The complete list of Arkansas solar incentives and tax credits for 2023, plus how to take advantage.
Arkansas isn’t especially solar-friendly, which cynics might suggest is a result of fossil fuels and biodiesel being big business in the state. In fact, Arkansas is the fifth biggest producer of biodiesel in the U.S., accounting for nearly 5% of the country’s total.
Arkansas isn’t especially sunny either, getting just less than the average peak-sun-hours. And, with no state tax incentives or rebates, homeowners would be forgiven for thinking solar is a bad bet in Arkansas.
The good news is that the state has mandated full net metering through all utilities. This, plus the federal tax credit, could mean solar panels pay for themselves in Arkansas in less than half of their expected lifespan.
Arkansas Solar Incentives
| Incentive | Description |
|---|---|
| Net metering | Full net metering is available until December 31, 2022, with credit at the full retail rate for systems up to 25 kW. Terms and conditions may change in 2023. |
Net metering in Arkansas
Full net metering is available in Arkansas through all utilities, with credit at the full retail rate for systems up to 25 kW. Some lawmakers are making noise suggesting reduced rates and new fees going forward, however, so go solar soon to take full advantage of net metering in this state.
Under Arkansas law, utilities must offer net metering to homeowners installing solar. Any energy your system sends to the grid is credited at the full retail rate against the energy you draw from the grid. Any excess is credited to your next month’s bill at a rate set by the utility and approved by the state’s energy commission.
A recent case in the Arkansas Court of Appeals involved a legal battle between the Arkansas Public Utilities Commission, solar companies, and utilities. The utilities were arguing to overturn current rules in favor of either charging net-metered customers an additional monthly charge or switching to an avoided cost rate (instead of one-to-one credits). The May 2022 ruling upheld the current rate structure for net metering, however.
For now, solar customers in Arkansas continue to receive the full retail rate for excess exported energy. In addition, the ruling enables a simplified approval process for smaller solar energy systems and the aggregation of smaller systems.
The wording of the ruling is important though. The Commission also upheld the regulation stating that after December 31, 2022, “a utility may request approval of an alternative [rate structure] that is in the public interest and will not result in an unreasonable allocation of, or increase in, the costs to other utility customers.” This might mean that net metering as we know it could come to an end for customers in Arkansas once 2023 rolls around.
So, if you’re thinking of going solar in the Land of Opportunity, act fast. Anyone who submits a Standard Interconnection Agreement to their electric utility in Arkansas before December 31, 2022, locks in those net metering rules for 20 years.
Final thoughts on state solar incentives in Arkansas
Most Arkansas households will need an 8 kW residential rooftop array to meet their energy needs. With the average cost of home solar in Arkansas around $13,000, and electricity costs fairly low, homeowners in the state are looking at around a 10-year solar payback period. Factor in the 30% federal solar investment tax credit and that payback period could be even shorter.
If you’re quick, you can sign up for net metering under current Arkansas rules. that way, you could start saving on your energy bills right away. Don’t dilly dally though. Arkansas seems inclined to adopt less favorable net metering standards soon, which means less savings in the state for homeowners who aren’t locked in under current rates.
Saving money isn’t the only reason to go solar, of course. Homeowners investing in solar panels in Arkansas could reduce their carbon emissions by around 8 metric tons each year, which is the equivalent of planting more than 100 trees!