The complete list of Kentucky solar incentives and tax credits for 2023, plus how to take advantage.
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Kentucky doesn’t offer much in the way of solar incentives, unfortunately, which might explain why the state only produces 0.16% of its energy from solar. That said, Kentucky utilities still offer net metering programs with decent compensation and Kentuckians can take advantage of the Federal Solar Investment Tax Credit to recoup some of the cost of going solar.
Looking beyond the finances of going solar in Kentucky, Bluegrass State residents who install a 10 kW home solar array could help cut their annual carbon emissions by around 10 tons a year. That’s the equivalent of planting around 160 trees each year or not driving nearly 26,000 miles in the family car. Now there’s something to write a song about.
Kentucky State Solar Incentives
| Incentive | Description |
|---|---|
| Net metering | Net metering is mandated by law in Kentucky and credits customers one-for-one and then at avoided cost rate for excess exported energy |
| Solar loans in Kentucky | PACE financing is legal in Kentucky, but only a handful of areas have authorized the low-cost solar loans |
Low-cost solar loans in Kentucky
Kentucky offers a Property Assessed Clean Energy (PACE) program for homeowners to finance the cost of installing solar and pay back the money via a voluntary property tax assessment. PACE programs are funded using private capital and homeowners repay the loans as a line item on their property tax bills.
Homeowners who qualify for PACE solar loans can access up to 100% upfront financing at a fixed interest rate for up to 30 years. And because PACE financing is attached to a property rather than an individual, the loan doesn’t affect your credit score. Most PACE repayment schemes also give a year’s grace before you have to start paying back the loan, which helps homeowners going solar to claim their federal tax credit and start saving on energy bills before repaying the cost of installation.
PACE financing is only available in certain places in Kentucky, however. You can see a map of those areas in the Resources section of the KYPACE website.
Net metering in Kentucky
Kentucky mandates that investor-owned utilities and electric cooperatives (exempting Tennessee Valley Authority [TVA] utilities) offer net metering to consumers with a solar system of up to 30 kW. Credits used to be given at the full retail rate, but the law changed in 2021 and most utilities now offer a much lower buy-back rate.
Now customers of Kentucky Power receive credits of around $0.09 per kWh, while customers of Louisville Gas and Electric (LG&E) and Kentucky Utilities (KU) are credited at around $0.07 per kWh.
All in all, net metering customers in Kentucky still stand to save money on their utility bills each month, but the amount isn’t quite what it used to be.
Final thoughts on state solar incentives in Kentucky
Kentucky gets less than average sun in the U.S. and has lower than average electricity costs, both of which make solar seem financially unwise in the state. However, the cost of going solar in Kentucky has dropped by more than 50% in the last decade, according to the Solar Energy Industry Association (SEIA) which also predicts that Kentucky will go from 46th in the U.S. for solar capacity to 21st in the next five years.
All in all, while Kentucky isn’t the best place to go solar in the U.S., there’s never been a better time to install residential solar for homeowners keen on generating renewable energy and gaining energy independence in the Bluegrass State.