Alabama is the rare state where the utility charges you a monthly fee for owning solar panels. Alabama Power’s Rider RGB adds $5.41 per kilowatt of nameplate capacity, every month, to a solar customer’s bill. On a 9 kW system that is about $49 a month, near $585 a year, charged for the privilege of generating your own power. Understanding that charge, and the export rate that sits under it, matters more here than any incentive list, because Alabama’s incentive question is really a question about what the utility takes back.
The Back-Up Charge Comes Off the Top
Rider RGB has been in effect since April 2022 and applies to customers with on-site generation. It is assessed on nameplate capacity rather than on what you actually export, so a larger array costs more every month regardless of how you use it. That single design choice reverses the usual logic: in most states a bigger system improves your economics, and in Alabama Power territory it also raises a fixed monthly cost.
System size | Rider RGB per month | Rider RGB per year |
|---|---|---|
5 kW | $27.05 | $324.60 |
7 kW | $37.87 | $454.44 |
9 kW | $48.69 | $584.28 |
12 kW | $64.92 | $779.04 |
Those figures are arithmetic on the filed rate, not estimates. Ask any installer quoting you in Alabama Power territory to show Rider RGB as a line in the model. If it is missing, the savings number you are being shown is wrong by several hundred dollars a year for as long as you own the system.
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Does Alabama Have Net Metering?
No. There is no statewide net metering in Alabama, and no proceeding pending to create one. What exists instead is a buy-all style purchase at avoided-cost rates. Under Alabama Power’s Rate PAE, approved by the Public Service Commission in Docket 18005 and effective with April 2025 billings, exports from systems up to 100 kW earn roughly 3.05¢ to 4.93¢ per kilowatt-hour depending on season and hour, against Alabama’s statewide average residential rate of 16.38¢; your Alabama Power rate schedule sets the exact figure you offset.
Put the two together and the shape of the decision is clear. A kilowatt-hour you use inside the house is worth roughly the 16.38¢ statewide average. The same kilowatt-hour sent to the grid is worth about a quarter of that, and you are paying a monthly charge on your system size either way. Alabama rewards self-consumption more sharply than almost any state, and it punishes oversizing twice.
North Alabama Plays by TVA’s Rules Instead
Alabama Power serves about 57% of residential customers. Much of north Alabama, including Huntsville and Athens, sits in Tennessee Valley Authority territory, where the state Public Service Commission has no say. There the route is an optional sale to TVA at avoided cost through its Dispersed Power Production arrangement, administered by your local power company rather than by TVA directly.
TVA does not post a residential cents-per-kilowatt-hour figure for that arrangement. Ask your local power company for its current schedule in writing. Baldwin County Electric, Athens and the other municipal and cooperative utilities also set their own terms and are outside the Commission’s rules entirely, which means roughly two in five Alabama households are not covered by anything described in the section above.
Is There an Alabama State Solar Tax Credit?
The whole Alabama picture in one table:
Program | Status in 2026 | What it means |
|---|---|---|
Federal 25D credit | Ended | $0 for installations completed after December 31, 2025 |
Federal 48E via third-party ownership | Closed in Alabama | Residential power purchase agreements are prohibited |
Alabama state tax credit, rebate, or performance payment | None | No program exists or is pending |
Export compensation | Alabama Power Rate PAE | 3.05¢ to 4.93¢ per kWh by season and hour |
Rider RGB back-up charge | In effect since April 2022 | $5.41 per kW per month, charged on system size |
There is no Alabama state income tax credit for residential solar, no statewide rebate, and no state performance payment. Alabama is frequently included in lists of states with “solar incentives available” on the strength of the federal credit alone.
That federal credit is now gone for purchased systems. Section 25D is $0 for anything whose installation is completed after December 31, 2025 under Public Law 119-21. It was not reduced in stages; it ended. The commercial credit can still reach a residential rooftop through third-party ownership, but Alabama prohibits residential power purchase agreements, which closes that route for most homeowners here. Alabama is therefore one of the few states where a homeowner has neither a state incentive nor a practical path to the remaining federal one.
