Is solar worth it in Alabama in 2026?

How Alabama pays for your solar power

No statewide rule; set by each utility. Alabama has no net metering rule. Alabama Power buys exported solar under Rate PAE at about 3.5 to 5.5 cents/kWh (April 2026 rates) and bills a capacity charge under Rate Rider RGB.

In the calculator, 40% of your solar output is used at home at the retail price and the rest is exported at about 23% of retail, so each solar kWh is worth 54% of the retail price on average. Change it if your utility pays more or less. Method

How exports are credited

Alabama has no statewide net metering requirement. The rules that matter for most homeowners are Alabama Power’s, approved by the Alabama Public Service Commission. Customers of municipal utilities and electric cooperatives follow their own terms, so ask your utility.

Alabama Power does not credit exported solar at the retail rate. A home system of up to 100 kW sells its exports to the utility under Rate PAE (Purchase of Alternate Energy). Everything you import is billed at your normal retail rate. Everything you export is paid at a per-kWh purchase price that depends on the option you pick. For billing from April 2026, the rate sheet lists:

• Time of Day option: 5.17 cents/kWh on summer weekdays from 10 a.m. to 9 p.m. (June to September) and 3.85 cents at other summer hours. From October to May it pays 3.84 cents on weekdays from 7 a.m. to 9 p.m. and 3.66 cents at other hours.
• Time Advantage option: 5.47 cents on summer weekdays from 1 p.m. to 7 p.m., 4.02 cents at other summer hours, 4.37 cents on winter weekday mornings (5 a.m. to 9 a.m.), 3.84 cents at other winter hours, and 3.45 cents in October, April and May.
• Residential Demand option: 4.64 cents on weekdays from 1 p.m. to 5 p.m. from April to October and 3.83 cents at other hours, then 4.38 cents on weekday mornings from November to March and 3.86 cents at other hours.

Eligibility for each option depends on the rate plan you take for your electric service. The rate pays a monthly base charge of $0.91 for single phase service. Payments are settled monthly. If your export credits exceed your charges, the balance is credited to your account and may be carried forward, and Alabama Power pays a check for what is owed on request or when service under the rate ends.

The contract runs for up to one year and renews automatically until you give 30 days’ written notice. The rate sheet also lets the company end service under PAE if it stops being obligated to buy this energy under federal law (PURPA).

State incentives in 2026

No statewide residential solar rebate, income tax credit or property tax exemption was confirmed. The Alabama Energy Division’s program list covers weatherization, low-income energy assistance and the State Energy Program, with no residential solar rebate, tax credit or loan listed.

The federal residential credit ended for systems installed after December 31, 2025, so it does not offset cost in 2026. See the federal credit explainer.

What it means for payback

The gap between what you pay and what you are paid is wide. At the 16.54 cents/kWh average retail price, a 3.84-cent export credit is worth about 23% of an imported kilowatt-hour. A kilowatt-hour you use at home saves the full retail rate. A kilowatt-hour you export earns roughly a quarter of that.

That makes self-consumption the main lever. Size the system to your daytime load rather than your annual total, and shift flexible loads such as laundry, dishwashers and EV charging into sunny hours. Oversizing to export mostly adds cost that the buyback rate will not repay. The time-of-day options pay more in the afternoon peak, but the bonus is small next to retail, so compare them against your own load shape rather than assuming one is better.

A battery can store midday output for the evening instead of exporting it at 3 to 5 cents, which is where the economics are strongest in a buyback state. Whether it pays depends on its installed cost. See are solar batteries worth it and net metering vs net billing for the general trade-offs.

Other rules worth knowing

Every customer who runs on-site generation in parallel with the grid must take Rate Rider RGB (supplementary, back-up or maintenance power), which Rate PAE requires. For rate classes without their own terms, the rider adds a Capacity Reservation Charge of $5.41/kW per month on secondary service, applied to the nameplate capacity of the on-site generator, according to the rider. A 10 kW system would therefore carry about $54 a month on top of the bill as written. The rider says a customer can ask Alabama Power to calculate actual capacity needs if the nameplate figure overstates them. It also caps eligibility on those rate classes at the lesser of 6% of the customer’s maximum 15-minute demand over the previous 11 months or 25 kW. Ask Alabama Power how this applies to your rate plan before you sign a solar contract.

Interconnection study fees are waived for generators of 1 to 25 kW, and cost $500 for systems above 25 kW up to 100 kW. The customer pays for any equipment or upgrades the interconnection needs. Alabama Power says applications go through its PowerClerk portal and that it may recommend liability insurance for systems of 25 kW or less.

Alabama Power can disconnect a customer system during emergencies, for hazardous conditions or for non-compliance. Alabama Power’s pages do not cover homeowner association covenants or local permits, so check both before you order.

Berkeley Lab does not publish a Alabama median from enough systems, so the calculator starts from the U.S. median of $3.60/W. Put your own quote in.