Is solar worth it in Tennessee in 2026?

How Tennessee pays for your solar power

No statewide rule; set by each utility. Tennessee has no statewide net metering rule; homes on TVA power sell excess solar to TVA at a wholesale avoided-cost price (3.112 cents/kWh in October 2026), far below the retail rate.

In the calculator, 40% of your solar output is used at home at the retail price and the rest is exported at about 22% of retail, so each solar kWh is worth 53% of the retail price on average. Change it if your utility pays more or less. Method

How exports are credited

Tennessee has no statewide net metering rule. DSIRE states that “Tennessee does not offer net metering and does not have standardized interconnection rules.” Instead, exports depend on the local power company that sells you electricity and on the Tennessee Valley Authority (TVA), which supplies it.

The common route is TVA’s Dispersed Power Production (DPP) program. The homeowner signs a power purchase agreement (PPA) and sells all or part of the output to TVA at TVA’s avoided cost. The price is a wholesale number, reset monthly. TVA’s schedule effective October 1, 2026 pays a flat 3.112 cents per kWh, or a time-of-day price from 2.913 cents (super off-peak) to 3.221 cents (super peak). The schedule says the PPA runs for a term of not less than one year. Memphis Light, Gas and Water (MLGW) describes a 5-year DPP agreement, and says TVA pays by direct deposit rather than as a bill credit.

Compare that with the 13.87 cents/kWh average residential price in the site’s data. A kilowatt-hour sent to the grid earns roughly 22% of what a kilowatt-hour avoided from the grid saves. Power the home uses at the moment it is produced offsets the full retail rate.

Local power companies can add their own program. Nashville Electric Service (NES) offers NESolar Savings for solar up to 250 kW DC. It pays a seasonal rate plus TVA’s monthly fuel cost charge (TMFC): $0.02916 in summer, $0.03083 in winter and $0.03147 in the shoulder months, per the August 2024 guidelines. NES may change these rates. Exports bought in a year may not exceed 100% of the customer’s annual usage, and the program is first come, first served up to 10 MW.

Co-op customers, such as members of Volunteer Energy Cooperative, go through the same DPP contract with TVA and pay their co-op fees. Ask your local power company which route it offers.

State incentives in 2026

No open statewide residential solar rebate, income tax credit or sales tax exemption was confirmed in the sources checked. DSIRE’s Tennessee summary lists TVA financial programs but gives no current state residential solar incentive.

The federal residential credit ended for systems installed after December 31, 2025 (see /federal-solar-tax-credit-ended/).

What it means for payback

With exports worth about a fifth of the retail rate, the value of a Tennessee system comes from the electricity it displaces in your own home, not from what it sells. Size the array to daytime and year-round household use. An oversized system sends its surplus to the grid at 3 cents or so and stretches the payback.

Batteries make more sense here than in a full net metering state, because stored midday output can be used in the evening instead of exported cheaply. Whether the added cost pays back depends on the price of the battery and on your own use (/are-solar-batteries-worth-it/). The calculator uses the 22% export value for this state; see /how-we-calculate-solar-payback/ for the method.

Other rules worth knowing

• DPP requires a PPA with TVA and an interconnection application to your local power company. Volunteer Energy Cooperative lists a $250 non-refundable application fee and a $500 interconnection fee, and notes that installations of 5 kW or smaller may not recover those fees quickly. Fees differ by company.
• MLGW applies a monthly Electric Service Availability charge to its self-generation options and requires a separate generation meter, with the construction cost quoted to the customer.
• NES says participants who receive more than $400 a month on average in bill credits for selling generation must register for sales tax.
• Local permits and an electrical inspection are required before interconnection, according to Volunteer Energy Cooperative and MLGW.
• The DPP price changes every month. Check TVA’s current schedule rather than relying on this page’s figure.

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