Is solar worth it in Kentucky in 2026?

How Kentucky pays for your solar power

Net billing (exports credited below retail). LG&E and KU credit every kWh a new solar system produces at a flat dollar rate set by the PSC in its 2026 rate orders (7.089 cents/kWh LG&E, 7.534 cents/kWh KU), applied to the energy charge only, with systems capped at 45 kW.

In the calculator, 40% of your solar output is used at home at the retail price and the rest is exported at about 50% of retail, so each solar kWh is worth 70% of the retail price on average. Change it if your utility pays more or less. Method

How exports are credited

Kentucky has no single statewide credit rate. The Public Service Commission (PSC) approves a net metering tariff for each utility, and the rule that covers the most homeowners is the one for Louisville Gas and Electric (LG&E) and Kentucky Utilities (KU), which share a net metering page.

Customers whose systems entered service on or after September 24, 2021 are on Rider NMS-2. LG&E and KU describe it this way: the customer receives a dollar-denominated bill credit for all energy the system produces onto the grid in each billing period, whatever the home consumes in that period. Power the home buys is billed at the normal retail rate. Earlier customers stay on NMS-1, which credits energy in kWh instead of dollars.

The credit rate was left unchanged by the PSC in the 2025 rate cases. Orders dated March 4, 2026 set it at:

• LG&E: $0.07089 per kWh
• KU: $0.07534 per kWh

The credit is applied only to the energy charge and to riders billed per kWh. Fixed customer charges are not reduced. Credit left over in a billing period carries forward to later bills. It ends when you close the account and cannot be transferred to another customer or address.

The NMS-2 tariff sheets also give a 45 kW maximum rated capacity and let a customer keep a two-part rate structure for 25 years from the start of NMS-2 service.

Kentucky Power, which serves eastern Kentucky, uses a different design under its Tariff N.M.S. II. Net energy is calculated for the billing period, and only the net surplus is credited at an avoided cost rate. The sheet that PSC archived on March 1, 2026 listed 9.746 cents/kWh for residential service, and the tariff was replaced on that date, so confirm the current figure with Kentucky Power. Electric cooperatives and municipal utilities have their own tariffs; ask yours.

State incentives in 2026

No statewide residential solar rebate, income tax credit, or tax exemption was confirmed. The Energy and Environment Cabinet’s program page lists the federally funded Home Energy Rebates program and Solar for All, a low-income program, and gives no rooftop solar rebate for the general public. Eligibility and funding for those two were not confirmed, so none is listed as an incentive.

The federal residential credit ended for systems installed after December 31, 2025. See the federal credit explainer.

What it means for payback

At 14.27 cents/kWh average residential price, LG&E’s 7.089 cent credit is worth about half the retail rate, and KU’s 7.534 cents about 53%. Because the credit is a fixed dollar rate rather than a one-for-one offset, payback depends on the rate staying where it is. The PSC reset it in the rate case process, so it can change in later cases. The 25-year lock applies to the two-part rate structure, and the sheets do not promise the credit rate for that period.

The credit is paid on everything the system produces, including power the home uses at the same moment, but it only reduces energy charges. A home with a large fixed customer charge cannot bring the bill below that charge. Size the system against your energy use rather than aiming for a zero bill.

Since export value is about half of retail, storing midday output for the evening can be worth more than selling it. Whether a battery clears its cost depends on your bill; see are solar batteries worth it and net metering vs net billing.

Other rules worth knowing

LG&E and KU say nearly all net metering applications carry no review fee. Applications go by email, with a one-line drawing, a site layout and inverter specifications attached. The utility must install an eligible bidirectional meter; Kentucky Power’s tariff says it provides one at no cost unless distribution upgrades are needed.

Kentucky Power customers on N.M.S. II are not eligible for the company’s budget billing plans, and the tariff caps cumulative net metering at 1% of the company’s previous-year peak load, after which it may limit new customers with PSC approval.

Homeowner association covenants and local permits were not covered in the sources checked, so read your covenants and ask your city or county before ordering a system.

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