Solar Incentives in Tennessee
Tennessee homeowners considering solar in 2026 have access to a limited set of state-level incentives. The Green Energy Property Tax Assessment, established under a 2013 amendment to Tenn. Code Ann. § 67-5-601, caps the appraised value of solar generating property at 12.5 percent of total installed cost, which can reduce ongoing property-tax liability compared to full-value assessment. A Sales and Use Tax Credit for Certified Green Energy Production Facilities allows eligible taxpayers to claim a credit, refund, or exemption on Tennessee sales and use tax for qualifying machinery and equipment; certification is administered by the Tennessee Department of Environment and Conservation, with tax administration handled by the Department of Revenue. Note that net metering and solar export compensation policies vary by utility in Tennessee — rates and terms differ across providers and should be confirmed directly with the serving utility before relying on any specific figure.
On the federal side, the residential Clean Energy Credit under Internal Revenue Code § 25D — widely known as the 30 percent credit — expired for systems placed in service after December 31, 2025, under the One Big Beautiful Budget Act (Pub. L. 119-21). Homeowners installing solar in 2026 cannot claim that credit on a new residential system, which meaningfully extends payback timelines compared to prior years.
The Tennessee Energy Efficiency Loan Program (EELP), administered through Pathway Lending, and the Commercial Property Assessed Clean Energy and Resilience (C-PACER) financing program are active but target commercial, industrial, and eligible non-residential properties rather than typical single-family homeowners. Tennessee's residential electricity rate averaged approximately 15.08 cents per kilowatt-hour as of March 2026, up from the prior year, which affects how quickly solar generation offsets costs.
All figures are verified as of June 2026 against official sources; programs change with each legislative session and utility rate case, and the Tennessee Department of Environment and Conservation (tdec.tn.gov) and Tennessee Department of Revenue (tn.gov/revenue) should be treated as authoritative.
Federal credit update. The federal residential Clean Energy Credit (the 30% “solar tax credit” under §25D) expired for systems placed in service after December 31, 2025. New 2026 residential installs do not qualify; a 2025 install can still be claimed on a 2025 return (IRS Form 5695). What this means for 2026 →
Current solar incentives in Tennessee
Sales and Use Tax Credit for Certified Green Energy Production Facilities
Tennessee lets a taxpayer take a credit, apply for a refund of taxes paid, or obtain authority to make tax-exempt purchases of machinery and equipment used to produce electricity at a Certified Green Energy Production Facility. A facility qualifies once the Tennessee Department of Environment and Conservation certifies that it produces or stores electricity using clean energy technology, defined by statute as geothermal, hydrogen, solar, or wind sources, with nuclear energy production facilities added by a 2025 amendment. Applications are accepted year-round; TDEC forwards approved certifications and the supplemental tax form to the Department of Revenue, and the state's monthly certification log shows facilities still being approved through 2026.
| Amount | Credit, refund, or exemption of Tennessee sales and use tax on machinery and equipment used to produce electricity at the certified facility; no stated dollar cap. |
|---|---|
| Who qualifies | Owners of facilities certified by TDEC as producing or storing electricity using clean energy technology (geothermal, hydrogen, solar, wind, or nuclear); energy storage qualifies if the stored electricity is produced entirely from clean energy technologies. Oriented to commercial-scale generation, not typical homeowner systems. |
| Administered by | Tennessee Department of Environment and Conservation (certification) / Tennessee Department of Revenue (tax administration) |
Source: Tenn. Code Ann. §§ 67-6-346 and 67-4-2004; see also § 67-4-2108 Official source →
Green Energy Property Tax Assessment
Tennessee law caps the taxable value of solar generating property rather than exempting it outright: under a 2013 act amending Tenn. Code Ann. § 67-5-601, the value of solar source property may not initially exceed 12.5 percent of its total installed cost. Per the state's TACIR analysis of the statute, solar equipment at a facility selling power is appraised at 12.5% of original cost and assessed at 55% of appraised value (with a further 15% reduction), while equipment at a TDEC-certified green energy production facility using its power on-site is appraised at 12.5% of original cost and assessed at 30%. The property owner must file the TDEC Green Energy Production Facility Certification or a public utility filing with the Comptroller of the Treasury to document eligibility.
| Amount | Appraised value of solar equipment capped at 12.5% of total installed cost; assessment then 30% (locally assessed certified facilities) or 55% less a 15% reduction (state-assessed facilities selling power). |
|---|---|
| Who qualifies | Public utility, commercial, and industrial property that generates electricity using machinery and equipment of a certified green energy production facility (geothermal, hydrogen, solar, or wind); certification by TDEC or a public utility filing with the Comptroller is required. |
| Administered by | Tennessee Comptroller of the Treasury (with TDEC certification) |
Source: Tenn. Code Ann. § 67-5-601 (green energy valuation provisions added by 2013 act, SB 1000/HB 62) Official source →
Tennessee Energy Efficiency Loan Program (EELP)
The Tennessee Energy Efficiency Loan Program is a low-interest revolving loan fund launched in 2010 to help commercial and industrial businesses, and later governmental entities, finance energy efficiency and renewable energy improvements, including solar installations. Pathway Lending, a U.S. Treasury-certified community development financial institution, operates and manages the fund in partnership with the TDEC Office of Energy Programs. Per the state energy office, the program has funded more than 200 projects across Tennessee with 100% financing, with project financing ranging from $20,000 to $5 million.
| Amount | Loans from $20,000 to $5 million with 100% project financing; low-interest revolving loan fund. |
|---|---|
| Who qualifies | Tennessee for-profit and not-for-profit commercial and industrial businesses and governmental entities; eligible projects include renewable energy installations and energy efficiency upgrades. Not a residential homeowner program. |
| Administered by | Pathway Lending (CDFI) in partnership with the TDEC Office of Energy Programs |
Source: Program description on TDEC State Energy Office Commercial Solar page (updated April 2026) Official source →
Commercial Property Assessed Clean Energy and Resilience (C-PACER) Financing
Tennessee's Commercial Property Assessed Clean Energy and Resilience Act (enacted 2021 as Public Chapter 138, effective July 1, 2021) authorizes local governments to voluntarily establish C-PACER programs so owners of agricultural, commercial, industrial, and multifamily residential properties can obtain low-cost, long-term financing for qualifying improvements, repaid through an assessment on the property. Qualified improvements include permanent improvements that support the production of clean, renewable energy on the customer's side of the meter — which covers solar — as well as energy efficiency, water, and resilience measures. Availability depends on whether the county or municipality has adopted a C-PACER program; single-family residences are not eligible.
| Amount | Financing amounts and terms set per project under locally adopted C-PACER programs; repaid via a property assessment and lien. |
|---|---|
| Who qualifies | Owners of agricultural, commercial, industrial, and multifamily residential property located in a Tennessee jurisdiction that has voluntarily implemented a C-PACER program. |
| Administered by | Local governments that adopt C-PACER programs (state authorization under Tenn. Code Ann. Title 68, Chapter 205) |
Source: Tenn. Code Ann. § 68-205-101 et seq. (Commercial Property Assessed Clean Energy and Resilience Act, SB 795 / Public Chapter 138, 2021) Official source →
Verification note. Some official source pages for this state block automated access from our servers, so one or more figures here rest on the underlying statute or an official search result pending a final browser check. The cited official source is authoritative — confirm current terms there before you rely on a figure.
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Programs verified as of June 2026 against official state and federal sources (each cited above); refreshed quarterly as legislatures and utility rate cases change the rules. How we verify this data. This page is informational only — not tax or legal advice.