Solar Panel Cost in Tennessee: $3.56/W, 21.2–33.2-Yr Payback

Solar in Tennessee costs about $28,480 for 8 kW at $3.56/W and pays back in roughly 21.2–33.2 years at 13.7¢/kWh with the federal credit at $0.

Updated September 2026 · Source: EIA Electric Power Monthly Table 5.6.A (July 2026 data) · next EIA update ~Oct 23

By SolarCostData Data Desk · Reviewed September 2026 · Corrections log

On this page: CalculatorTableHow we calculatedSources

Why Tennessee’s payback lands where it does

Tennessee’s rate rose about four percent to 13.7 cents per kilowatt-hour this July from 13.21 cents a year earlier, enough to keep the state at rank 46 — among the five cheapest in the country. A middling yield of 1,290 kilowatt-hours per installed kilowatt combined with an installed cost of 3.56 dollars per watt, higher than many states with similar sun, pushes the payback out to roughly 21.2 years. Nashville Electric Service, the largest utility by residential customer count at over 417,000, prices at 13.5 cents, just below the state average, so its customers should expect a payback close to but slightly longer than the 21.2-year state figure. Tennessee has no statewide net-metering rule, so what an export is worth depends on Nashville Electric Service’s own plan rather than a guaranteed rate, meaning the state’s solar economics depend on installed costs and utility policy more than on the electricity price.

Electric utilities in Tennessee

The state average hides real spreads between utilities. The largest residential utilities EIA-861 lists for Tennessee, with each one’s own average bundled residential price (2024 — revenue ÷ sales, the audited annual figure, not this month’s tariff):

Your utility decides Tennessee’s real number — the ZIP lookup finds it in three clicks; the 2024 annual utility averages above sit apart from the June-2026 monthly 13.7¢ state figure.

Tennessee’s rate, the last 24 months

July 2025 → July 2026: 13.21¢ → 13.71¢. The rate tracker has every month against the US average.

An 8 kW system in Tennessee, priced out

The $3.56/W used above comes from EnergySage marketplace quotes (August 2026). Those are quotes in a competitive online market, not signed contract prices.

Read that table with one caveat: $3.56/W is Tennessee’s market average, and it is the input most likely to differ for you. A quote $0.50 per watt above or below the $3.56 used here moves the payback by roughly a year and a half in either direction.

How much sun Tennessee actually gets

A kilowatt of panels in Tennessee produces about 1,290 kWh a year on an unshaded, south-facing roof at a 20-degree pitch. Sites that swap Tennessee’s 1,290 kWh for a single national average are how Arizona and Washington end up with identical paybacks despite a 1.6x real difference in output.

That figure is a five-point cluster around Tennessee’s largest metro area, which keeps it representative of where most people actually live rather than of the state’s best site.

City-level figures for Tennessee

We have separately modeled production for 1 Tennessee city, and they are 0% apart — Nashville at 1,340 kWh per kW against Nashville at 1,340. Installed cost held at $3.56/W; paybacks use each city’s own utility tariff and export treatment where we have official EIA-861 data, which is why some differ sharply from this page’s state-average model.

• Nashville — 1,340 kWh per kW, payback about 20.8–32.7 years (on its own utility’s tariff)

Those are real PVGIS-NSRDB location points, not the state figure scaled by guesswork. All Tennessee and other city figures .

Two adjustments matter before you apply this to your own roof:

• Shading and orientation. The 1,290 kWh figure assumes an unobstructed south-facing array. A real Tennessee roof — its own azimuth and pitch, a tree or a chimney — typically produces 10-25% less; this page models 90% of the ideal, so the 9,288 kWh/year above is already derated from 10,320. A genuinely unshaded south roof can adjust upward in the calculator.
• Year-to-year weather moves output by roughly ±5% either way.

How Tennessee compares with the other 49

Tennessee ranks 46th of 50 on electricity price and 46th on annual output value per kW installed — close enough that its rate is a fair proxy for its solar case, which is not true everywhere. Its immediate neighbors on price are Idaho (13.7¢) just above and North Dakota (13.4¢) just below.

Nebraska is Tennessee’s closest comparable-rate analogue — 13.8¢/kWh, roughly 1,335 kWh per kW, and a payback within about a year of this one (20.8 vs 21.2 years). If you find Tennessee quotes hard to sanity-check, Nebraska numbers are broadly transferable.

The export question worth asking your Tennessee utility

Tennessee has no statewide export-credit requirement. What you are paid for surplus power — the export credit — is set by your utility or retail provider — TVA Green Connect, administered by local power companies — not by state law, and it can differ between plans from the same provider.

