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Is Solar Worth It in Alabama? 2026 Rates & Payback

Is solar worth it in Alabama?

Less attractive

At 16.4¢/kWh, payback in Alabama takes about 12.3 years, so the financial case is weaker here.

Electricity here is 15% cheaper than the national average (~19.3¢/kWh).

Rates in Alabama rose 28% from 2020 to 2025. If prices rise 3% a year, payback drops to about 10.6 years. Try other scenarios ↓

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Estimates only. Actual results depend on your home, installer and local rules. Learn more: Is solar worth it in 2026? · What if electricity prices rise?

Residential rate
16.4¢
per kWh
Est. monthly bill
$148
at 900 kWh/mo
Solar payback
12.3
years

At 16.4¢/kWh, a home using 900 kWh a month pays about $148. A 6 kW rooftop system here produces roughly 8,928 kWh a year. At $3.00/W ($18,000, before incentives), the savings would pay off the system in about 12.3 years.

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Estimate based on average system size and current rates. Actual results vary.

What if electricity prices rise?

Many states have seen rates rise faster than 3% in recent years.

Estimated payback
10.6 yrs
Savings over 10 years
$16,785
Savings over 25 years
$53,381

Do nothing: over 25 years you'd pay about $53,381 for the electricity a 6 kW system would otherwise produce — money that stays with the utility instead of paying off your panels.

Estimates only. Actual results depend on your home, installer and local rules.

Electricity rate trend

From 2020 to 2025, the average residential rate went from 12.6¢ to 16.1¢/kWh — +28% in 5 years.

If rates continue at a similar pace, solar payback shortens further.

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Electricity price trend

Electricity in Alabama went up 38% since 2015 (about 3.2% per year).

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Average residential price, ¢/kWh (EIA yearly data).

25-year savings, flat prices
$36,603
If prices keep rising like they have
$55,123

For a 6 kW system. Yearly price rise capped at 5% in this estimate. Future prices are not guaranteed.

Major utilities & net metering

  • Alabama Power

Charges a monthly fee for grid-tied solar systems.

Net metering: Limited — no statewide net metering rule; export credit depends on your utility and is often low.

General guide — check your utility for current rates.

Solar installers in Alabama

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Data based on EIA and NREL PVWatts (rates for 2026-07).