Tennessee solar incentives are small, and your power company decides most of them. Almost every home here buys power from a local company supplied by the Tennessee Valley Authority (TVA), a federal power agency. These companies do not credit your bill for extra solar power. TVA buys it instead, at a low price that changes every month. The state’s real help is a sales tax exemption, and you have to apply for it.
Recently changed: TVA sets a new price for extra solar power every month. Ask for this month’s TVA price letter before you sign. Tennessee Solar for All, the planned program for lower-income homes, is not available: the federal grant was ended and the state will not run the program.
NES, MLGW, a co-op or Kingsport Power: who handles your extra solar power?
The name at the top of your electric bill decides what happens to the solar power you do not use. Open your company to see its terms.
Nashville Electric ServiceNashville and Davidson County, plus parts of nearby counties.Own bill credit: 3.069 cents per kWh in summer, plus a fuel amount
What you can get with Nashville Electric Service
- NESolar Savings3.069 cents per kWh
Nashville Electric Service (NES) buys the power you send to the grid and credits your bill each month. The rate is 3.069 cents per kWh from June to September, 3.197 cents from December to March, and 3.244 cents in the other months. NES adds TVA’s fuel cost rate for that month on top. Example: 100 extra kWh in summer earn $3.07 before the fuel amount.
- Who can joinUp to 250 kW
The system must send out at least 50 kWh a month on average, and no more in a year than your home uses. You can own or lease it.
- Room in the program10 megawatts
The limit for all customers together (10,000 kW), first come, first served. NES does not publish how much room is left.
Your bill credits
NES does not offer net metering, a rule where each kWh you send out cancels one kWh you buy. Its credit is a fixed price per kWh, well below what you pay for power.
The agreement runs five years and renews by itself. One account cannot be in two buyback programs.
Watch out: The rates come from guidelines dated October 2024, and NES can change them. Ask NES for the current rate in writing. Apply no later than 60 days before the system starts making power. Do not order equipment before NES approves the connection.
For every Tennessee home: the sales tax exemption and the paperwork.
Memphis Light, Gas and WaterMemphis and Shelby County.No bill credit. A solar home pays $14.40 a month.
What you can get with Memphis Light, Gas and Water
- Bill credit for extra powerNone
Memphis Light, Gas and Water (MLGW) says extra power flows to its grid “without financial benefit”. You earn something only if you also sign a TVA contract.
- Monthly charge for solar homes$14.40 a month
The Electric Service Availability charge, billed to homes that make their own power. That is $172.80 a year. MLGW says it can change.
- Selling extra power to TVAChanges monthly
TVA sets a new price each month. Ask MLGW or your installer for this month’s price letter. TVA pays you by direct deposit, not on your MLGW bill. See how the TVA sale works.
Your bill credits
MLGW does not offer net metering, a rule where each kWh you send out cancels one kWh you buy. Its contract with TVA bars it from buying power from anyone else.
MLGW says the average home uses about 60% of its solar power at the moment the panels make it. The rest goes to the grid. Ask your installer how many kWh a month you would have to sell to TVA, at this month’s price, just to cover the $14.40 a month charge.
Watch out: Send MLGW’s interconnection application, the request to connect your system to the grid, before you buy equipment. Every option needs a second meter. A repeat of MLGW’s acceptance test costs $200.
For every Tennessee home: the sales tax exemption and the paperwork.
Kingsport PowerKingsport and the area around it. The name on the bill is AEP Appalachian Power.The one Tennessee utility with net metering
What you can get with Kingsport Power
- Net meteringkWh for kWh
Each kWh you send to the grid cancels one kWh you buy. Extra kWh roll forward to later bills. Kingsport Power is the only Tennessee electric utility that TVA does not supply.
- Size limit10 kW
A home system can be up to 10 kW, or 15 kW if you show proof of a licensed electric vehicle. You cannot be on a time-of-day plan, a plan where the price changes by hour.
- Costs to join$50
The fee to inspect your inverter, the box that turns solar power into household power. You also need proof of $100,000 of liability insurance.
Your bill credits
Kingsport Power never pays cash for extra power. Extra kWh carry into the next 12-month period only up to the amount you were billed for in that period.
The program closes to new homes once all net metering systems reach 1% of the most power its Tennessee customers use at one moment. The tariff, the official rule sheet, dates from August 8, 2022.
Watch out: We read the tariff as filed with the state regulator, not on the company’s site. Ask Kingsport Power for the current Tariff N.M.S. sheet. Send its Interconnection Notification Form at least 30 days before you connect.
For every Tennessee home: the sales tax exemption and the paperwork.
Middle Tennessee Electric and other TVA power companiesMurfreesboro, Franklin, Knoxville, Chattanooga and most other cities and co-ops.No bill credit. TVA buys extra power.
What you can get with Middle Tennessee Electric and other TVA power companies
- Bill credit for extra powerNone found
No TVA-supplied power company we checked offers net metering, a rule where each kWh you send out cancels one kWh you buy. Their supply contracts with TVA do not let them buy power from anyone else.
