar systems to deduct from their personal income taxes. In Kentucky, residents enjoy an average ITC of $6,692. The ITC applies to all systems purchased before December 31, 2022.

Kentucky Solar Sales Tax Exemption

Unfortunately, Kentucky doesn’t have a sales tax exemption for the purchase of renewable energy systems.

Kentucky Solar Property Tax Exemption

Unlike other states, Kentucky does not have a solar property tax exemption. This means that you will pay property taxes on the increased value of your home that comes from installing solar panels. While the downside is that you’ll pay more property taxes, your home will also be more valuable as a result of your new solar energy system.

Kentucky Net Metering

Kentucky requires utility and electric cooperatives (excluding the Tennessee Valley Authority) to offer net metering to customers with 30-kW solar energy systems. This policy means that your solar panels will be connected to the public-utility power grid, and surplus power created by your panels will be transferred to the grid. You can offset the cost of power drawn from the electricity grid as a result of net metering. The minimum amount of compensation that you’ll receive is the avoided-cost rate, which is below the retail rate. While the policy specifics of net metering programs will vary among providers, this remains massively beneficial for solar owners.

Cumberland Valley Electric

This company offers rebates to customers ranging from $50 to $1,370 for energy-efficient home upgrades.

Taylor Country RCC

This company will provide varying rebates for a number of residential energy-efficiency measures and new construction incentives.

Property Assessed Clean Energy (PACE) Program

The state of Kentucky offers access to financing for energy-efficient power systems and upgrades through the PACE financing program. This program allows property owners to finance their purchase of solar energy systems and to pay back the money owed through a voluntary property tax assessment. While it may not lower the cost of going solar, it can be a great means of financing for homeowners that can’t take out traditional loans.

Commercial Kentucky Solar Incentives

Solar Incentives for Nonprofits and Businesses in Kentucky

The City of Louisville Go Green Loan Program offers below-market-rate financing to small businesses and agribusinesses aimed at increasing energy efficiency and creating green jobs. Small businesses in Louisville can get a loan of up to $50,000, and agribusinesses can get up to $100,000.

USDA REAP Grant

The United States Department of Agriculture (USDA) has created a program designed to increase investments in clean energy called the Rural Energy for America Program (REAP). REAP assists agricultural producers and rural small businesses reduce their energy costs and consumption by providing loan financing and grant funding to purchase and install renewable energy systems. Eligible participants in the REAP program are agricultural producers, with at least 50 percent of their gross income coming from agricultural operations and small businesses in eligible rural areas.

Key Takeaways: The Best Kentucky Solar Incentives

Now is the time to invest in solar energy in the great bluegrass state. It doesn’t matter if you’re a residential, commercial, or industrial property owner, solar panels can provide you with life-changing savings. Plus, with a large number of public and private financial incentives available to potential buyers, you can save lots of money on your initial system purchase.

No one knows how much your utility bills may increase in the coming years. But if you want to stay ahead of any shocks to your wallet, buy a solar energy system and begin producing your own electricity. If you are interested in purchasing, there are many great companies that will help get you set up.

Kentucky Solar FAQ

Is solar worth it in Kentucky?

Yes, we highly recommend solar energy in Kentucky. Solar power will save you lots of money on your utility bills and help reduce your production of emissions and your carbon footprint. While Kentucky does not have a renewable energy portfolio standard, a variety of federal, state, and local financial incentives are available to make the purchase of solar panels accessible to anyone!

How much will my electricity bill go down with solar in Kentucky?

On average, residents of Kentucky can save $20,247 in electricity bills over the lifetime of their solar energy system. This number is based on the assumption that solar panels purchased in Kentucky will have a payback period of 13 years—you will save enough money from your solar system over 13 years to make up the initial installation cost.

How much does it cost for solar panels in Kentucky?

The average cost of a solar panel installation in Kentucky ranges from $11,700 for a 5-kW system to $32,760 for a 14-kW system. On a cost-per-watt basis, solar panel installation in Kentucky is an average of $2.34. This cost has fallen by more than 80% over the last ten years and is significantly lower than the national average of $2.66 per watt.

Can you get solar panels for free in Kentucky?

While you probably can’t get solar panels for free in Kentucky, there are a number of federal, state, and local financial incentives that can significantly minimize the costs associated with purchasing a new solar energy system.

What solar rebates are available in Kentucky?

There are many federal, state, and local financial incentives for purchasers of solar energy systems in Kentucky. These include the Federal Solar Investment Tax Credit (ITC) and a variety of public and private rebate programs.

How many homes in Kentucky have solar panels?

There is enough solar installed in Kentucky to power 6,241 homes, and solar accounts for 0.2% of the state’s electricity production.

Do solar panels increase property taxes in Kentucky?

Yes, unfortunately, your property taxes will likely go up. Kentucky does not have a solar property tax exemption, which means that you will pay property taxes on the increased value of your home that comes from installing solar panels. While the downside is that you’ll pay more property taxes, your home will also be more valuable as a result of your new solar energy system.

How much can you write off for solar panels on taxes in Kentucky?

Kentucky taxpayers can write off lots of costs associated with the purchase of new solar energy systems. Check out this database of incentive programs for more information.

House Method’s Solar Companies Rating Methodology

At House Method, transparency and trust are our most important values for the reader. That’s why we took the time to create an objective rating system and score each solar energy company/service according to our methodology.

Our research team dug deep into the fine print of contracts, combed through more than one hundred customer reviews, and thoroughly investigated all of each solar energy company’s services, costs, and products. We’ve done the homework for you by researching nearly all of the solar energy companies on the market so you can have the information you need to make the best choice for your home.

We developed a formula to objectively determine the best solar energy companies and give each a score out of 100 based on the following criteria:

  • Plan Options (30): Do they provide a variety of plan options? We looked at the number of plans each solar energy company offered and the flexibility of adjusting the plan.
  • Services offered (20): How many services are offered in each plan? We looked at whether the company manufactures its own solar panels, whether it contracts out installation, and what additional products each company offers.
  • Trust (10): What do customers say after their solar panels are installed? Does this company offer a guarantee? We considered how satisfied customers are post-service if the company does what it says it will, BBB accreditation, and service guarantees.
  • Prices (10): How reasonable are the costs of the plan or service in comparison to the industry average? We compared the costs of each company to competitors that offer the same solar energy services.
  • Unique perks (10): Does the company offer discounts or special services such as financial incentives, rebates, or a useful mobile app? We looked for extras each company offers that set them apart from the competition.
  • Customer Service (10): How is the customer experience when contacting the company? We considered the speed of response, weekend/holiday availability, and ease of communication through phone calls, email, and online chat functions.
  • Nationwide availability (10): How many states does the company offer its services? Companies that operate nationally and in all zip codes are favored over those with limited availability.

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