You Likely Will Not Qualify If
- You are hoping to claim the 30% federal credit. It is $0 for purchased systems whose installation is completed after December 31, 2025. Any quote still subtracting it is wrong by thousands.
- You were told a lease or power purchase agreement would carry the incentives for you. Residential PPAs are prohibited in Alabama.
- You are on a municipal or cooperative utility and assumed Rate PAE applies. It does not. Huntsville, Athens, Baldwin County Electric and the rest write their own terms.
- You expected a state rebate. There is not one, at any income level, and no program is pending.
What Actually Makes Solar Work in Alabama
None of the above says solar cannot work here. It says the value has to come from displacing power at around the 16.38¢ statewide average rather than from any program. Three things follow from that, and they are the whole strategy in this state.
- Size to your own daytime use, not to your roof. Every kilowatt of nameplate adds $5.41 a month in Alabama Power territory and every exported kilowatt-hour earns about a quarter of retail. Both point the same way.
- Move load into daylight. Water heating, pool pumps and vehicle charging shifted into generating hours convert 4¢ exports into avoided purchases at your full retail rate, near the 16.38¢ statewide average.
- Treat storage as a rate arbitrage, not a luxury. The spread between what you pay and what you are paid is wider here than in most states, which is exactly the condition that makes a battery pay for itself rather than just provide backup.
Our Alabama cost guide works through the pricing side, and the Alabama installer list covers who does the work.
Alabama Solar FAQs
There is no Alabama state solar tax credit, no statewide rebate and no state performance payment. The federal residential credit is also $0 for purchased systems whose installation is completed after December 31, 2025 under Public Law 119-21. Alabama solar value comes from displacing retail power near the 16.38¢ statewide average rather than from any program.
Rider RGB, a back-up charge of $5.41 per kilowatt of nameplate capacity per month, in effect since April 2022. It is assessed on system size rather than on exports, so a 9 kW system carries about $48.69 a month or $584.28 a year regardless of how much you send to the grid. Ask for it as a visible line in any quote.
No. There is no statewide net metering and no proceeding pending to create one. Alabama Power buys exports under Rate PAE at roughly 3.05¢ to 4.93¢ per kilowatt-hour by season and hour, against a retail rate near the 16.38¢ statewide average. North Alabama sits in TVA territory under a separate arrangement, and municipal and cooperative utilities set their own terms.
Residential power purchase agreements are prohibited in Alabama. That matters more than it used to, because since January 1, 2026 third-party ownership is the only route by which a federal credit can still reach a residential rooftop. In Alabama that route is closed to most homeowners.
It depends almost entirely on how much of your own generation you consume. A kilowatt-hour used in the house is worth your full retail rate, near the 16.38¢ statewide average; the same kilowatt-hour exported earns roughly a quarter of that, and Rider RGB charges you monthly on system size either way. Sizing to daytime use, shifting load into daylight and considering storage are the three things that move the outcome here.
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References & Research Sources
EcoGen America reviewed Alabama Power tariff sheets, Alabama Public Service Commission filings, TVA program materials, federal energy data, and IRS guidance for this page. Sources accessed between June 10 and August 20, 2026.
- Alabama Power. Rider RGB tariff sheet. The $5.41 per kilowatt-month back-up charge, in effect since April 2022. Accessed August 20, 2026.
- Alabama Public Service Commission. Rate PAE tariff, Docket 18005. The seasonal and hourly export compensation rates effective with April 2025 billings. Accessed August 20, 2026.
- Tennessee Valley Authority (TVA). Dispersed Power Production arrangement. The separate export arrangement covering north Alabama local power companies. Accessed August 20, 2026.
- U.S. Energy Information Administration (EIA). Form EIA-861 (2024) and Electric Power Monthly. Utility customer counts for Alabama Power, Huntsville, Baldwin County Electric and Athens, and the statewide average residential price. Accessed August 20, 2026.
- Internal Revenue Service (IRS). One, Big, Beautiful Bill Provisions. Guidance on the Public Law 119-21 termination of the Section 25D residential credit for systems whose installation is completed after December 31, 2025. Accessed August 20, 2026.