- Selling extra power to TVAChanges monthly
TVA sets a new price each month. Ask your power company or installer for this month’s price letter. TVA pays you directly. See how the TVA sale works.
- Fees to connectDiffer by company
Each company sets its own. Middle Tennessee Electric (MTE) lists $0 for the application, the meter exchange and extra monthly billing. Volunteer Energy Cooperative charges $750 in application and connection fees.
Your bill credits
Your local power company approves the connection. TVA buys the power. These are two steps with two documents. Without a TVA contract, the power you send out earns nothing.
MTE says the TVA contract can take two to three months. It advises members to start before the installation is finished.
Watch out: Utility web pages can be out of date. Volunteer Energy Cooperative’s solar page still says TVA pays about 1.8 cents per kWh. Ask for TVA’s price letter for the current month instead.
For every Tennessee home: the sales tax exemption and the paperwork.
Everything below applies across Tennessee.
What does Tennessee actually offer a solar home?
Five things are open to a new home system. None is a rebate for the panels.
| What is on offer | What it is worth | Who pays or waives it | The condition |
|---|---|---|---|
| Sales tax exemption | 100% of Tennessee sales tax on solar and battery equipment | The state | A state certificate for your system |
| TVA Dispersed Power Production | A price per kWh for power you sell, set each month | TVA, by direct deposit | A contract with TVA. New price every month |
| NESolar Savings | 3.069 cents per kWh to 3.244 cents, plus a fuel amount | NES, on your bill | NES customers, until 10 megawatts is reached |
| Kingsport Power net metering | Each kWh sent out cancels one kWh bought | Kingsport Power, on your bill | Home systems up to 10 kW |
| Property tax value limit | Solar valued at no more than 12.5% of installed cost | Your county assessor | Ask your county assessor if it applies to your home |
Tennessee has no state rebate for solar. It has no individual income tax, so there is no state income tax credit.
How much does TVA pay for solar power from a Tennessee home?
TVA’s program is called Dispersed Power Production. You reach it through your local power company, but the contract and the money are with TVA.
TVA pays its avoided cost: what it would cost TVA to make or buy the same power elsewhere. That is far below the price you pay for power.
TVA sets the price in a letter each month. Ask your power company or installer for this month’s letter and the price in it. Your installer’s numbers should use that price, not an old one.
- Two ways to sell: everything your panels make, or only what your home does not use at that moment.
- Two price plans: one flat price for every kWh, or a price by time of day. Both change every month.
- Contract length: a five-year contract. The length is fixed. The price is not.
- How you are paid: by direct deposit, not on your electric bill.
Watch out: A kWh you use at home replaces a kWh you would buy at your full rate. A kWh you send out earns only TVA’s monthly price. Green Power Providers, the older TVA program, has taken no new applicants since December 31, 2019.
Ask installers how much solar power you would use yourself
Your ZIP code starts a quote request with installers near you. Ask each one: what share of the power does this quote assume I sell?
- Your power company sets the termsNES, MLGW, Kingsport Power and the co-ops each handle extra power differently. A quote should name yours.
- The TVA price changes monthlyAsk for the price letter the quote is based on.
- Shared only with matched installersYour details go to the installers you are matched with.
Which Tennessee tax breaks need a TDEC certificate?
Both of them. The Tennessee Department of Environment and Conservation (TDEC) certifies your system as a green energy production facility. That certificate opens the sales tax exemption and is the first step toward the property tax limit.
Sales tax: 100% off the equipment
Tennessee does not charge sales tax on machinery and equipment that make or store electricity in a certified system. The law is Tenn. Code Ann. § 67-6-346. The state sales tax rate is 7%, and local sales tax comes on top. Example: on $10,000 of equipment, the state tax alone is $700.
Homeowners can apply. The Department of Revenue says people who are not registered for sales tax do not need to register.
You email Form CN-1386 to TDEC with your utility connection agreement or installer contract, plus the Department of Revenue’s supplemental tax form. The Department of Revenue then issues an exemption certificate to you or your installer. If tax was already paid, it can be refunded.
A battery qualifies only if all the power it stores comes from clean sources, such as your own panels.
Watch out: The refund goes to whoever paid the tax. If your installer bought the equipment, that is the installer. Ask for sales tax as its own line in your quote. Ask your installer whether any sales tax in the quote falls on installation labor.
Source: Tennessee Department of Revenue, Sales and Use Tax Manual
Property tax: a limit on the value, not an exemption
State law says certified solar property should not be valued at more than 12.5% of its installed cost when it is first appraised. The law is Tenn. Code Ann. § 67-5-601(e). Example: a typical 10.2 kW system costs $31,008, so its value on the tax record would be $3,876 at most.
To claim it, a copy of the TDEC certificate must reach the office of the Comptroller of the Treasury by March 1 of the first year you claim the lower value.
Watch out: The Comptroller’s instructions for this limit are written for solar companies. Ask your county assessor whether and how it applies the limit to a home system before you count on it.
Source: Tennessee Comptroller of the Treasury, 2026 solar report instructions
Can a Tennessee renter buy into a utility solar farm?
Only in Nashville right now.
