Solar Incentives in Tennessee

TVA's historic residential solar incentive programme (Green Power Providers, GPP) paid retail-plus rates for solar exports and was the dominant Tennessee programme through the 2010s. GPP closed to new applicants in 2019, replaced by Dispersed Power Production (DPP, also subsequently closed). As of 2026, there is no TVA-funded performance payment for new residential rooftop solar in Tennessee. Customers connect through their Local Power Company (LPC) — utilities like Memphis Light Gas & Water (MLGW), Knoxville Utilities Board (KUB), Nashville Electric Service (NES), Chattanooga EPB, and dozens of co-ops — under each LPC's interconnection terms. Most LPCs offer no net-metering and treat residential solar as load reduction with no export compensation. EPB Chattanooga is a notable exception, paying a small export credit. Confirm terms with your LPC before contracting an installer.

Under Tennessee Code §67-5-601 and subsequent amendments, residential and commercial renewable energy systems including solar PV are assessed for property tax based on installed cost rather than full market value, capped at 12.5% of installed cost (effectively meaning 87.5% of the cost is excluded from assessment). This is not a full exemption like Utah or Florida but materially reduces the property tax exposure of a residential PV system over its life. Local county assessors apply the rule; homeowners typically do not need to file a separate claim, though it's worth confirming with the county assessor on first-year assessment that the renewable-energy treatment was applied.

Tennessee does not have a state-level sales tax exemption for residential solar PV equipment. The state sales tax rate is 7% on most goods, with local option taxes ranging from 1.5% to 2.75% bringing combined rates to 8.5%–9.75%. There is a sales tax exemption for certain commercial and industrial green-energy property under the Green Energy Tax Credit programme, but this does not apply to residential rooftop installs. Combined with the absence of TVA performance payments and limited LPC export compensation, Tennessee residential solar economics are weaker than the southeastern average — the federal Section 25D credit (expired 2026-01-01) was historically the dominant economic driver.