Tennessee is one of the hardest states in the country to get solar for free. Rooftop solar here shrank 6% last year, one of only two states in its peer group to go backwards. No company offers free panels. The state has no net metering law. And for nearly every household, the terms are set not by a utility commission but by the Tennessee Valley Authority.
A Market Going the Wrong Way
Free solar means a lease or a power purchase agreement, under which a company owns the equipment on your roof. Per the Database of State Incentives for Renewables and Efficiency, Tennessee is one of 17 states with no current residential third-party ownership offerings.
It is also one of only two in that group whose installed residential capacity fell over twelve months, from a base of 17.5 MW. Alabama was the other. Every other state in the group grew, several of them briskly, which makes Tennessee’s direction a fact worth taking seriously rather than explaining away.
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The Terms Come From TVA, Not From Nashville
Tennessee has no statewide net metering policy, and the Public Utility Commission cannot create one for most households, because most households buy their power from a local company supplied by the Tennessee Valley Authority. TVA’s rules therefore decide what a Tennessee rooftop earns.
The route that exists is TVA’s Dispersed Power Production arrangement, which pays an avoided-cost rate for exported power rather than crediting it against your bill at retail. On the September 2025 schedule that was $36.35 per MWh, or about 3.635¢ per kilowatt-hour, on the flat round-the-clock tier, with time-differentiated rates in roughly the 3.2¢ to 4.3¢ range.
Set that against what your local power company charges at retail, typically 11 to 12 cents in Tennessee (the statewide average across all rates is 13.48¢), and the gap runs roughly three to one against the 3.6-cent export rate. TVA posts the Dispersed Power Production schedule monthly; ask your local power company for the rate in force before anyone models on it.
TVA also runs Green Connect, which is a quality assurance program rather than a payment one: it connects homeowners with installers meeting its Quality Contractor Network standards. Useful for choosing a company, but it is not money and should not appear in a savings calculation.
Why the Numbers Point Where They Do
Put the three facts together and the direction of the market stops being mysterious. Exports earn roughly a quarter of retail. No company will finance a system for you. And since December 31, 2025, Section 25D is $0 for purchased systems, so the credit that carried a lot of Tennessee installations no longer exists.
The credit that survives, Section 48E, is commercial and reaches a residential roof only when a business owns the system, which is exactly the arrangement Tennessee has no providers for. So the state’s absence of third-party ownership, which mattered less while homeowners could claim 25D themselves, matters a great deal now.
Tennessee also has no state income tax credit for solar and no state rebate. A household buying panels here in 2026 receives no standard cash incentive from any level of government (income-qualified Solar for All funding may be the one exception), and sells its surplus at wholesale.
You Likely Will Not Qualify If
- You are answering a national free solar advertisement. Tennessee is among the 17 states with no current residential third-party ownership providers, so there is no company positioned to deliver a lease or power purchase agreement here. If an out-of-state pitch does reach you, know that those contracts raise the monthly payment every year on an escalator, typically 1 to 3%, for 20 to 25 years.
- You assumed Tennessee has net metering. There is no statewide policy, and for most households TVA’s rules apply rather than a state commission’s.
- You are counting on the 30% federal credit. Section 25D is $0 for purchased systems from January 1, 2026, and Section 48E is claimed by a business owner through arrangements Tennessee does not have.
- You are expecting a Tennessee state credit or rebate. There is neither.
- You were shown Green Connect as a financial incentive. It is a contractor quality program, not a payment, and it does not belong in a savings calculation.
What Still Works in Tennessee
None of the above means solar cannot work on a Tennessee roof. It means the case rests entirely on self-consumption, because that is the only place retail value is available to you. A kilowatt-hour the house uses as it is generated is worth whatever your local power company charges at retail, typically 11 to 12 cents in Tennessee (the statewide average across all rates is 13.48¢). The same kilowatt-hour exported is worth a fraction of that.
So the design that works here is smaller than the one a salesperson in a stronger state would propose, matched to daytime load rather than annual total, with any shiftable usage moved into daylight. Anything beyond that is generating power you sell at wholesale.
And use Green Connect for what it is actually good for: a shortlist of contractors that meet a standard, in a state where the economics leave no room for a bad installation. Our Tennessee incentives guide covers the TVA detail and the Tennessee installer list covers who does the work.
Tennessee Solar FAQs
No company currently offers them. Tennessee is among the 17 states with no current residential third-party ownership providers, and it is one of only two in that group whose installed rooftop capacity fell over twelve months, from a base of 17.5 MW. There is no company positioned to deliver a lease or power purchase agreement here.
No statewide policy, and the Public Utility Commission cannot create one for most households, because most buy power from a local company supplied by the Tennessee Valley Authority. TVA’s rules decide what a Tennessee rooftop earns, through its Dispersed Power Production arrangement, which pays an avoided-cost rate for exports rather than crediting them at retail.
An avoided-cost rate. On the September 2025 Dispersed Power Production schedule that was $36.35 per MWh, about 3.635¢ per kilowatt-hour on the flat round-the-clock tier, with time-differentiated rates roughly in the 3.2¢ to 4.3¢ range, against local retail rates typically at 11 to 12 cents (the statewide average is 13.48¢). TVA posts the Dispersed Power Production schedule monthly, so ask your local power company for the rate in force before you model on it.
No. Green Connect is a quality assurance program that connects homeowners with installers meeting TVA’s Quality Contractor Network standards. It is useful for choosing a company and it is not money, so it should not appear in a savings calculation. Treat any proposal that counts it as a financial incentive with caution.
It can, but the case rests entirely on self-consumption, because that is the only place retail value is available. A kilowatt-hour the house uses as it is generated is worth your local power company’s retail rate, typically 11 to 12 cents (the statewide average is 13.48¢), while the same unit exported is worth a fraction of that. The design that works here is smaller than one a salesperson in a stronger state would propose, matched to daytime load rather than annual total.
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References & Research Sources
The export mechanics and market figures above come from the records below. Capacity figures are 2024 data. Sources accessed between June 10 and August 17, 2026.
- pv magazine USA. States without residential solar third-party ownership may become holes in the market after 2025. Analysis drawing on DSIRE and US Energy Information Administration data: the 17-state count including Tennessee, and Tennessee’s 17.5 MW installed residential base at the end of 2024 against a 6.0% twelve-month decline, one of only two contractions in that group alongside Alabama. Dated July 22, 2025. Accessed August 17, 2026.
- Tennessee Valley Authority. Dispersed Power Production schedule. The September 2025 rate of $36.35 per MWh, about 3.6¢ per kilowatt-hour on the flat round-the-clock tier, with time-differentiated rates roughly in the 3.2¢ to 4.3¢ range; the schedule posts monthly, so ask your local power company for the rate in force. TVA’s terms govern in the absence of a statewide Tennessee net metering policy, and Green Connect with its Quality Contractor Network is a contractor quality program rather than a financial incentive. Accessed August 17, 2026.
- US Energy Information Administration. Electric Power Monthly, Table 5.6.A: Average Price of Electricity to Ultimate Customers. The Tennessee statewide average residential rate of 13.48¢ per kWh used on this page as labeled context; local power company retail typically runs 11 to 12 cents. Accessed August 17, 2026.
- Internal Revenue Service. One, Big, Beautiful Bill provisions. The Public Law 119-21 termination of Section 25D and the availability of Section 48E to business owners of residential systems under current deadlines. Accessed August 17, 2026.
