Solar resource
Your solar production in Birmingham
4.73 avg peak sun hours/day
Monthly avg solar radiation (kWh/m²/day) — Birmingham, AL. Bars update to show estimated kWh production when you use the calculator above.
Utility rate
Alabama Power electricity rate
$0.132/kWh residential
- Utility
- Alabama Power
- Residential rate
- $0.132/kWh (blended)
Alabama Power is an investor-owned utility serving most of Alabama including Birmingham and Jefferson County. Alabama does not have a statewide net metering mandate. Alabama Power offers a Distributed Generation program that credits excess solar energy exported to the grid at the avoided cost rate — approximately $0.032–$0.044/kWh in recent rate filings — significantly below the retail rate of $0.132/kWh. This means Birmingham solar homeowners primarily save by self-consuming their solar production (avoiding buying retail power) rather than by exporting surplus generation. Alabama has no state solar income tax credit, no state solar rebate program, and no strong net metering mandate, making Alabama Power customers dependent on the federal Investment Tax Credit alone for incentive-side savings. This makes Birmingham the weakest state-level incentive environment for residential solar among major Southeast cities — an important consideration when comparing payback periods with Nashville (TN), Atlanta (GA), or Charlotte (NC).
Affiliate slot
Ready to go solar?
Compare quotes from vetted Birmingham solar installers — no obligation, no sign-up required to see prices.
Incentives
Available solar incentives in Birmingham, AL
Federal + state + utility
| Incentive | Type | Value | Scope |
|---|---|---|---|
| Federal Solar Investment Tax Credit (ITC) | Tax Credit | 30% of system cost | Federal |
| Alabama Power Distributed Generation (Avoided Cost Rate) | Net Metering | ~$0.032–$0.044/kWh for exported solar energy (avoided cost) | Utility |
Incentive amounts and eligibility rules change. Verify current terms with your installer and a tax professional before installation.
System cost
Cost breakdown (6 kW default)
- Gross system cost
- $17400
- Federal ITC (30%)
- −$5220
- Net system cost
- $12,180
- Installed cost per watt
- $2.9/W
Lawrence Berkeley National Laboratory Tracking the Sun 2024 — Southeast median installed cost for systems 3–10 kW. Alabama's installer market is smaller than Georgia or Tennessee; $2.90/W is a reasonable estimate for a standard 6 kW system in Birmingham.
Payback & long-term value
25-year outlook
- Annual savings (yr 1)
- $1,022
- Simple payback period
- 11.9 years
- 25-year net savings
- $21800
- Assumed annual rate increase
- 2.5%/year
25-year estimate uses flat electricity rate for conservative baseline. Accounting for 2.5% annual rate increases, lifetime savings increase substantially.
Affiliate slot
Shop solar equipment
Browse solar panels, inverters, and mounting hardware for DIY or installer supply purchases.
How it works
How solar savings work in Birmingham
- Your panels capture Birmingham's solid Southeast solar resource Birmingham averages 4.73 peak sun hours per day — comparable to Nashville and Atlanta, and better than most northern U.S. cities. The Southeast's humid climate means Birmingham receives more diffuse irradiance on partly cloudy days than arid Southwest cities; panels still produce meaningful output even on overcast days. A 6 kW system in Birmingham produces roughly 8,448 kWh per year.
- Self-consumption is your primary savings mechanism — export earns little Alabama Power credits exported solar at avoided cost (~$0.032–$0.044/kWh), far below the retail rate of $0.132/kWh. Every kWh your panels produce while you're using power in the house avoids a $0.132/kWh retail purchase — that's the value you capture. Electricity exported to the grid earns only a fraction of that. This structure makes self-consumption maximization critical for Birmingham solar economics.
- Size your system for your daytime load, not maximum roof coverage Given Alabama Power's low export rate, the optimal Birmingham solar system is sized to match your daytime electricity consumption — typically the HVAC, refrigerator, water heater, and other loads running during daylight hours — rather than the maximum your roof can support. A 6 kW system producing 8,448 kWh/year is a reasonable starting point for a typical Birmingham household.
- You claim the 30% federal tax credit — the only major incentive available In the tax year your system is installed, claim the federal Investment Tax Credit (30%) — $5,220 on a $17,400 system. Alabama has no state solar income tax credit, no utility rebate program, and no strong net metering mandate. The federal ITC is the primary incentive-side lever for Birmingham homeowners. This reduces your net system cost to $12,180.
