Tennessee's Solar Power Incentives

Industry Recruitment/Support

• Tennessee offers a program called the Sales and Use Tax Credit for Emerging Industries to the makers of clean energy technology such as hydrogen, geothermal, biomass and solar. The credit reduces the tax rate 0.5 percent. To qualify for the credit, manufacturers must make at least a $100 million investment. They must also establish and maintain 50 full-time positions with wages that exceed 150 percent of the state's occupational average wage. The jobs must last for at least 10 years. Program participants will have an obligation to pay excise and franchise taxes.

  Manufacturers must purchase or lease qualified equipment, machinery or building materials. Eligible solar technology includes photovoltaics, solar water heat, solar thermal electric and solar thermal process heat. Parties interested in having their facilities certified can submit an application with the Tennessee Department of Revenue.

TVA - Generation Partners Program

• This performance-based incentive provided by the Tennessee Valley Authority (TVA), and authorized power distributors of TVA, buys 100 percent of the solar energy created by an approved photovoltaic system. The program pays a $0.12 premium per kilowatt-hour. TVA receives the rights to green tags or renewable energy credits. The TVA may also gain the rights to other benefits.

  Participants that produce energy receive credits from local power companies, which the utilities apply to monthly power bills. The utility has the discretion to apply excess credits monthly or on an annual basis. Agreements run for 10 years. Systems must produce at least 0.5 kilowatts up to a maximum output of 200 kilowatts. Commercial, residential, nonprofit, local, state and federal government solar energy producers may qualify for this program

Personal Tax Credits

• Residential property owners in Tennessee are eligible for federal personal tax credits for the installation of photovoltaics, solar water heating and other solar electric systems. The system must produce a minimum output of 0.5 killowatts. Water heating systems must receive certification from the Solar Rating and Certification Corporation. The home does not have to serve as the owner's primary residence. The amount of the incentive is 30 percent. The program expires Dec. 31, 2016.

Corporate Tax Credit

• The American Recovery and Reinvestment Act of 2009 allows eligible commercial, industrial, utility and agricultural entities to take advantage of a 30 percent tax credit for the installation of solar water heat, solar space heat and solar thermal electric and solar thermal process systems. In lieu of the tax credit, taxpayers who begin the installation of equipment before Dec. 31, 2011, can elect to receive a U.S. Department of Energy Grant. The incentive covers 30 percent of expenditures and does not have a limit.