- Nashville Electric Service, Music City Solar: open, with 12,863 panels left when we checked. You pay once per panel and get a bill credit through 2038. NES’s launch figures were $166.63 per panel, plus fees, and a credit of about $11.88 a year. At those figures a panel bought now returns about $143 by 2038, less than its price.
- Knoxville Utilities Board: full since August 2024. Waitlist only.
- EPB in Chattanooga: Solar Share is sold out.
- Middle Tennessee Electric: Cooperative Solar, at $20 a month per block of panels, has a waiting list.
Four Tennessee solar quote claims that do not hold up
- “Your utility credits extra power at the full rate.” Only Kingsport Power does that. Elsewhere, extra power is sold to TVA or, in Nashville, credited at NES’s own rate. In Memphis, MLGW also bills solar homes $14.40 a month.
- “TVA pays a fixed price for the whole contract.” The five-year contract fixes the length, not the price. The price resets every month.
- “The sales tax exemption is automatic.” It needs a TDEC certificate. Someone has to send Form CN-1386, and the quote should say who.
- “You still get a federal or state tax credit.” The federal credit for home solar ended for systems switched on after December 31, 2025. Tennessee has no state credit. An offer of free solar under the Solar for All name is not from the state.
Tennessee paperwork: power company first, TVA and TDEC after
- Before you buy anything: apply to your local power company. Send its interconnection application, the request to connect to the grid. NES and MLGW both say not to order equipment before approval.You or your installer.
- Choose what happens to extra power. In most of the state that means a TVA contract. In Nashville it means the NESolar Savings agreement. MTE says the TVA contract can take two to three months.You sign. Your installer can prepare the forms.
- Email Form CN-1386 to TDEC. Attach your connection agreement or installer contract and the supplemental tax form. This removes the sales tax.You or your installer. Agree on who in writing.
- By March 1: ask about the property tax limit. If your county assessor confirms it applies to your home, a copy of the TDEC certificate must reach the Comptroller’s office by then, in the first year you claim it.You.
Get Tennessee quotes that show the current TVA price
Enter your ZIP code to request quotes from installers in your area. Ask each one which month’s TVA price its numbers use, and what your own power company charges.
The form asks about your home first, then your contact details. EcoGen or its installer partners may contact you.
- A quote request, nothing moreYour ZIP code starts a request for quotes from local installers. It does not apply for any program.
- Home questions firstYour name, email and phone come last.
- You decideQuotes are free, and you never have to sign.
More Tennessee solar guides
Tennessee solar incentive questions
Does Tennessee Have a Solar Tax Credit?
No. Tennessee has no individual income tax, so there is no state income tax credit for home solar. Its Hall income tax, which applied only to interest and dividends, was repealed for tax years that begin on January 1, 2021 or later. The federal credit ended for systems switched on after December 31, 2025.
Does Tennessee Have Net Metering?
Not in most of the state. Net metering means each kWh you send out cancels one kWh you buy. Power companies supplied by TVA do not offer it. Kingsport Power does, for home systems up to 10 kW.
How Much Does TVA Pay for Extra Solar Power?
TVA buys it under its Dispersed Power Production program at a price that resets every month. Ask your power company or installer for this month’s TVA price letter. TVA pays by direct deposit, not on your electric bill.
Is Solar Equipment Exempt From Sales Tax in Tennessee?
Yes, once the state certifies your system. The exemption covers 100% of the sales tax on equipment that makes or stores the power. You apply to TDEC with Form CN-1386.
Do Solar Panels Raise Property Taxes in Tennessee?
They can. State law limits the first appraised value of certified solar property to 12.5% of its installed cost. Ask your county assessor whether and how it applies this limit to a home system.
Is Tennessee Solar for All Available?
No. The federal grant was ended, and TDEC says it will not run the program.
Sources (18)
- Nashville Electric Service, NESolar Guidelines, October 2024: nespower.com
- Nashville Electric Service, Renewable Energy: nespower.com
- Nashville Electric Service, Music City Solar and its FAQ: gosolarmusiccity.com
- Memphis Light, Gas and Water, solar options: mlgw.com
- Middle Tennessee Electric, Solar and Cooperative Solar: mte.com
- Middle Tennessee Electric, Solar FAQs: mte.com
- Volunteer Energy Cooperative, Solar: vec.org
- Kingsport Power, Tariff N.M.S., Docket 21-00107: tpucdockets.tn.gov
- Knoxville Utilities Board, KUB Community Solar: kub.org
- EPB, Solar Share: epb.com
- Tennessee Department of Revenue, Sales and Use Tax Manual, August 2026: tn.gov
- TDEC, Certified Green Energy Production Facilities: tn.gov
- TDEC, Form CN-1386: tn.gov
- Tennessee Comptroller of the Treasury, 2026 solar report instructions: comptroller.tn.gov
- Tennessee Department of Revenue, Hall Income Tax: tn.gov
- Tennessee Department of Revenue, list of taxes: tn.gov
- TDEC, Solar for All: tn.gov
- IRS, Residential Clean Energy Credit: irs.gov
