Home > Solar > Kentucky Solar Incentives: Tax Credits & Rebates Guide (2023)

Kentucky Solar Incentives: Tax Credits & Rebates Guide (2023)

Updated Jan 10, 2023

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Updated Jan 10, 2023

Home > Solar > Kentucky Solar Incentives: Tax Credits & Rebates Guide (2023)

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If you own property in Kentucky, you have probably noticed your utility bills skyrocketing in recent years. While the cost of electricity might be out of your hands, there are many ways to take back control of your energy bills. Specifically, purchasing and installing a renewable energy system on your property can produce electricity and save thousands of dollars annually. 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 several tax credits, rebates, and financing options that will lower the costs associated with their purchases. Keep reading to learn 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 rising 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, the Kentucky solar market will likely continue to grow for years to come.

Improved solar technology has also helped make this energy production widely accessible and effective in areas with 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 value after adding a solar power system. With an average home value of $188,463 in Kentucky, the average value increase from solar panels will be close to $7,727.

Are you sold on solar for your home? Get a free quote from local solar installers.


Kentucky Solar Cost

Solar prices in Kentucky have been dropping for years. 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 energy 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.

You can save for decades by purchasing solar panels because of their durability. You will likely use lower electricity rates for 25 years or more, which will help you avoid future utility price hikes.

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

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

IncentiveSummaryEnd Date

Federal Solar Tax Credit (ITC)
Kentucky residents can take advantage of the Federal Solar Tax Credit and get a discount of 30% applied to their tax returns. In Kentucky, residents benefit from an average ITC of $7,722.2032

Solar Sales Tax Exemption 
The state of Kentucky does not offer a sales tax exemption for purchasing 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 purchasing 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 some 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 to 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 30% federal tax credit allowing people who purchase solar systems to deduct from their income taxes. In Kentucky, residents enjoy an average ITC of $7,722. As a provision of the Inflation Reduction Act, this program was extended through the end of 2032.

Kentucky Solar Sales Tax Exemption

Unfortunately, Kentucky has no sales tax exemption for purchasing 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 from installing solar panels. While the downside is that you’ll pay more property taxes, your home will also be more valuable due to 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 due to net metering. The minimum compensation 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 several 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 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.

As an added provision within the Inflation Reduction Act, all non-tax-exempt businesses are eligible for a 30% tax credit when they install solar systems on commercial buildings. This will remain in place through the end of 2032.

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 to 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.

Final Thoughts: 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 life-changing savings. Plus, with many 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 provide installation services for you.

Kentucky Solar Incentives FAQs

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, various federal, state, and local financial incentives are available to purchase 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, several federal, state, and local financial incentives can significantly minimize the costs associated with purchasing a new solar energy system.

What solar rebates are available in Kentucky?

Kentucky has many federal, state, and local financial incentives for purchasers of solar energy systems. These include the Federal Solar Investment Tax Credit (ITC) and various 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, meaning you will pay property taxes on the increased value of your home from installing solar panels. While the downside is that you’ll pay more property taxes, your home will also be more valuable due to your new solar energy system.

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

Kentucky taxpayers can write off many costs of purchasing new solar energy systems. Check out this database of incentive programs for more information.

House Method’s Solar Ranking and Review 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 each solar energy company’s services, costs, and products. We’ve done the homework for you by researching nearly all 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 10 based on the following criteria:

  • Services Offered (2.0): What does each solar provider offer as a basic service with any solar installation plan? In-house labor led to companies being ranked higher than those that contracted their labor out to third parties. Similarly, battery installation and panel monitoring were key factors that we looked for in each provider.
  • Warranty Period (2.0): Solar warranties can cover labor, components, or both. The length of these warranty plans is of chief importance. Companies that offer 25-year warranty coverage got our highest score in this category.
  • Other Offerings (2.0): Solar companies that provide secondary services are rated highly. These include obtaining permits to operate (PTO), providing financing and price matching options, and mobile performance tracking options.
  • Company Reputation (1.5): Our main metrics for rating company reputation were BBB accreditation and rating and complaint response rate. These are reliable indicators of quality. Many of our best providers have a 100% complaint response rate.
  • Customer Service (1.5): Availability via phone and online is key for modern home service providers in any niche. Those that offer both, along with clearly posted business hours and in-person estimates, are rated highly.
  • Availability (1.0): Companies with availability in more than 40 states received our highest score in this category. We rated providers with a more limited presence progressively lower, depending on exact reach.

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