- Your savings grow as Alabama Power rates rise As Alabama Power rates increase over time (historically approximately 2.5%/year), the value of your self-consumed solar grows proportionally. Over 25 years, a 6 kW system in Birmingham nets approximately $21,800 after recovering the installation cost — reasonable economics for a federal-ITC-only incentive environment, though longer payback than states with stronger solar policy.
FAQ
Common solar savings questions for Birmingham, AL
How much can I save with solar in Birmingham?
A 6 kW system in Birmingham produces roughly 8,448 kWh/year and saves approximately $1,022/year at Alabama Power's current blended rate of ~$0.132/kWh, assuming primarily self-consumed production. After the 30% federal tax credit ($5,220), the net system cost is about $12,180, with a payback period of approximately 11.9 years and estimated 25-year net savings of $21,800.
Does Alabama have any state solar incentives?
No. Alabama does not have a state solar income tax credit, a solar rebate program, or a net metering mandate requiring utilities to credit solar exports at the retail rate. Alabama Power's Distributed Generation program credits excess solar at the avoided cost rate (~$0.032–$0.044/kWh), well below retail. The federal Investment Tax Credit (30% through 2032) is the only significant incentive available to Birmingham homeowners. This makes Birmingham one of the weakest state-level solar incentive environments in the Southeast.
How does Alabama Power's export rate affect solar payback in Birmingham?
Alabama Power credits excess solar exported to the grid at the avoided cost rate (~$0.032–$0.044/kWh), not the retail rate of $0.132/kWh. This means exporting surplus solar provides limited financial return. Birmingham solar economics depend primarily on self-consumption — every kWh produced while you're drawing power from the grid saves you the full $0.132/kWh retail rate. Systems sized for high self-consumption (matching daytime load) perform significantly better economically than oversized systems exporting large quantities to the grid.
How does Birmingham compare to Atlanta or Nashville for solar?
Birmingham's solar resource (4.73 peak sun hours/day) is nearly identical to Atlanta (4.74) and slightly better than Nashville (4.50). However, Alabama's incentive environment is the weakest in the Southeast: Georgia and Tennessee both have better net metering policies, and some Georgia utilities offer solar rebates. The lack of any Alabama state incentive means Birmingham's payback period is longer than Atlanta or Nashville despite comparable sun hours. Battery storage can partially close this gap by maximizing self-consumption.
Is battery storage worth it in Birmingham given Alabama Power's export rate?
Battery storage is more compelling in Birmingham than in states with strong net metering. Since Alabama Power credits surplus exports at only $0.032–$0.044/kWh (vs. $0.132/kWh retail), surplus solar that would otherwise be exported can instead be stored for use in the evening — effectively earning the full retail rate rather than the low export rate. Whether the battery's added cost is justified depends on your specific load profile and storage pricing, but the payback math for batteries is proportionally stronger in Alabama than in 1:1 net metering states.
What solar permits are needed in Birmingham?
A building permit from Birmingham Inspection Services is required for all rooftop solar installations in Birmingham. You also need an electrical permit for the PV system wiring and an interconnection application to Alabama Power before energizing the system. See the Birmingham Deck Permit Guide for insight into how Birmingham's Inspection Services department handles residential structural permits.
Sources
Data sources and freshness
- https://pvwatts.nrel.gov/
- https://www.alabamapower.com/residential/save-money-and-energy/energy-from-the-sun/solar-billing.html
- https://www.alabamapower.com/residential/rates-and-service/rates/rate-schedule-rs.html
- https://openei.org/apps/USURDB/
- https://dsireusa.org/state/alabama/
- https://emp.lbl.gov/tracking-the-sun
- https://www.energy.gov/eere/solar/homeowners-guide-federal-tax-credit-solar-photovoltaics
Related tools
More free homeowner tools
Disclaimer: This calculator provides estimates for informational purposes only — not financial or investment advice. Solar savings depend on actual shading, roof orientation, energy usage patterns, rate changes, and equipment performance. Consult a licensed installer and a tax professional before making purchasing decisions. Verify incentive eligibility with official sources. Data last verified 2026-04-19.