So there is no single honest payback for Tennessee. There is a range, and which end you land on is decided by a contract term rather than by your roof:

Plans with no buyback are common, and the gap between the top and bottom row is 23.1 years on identical hardware — a battery is the one hardware change that moves you up this table. Get the buyback terms in writing before signing, and treat any quote that assumes full retail credit as the optimistic end until your own plan says otherwise. Whether a Tennessee buyer should own a battery or take a lease/TPO deal is priced in the battery buy vs. TPO calculator .

⚠️ Treat this one as unconfirmed. Current export credit terms could not be found in a primary TVA source. Treat as unknown. We could not verify it against a primary source, so check directly with your utility before relying on the figure above.

One limit worth knowing: this reflects investor-owned, state-regulated utilities; Tennessee’s municipal utilities and co-ops are exempt in most cases and set their own terms.

What is actually left in Tennessee

The 30% federal credit ended for systems completed after December 31, 2025, so it is $0 here as everywhere. What remains is state, utility and local — and it varies far more than the federal rule ever did.

Tennessee offers no state-level solar tax credit or rebate. Utility-level rebates, and the tax exemptions below, are where any remaining help comes from — those are set locally, so DSIRE and your own utility are the places to look.

Tax exemptions

On sales tax: The sales-tax exemption applies to businesses only; homeowners cannot claim it.

If that list looks thin, it is — the solar incentives hub shows which states still put real money on the table, and where Tennessee sits among them.

Is solar worth it in Tennessee at 13.7¢/kWh?

Tennessee is a difficult 2026 case: a low rate, ordinary sunshine and no federal credit is the combination that makes a cash purchase hard to justify on economics alone.

At a horizon that long, owning the roof is not the only route to cheaper power. Community solar versus rooftop walks through the subscription alternative — no roof, no loan, and no 21.2-year wait — which is worth reading before committing capital in a market like Tennessee’s.

If you want a fast gut check before running the numbers above, the should-I-go-solar screener asks the four questions that matter most in a low-rate state like Tennessee.

Two numbers put that in context. At Tennessee’s rate, the electricity an 8 kW system would produce is worth about $1,273 a year, so the system costs roughly 22.4 years of that output to buy outright — a simple division, before costs. The headline 21.2-year figure above is the full model: it additionally counts 2.5%/yr rate inflation, $150/yr of running costs and one inverter replacement, which is why the two differ slightly. And doing nothing is not free: 25 years of that same electricity, with rates rising at 2.5% a year, comes to about $43,483.

For a 15-year payback in Tennessee — given its sunshine rather than a national average — the electricity rate would need to be about 20.3¢/kWh. Tennessee is at 13.7¢, which is below it.

Sources and method

• Electricity rate: U.S. Energy Information Administration, average price by state — EIA Table 5.6.A, July 2026 data (released Sep 2026). Rate shown is Tennessee’s residential average.
• Production: PVGIS v5.2 with the PVGIS-NSRDB radiation database, 1,290 kWh/kW for a five-point cluster around Tennessee’s largest metro, then the 90% real-roof factor; the assumptions, the ERA5 cross-check and the attribution are on the methodology page .
• Incentives: DSIRE — Database of State Incentives for Renewables & Efficiency, NC Clean Energy Technology Center. Verify current amounts and fund status before relying on them.
• Federal credit status: IRS, Residential Clean Energy Credit . See our 2026 energy tax credit guide .
• Payback model: shared with the solar savings calculator — 2.5%/yr utility inflation, 0.5%/yr degradation, federal credit $0.

Tennessee’s rate (13.7¢, EIA Table 5.6.A, July 2026 data (released Sep 2026)), export regime, production factor, installed cost and programs were last verified on 25 September 2026; Tennessee’s export credit resets on its tariff cycle and incentive budgets run out mid-year, so confirm current terms before acting. Not tax or financial advice.

Frequently asked questions

Sources: U.S. Energy Information Administration (EIA) electricity rates · DSIRE incentive records · public IRS/OBBBA guidance. Figures are modeled estimates, not quotes or tax advice. See our methodology.

States with a comparable tariff picture

• Why is my electric bill so high? — Splits a bill jump into weather, rate and usage — with Tennessee’s own EIA rate history built in.
• Electricity rate tracker — Tennessee’s last 24 months of EIA rates, charted against the US average.
• Find your rate by ZIP — Tennessee averages hide utility gaps — look yours up from EIA-861 in three clicks.
• Net metering by state (2026 table) — Every state’s export regime with program, date and source — the rule behind Tennessee’s payback.
• Solar panel cost in Texas — Same export regime at 15.9¢/kWh and a 10.7-year payback — the closest tariff comparison to Tennessee.
• Solar panel cost in Alabama — Same export regime at 16.4¢/kWh and a 18.6-year payback — the closest tariff comparison to Tennessee.
• Solar panel cost in Wisconsin — Same export regime at 19.1¢/kWh and a 14.8-year payback — the closest tariff comparison to Tennessee.