Solar in Kentucky: the 2026 numbers
On our reference case, nothing works here. All four ways of getting solar in Kentucky — cash, loan, lease and PPA — end up worth less than doing nothing.
Our answer for Kentucky: don't buy
Every option we model destroys value on the reference case. The least bad is a cash purchase at -$16,421 — still negative. A cash purchase would need installed cost to fall below $1.62/W before it broke even, against the $3.00/W we assume.
This is not advice to give up on solar forever. It is what the numbers say for a typical household at today's prices and today's rules. Change the inputs below to your own quote and usage — a household with much higher consumption, a much better price, or a utility rebate can land somewhere else entirely.
What Kentucky gives you to work with
| Sunlight (specific yield) | 1342 kWh per installed kW per year — NREL PVWatts v8, Louisville |
| Average residential rate | $0.150/kWh — EIA, May 2026 |
| Export credit | 30% of retail — Net metering has effectively ended for new installations; new interconnections are compensated near avoided cost. |
| Federal credit on a purchase | None — §25D expired after December 31, 2025 |
| State incentives | Checked, and there is no cash incentive — reviewed 2026-08-15 |
The four options, run side by side
A household spending $200 a month on electricity, with the array sized to cover its usage, at the default $3.00/W installed cost. This is the same case the calculator below opens on. Net present value discounts future dollars at 5%, so these are not the inflated “lifetime savings” totals a sales quote shows.
| Option | Net present value | Payback | Cost per kWh |
|---|---|---|---|
| Cash purchase You pay for it. No fee, no interest, no escalator. | -$16,421 | Year 25 | $0.186 |
| Solar loan Includes the 20% dealer fee that a low-APR solar loan hides in the financed price. | -$30,353 | Never | $0.251 |
| Lease You rent the system. The owner keeps the §48E credit. | -$26,287 | Never | $0.232 |
| PPA You buy the output per kWh, not the hardware. | -$19,281 | Never | $0.200 |
A cash purchase delivers electricity at $0.186/kWh while the utility charges $0.150. Generating your own is more expensive than buying it here, which is the core problem.
On these assumptions, none of the four options pays off. Every route has a negative net present value over 25 years. That is a real answer, not a broken calculator — at this electricity price and export rate, staying on the grid is the cheaper choice.
| Option | Owns it | 30% credit | Upfront | 25-yr NPV | Payback | Cost/kWh |
|---|---|---|---|---|---|---|
| Cash purchase | You | None | $35,700 | -$16,421 | Year 25 | $0.186 |
| Solar loan | You | None | $0 | -$30,353 | Never | $0.251 |
| Lease | Provider | Indirect (§48E) | $0 | -$26,287 | Never | $0.232 |
| PPA | Provider | Indirect (§48E) | $0 | -$19,281 | Never | $0.200 |
What this calculation assumes, and where it can be wrong
Federal credit. The 30% federal residential credit (IRC §25D) expired for systems placed in service after December 31, 2025. A 2026 cash or loan purchase receives no federal credit. Leases and PPAs remain eligible indirectly: the third-party owner claims the commercial credit (IRC §48E) and reflects part of it in the price offered, provided the system is placed in service by December 31, 2027.
Estimated §48E value in a lease or PPA quote: about $5,355 for this system, assuming the provider passes through half the credit. That share is our estimate, not a published figure.
Export credit. Net metering has effectively ended for new installations; new interconnections are compensated near avoided cost.
State incentives. Kentucky has no state solar tax credit. Net metering has effectively ended for new installations following the 2019 legislation and the rate cases that followed it; new interconnections are compensated close to avoided cost rather than retail. Households that installed before the change keep better terms, so a neighbour's numbers are not a guide to yours.
- Cash purchase: No federal tax credit is applied: IRC §25D expired for systems placed in service after 2025-12-31.
- Cash purchase: Exported power is credited at 30% of retail, so savings depend heavily on using power as it is generated.
- Solar loan: Financed amount includes a 20% dealer fee, which is why a $0-down loan quote costs more than the same system bought outright.
- Solar loan: No federal tax credit is applied: IRC §25D expired for systems placed in service after 2025-12-31.
- Solar loan: Exported power is credited at 30% of retail, so savings depend heavily on using power as it is generated.
- Lease: Pricing assumes the system owner claims the §48E credit and reflects part of it in your quote. The system must be placed in service by 2027-12-31 to qualify.
- Lease: Exported power is credited at 30% of retail, so savings depend heavily on using power as it is generated.
- PPA: Pricing assumes the system owner claims the §48E credit and reflects part of it in your quote. The system must be placed in service by 2027-12-31 to qualify.
- PPA: Exported power is credited at 30% of retail, so savings depend heavily on using power as it is generated.
Sunlight data: 1342 kWh per installed kW per year (verified — NREL PVWatts v8). Retail rate: $0.150/kWh.
Why Kentucky lands where it does
Across the 50 states we model, Kentucky ranks #49 on the value of a cash purchase, at -$16,421 — behind Utah at -$15,599 and ahead ofTennessee at -$16,447 . The ordering is not the one people expect, and the reason is worth stating plainly: sunshine matters less than the price of the electricity you stop buying.
Kentucky gets 1342 kWh per installed kW per year and pays $0.150 per kWh. Neither figure is extreme, so the outcome turns on the export rule and the state programme rather than on the weather.
The export rule is the main event here
Kentucky credits exported electricity at 30% of retail. Net metering has effectively ended for new installations; new interconnections are compensated near avoided cost. On the reference system, about 10,380 kWh a year leaves the house rather than being used in it, and the gap between what that power is worth on your bill and what the utility pays for it costs $1,088 a year.
That single number is the difference between the answer on this page and the answer on a calculator that values every kWh at retail — which is what almost all of them do. It is also why self-consumption is the lever that matters most in Kentucky: shifting load into daylight hours, or adding a battery, an EV or a heat pump, converts exported kWh worth $0.045 into avoided kWh worth $0.150.
What the state actually pays you
Kentucky has no state solar tax credit. Net metering has effectively ended for new installations following the 2019 legislation and the rate cases that followed it; new interconnections are compensated close to avoided cost rather than retail. Households that installed before the change keep better terms, so a neighbour's numbers are not a guide to yours.
So there is no cash incentive to model. That matters more than it used to: while the 30% federal credit existed, a state with no programme of its own was still fine. Now, Kentucky buyers are on their own entirely, and the whole case has to come from the bill savings.
The financing trap
A solar loan is worth -$30,353 here against -$16,421 for the same system bought outright — a gap of $13,932. The interest rate is not what causes that. A 20% dealer fee is embedded in the financed price, which is how a "1.99% APR" offer ends up costing more than a bank loan at 8%. It is rarely on the quote. Ask for it by name.
Lease and PPA look different from a purchase for a structural reason: the third-party owner still claims the 30% §48E credit, which a homeowner buying outright can no longer get. How much of that credit reaches you in the price is a negotiation, and we assume half. The owner also carries the upkeep and the inverter replacement that a buyer pays for. That is why they still trail a cash purchase here, though by much less than they would have in 2025. Both are tied to systems placed in service by December 31, 2027 — see the 2027 deadline.
Before you accept a Kentucky quote
- Confirm it does not apply the expired 30% federal credit.
- Ask what export rate it assumed. Kentucky credits exports at 30% of retail; if the quote valued every kWh at $0.150, its savings figure is overstated.
- Check the price per watt. Above about $1.62/W the purchase stops paying for itself in Kentucky.
- Ask for the dealer fee on any financed offer, as a dollar amount.
- If it is a lease or PPA, ask for a placed-in-service commitment — §48E requires the system running by December 31, 2027.
More: the 2026 credit change, when solar is not worth it, our assumptions and sources.