Last updated: October 2026 · By Byron Bennett, The Williams Group at Keller Williams Realty
QUICK SUMMARY
The short answer is that solar panels on an Alabama home are worth the most when they are owned outright and the buyer understands three Alabama-specific rules. First, Alabama Power customers with grid-connected systems pay a capacity reservation charge of $5.41 per kilowatt per month, about $27 a month for a 5 kW system, and a federal judge upheld it in March 2026. Second, Alabama has no net metering, so extra power sold back is paid at the utility’s avoided cost, not the retail rate. Third, the 30% federal residential solar credit ended for systems installed after December 31, 2025. As of October 2026, the first question in any solar sale is: owned, financed or leased?
KEY TAKEAWAYS
1. Ask whether the panels are owned, financed or leased before you write an offer; each one closes differently. 2. Budget for the Alabama Power capacity reservation charge: $5.41 per kW of nameplate capacity each month, which works out to roughly $325 a year on a 5 kW system. 3. Excess power is credited at avoided cost, so savings depend on using the power yourself, not on selling it back. 4. The 30% federal credit (Section 25D) is gone for systems finished after 2025, and it was never transferable to a later buyer. 5. Because residential solar is rare in Alabama, appraisers often have few or no comparable sales with panels, so do not price a home by what the system cost.
Why do solar panels work differently in Alabama?
Most national articles about solar and home value assume net metering and a strong tax credit. Alabama has neither, so the math a buyer or seller should run here is different.
The capacity reservation charge. Alabama Power’s Rate Rider RGB applies to customers with on-site generating capacity that “operates in parallel” with the company’s grid, which is how a typical rooftop system is installed. For residential (secondary service) customers the back-up charge is $5.41 per kW of the system’s nameplate capacity, every month. On a 5 kW system that is about $27.05 a month ($325 a year); on a 7.2 kW system it is about $39 a month. The Alabama Public Service Commission approved the charge in 2012 and raised it in 2020.
The March 2026 court ruling. Solar customers represented by the Southern Environmental Law Center sued, arguing the fee violated federal law. In late March 2026, U.S. District Judge Annemarie Carney Axon of the Middle District of Alabama ruled for Alabama Power and the PSC, so the charge remains in place. Alabama Power’s position, as reported by the Alabama Reflector, is that “customers who rely on the grid must help pay for the grid.”
No net metering. Alabama does not require utilities to credit exported power at the retail rate. Energy you send back to the grid is compensated at roughly what it would cost Alabama Power to produce that power itself, which is much lower than what you pay per kWh. In practice, the value of a system comes from the power the household uses as it is generated.
Not every home in our markets is on Alabama Power. Parts of rural West Alabama and the Birmingham suburbs are served by electric cooperatives or municipal systems, which set their own interconnection and billing rules. Our Moving to Tuscaloosa guide lists electric providers by area; if the house you are buying is on a co-op, ask the co-op directly how a solar system is billed.
Does the federal solar tax credit still apply in 2026?
No, not for new residential installations. Under the 2025 federal tax law, the IRS says the Section 25D Residential Clean Energy Credit “will not be allowed for any expenditures made after December 31, 2025,” and an expenditure counts as made when the installation is completed. A system finished in 2025 or earlier could qualify for the original owner; one finished in 2026 does not.
For a resale home, the credit was always the installing owner’s, not the property’s. A buyer of a house with existing panels does not inherit a credit, so a listing that mentions “tax credit” savings should be read carefully. Talk with a tax professional about your own situation; this article is general information, not tax advice.
Selling a home with solar in Tuscaloosa, Northport or the Birmingham suburbs? We can help you price it on real comparable sales. Call or text 205-292-2108 (West Alabama) or 205-292-7142 (Greater Birmingham).
Owned, financed or leased: why does it matter so much?
Owned outright. The panels are generally treated as part of the house and convey with it. This is the simplest sale. The buyer should still get the system paperwork, warranties and the Alabama Power interconnection details transferred.
Financed with a solar loan. The loan usually has to be paid off at or before closing. Some solar lenders record a UCC fixture filing in the county records; if one shows up in the title search, the closing attorney will need a release. Our guide to closing attorneys and title companies in Alabama explains who handles that, and our title insurance guide covers why clean title matters.
Leased or under a power purchase agreement (PPA). A third party owns the equipment. The buyer typically has to qualify with the solar company and take over the contract, or the seller has to buy out the lease. Lenders and appraisers generally do not give leased equipment value as part of the house. Get the contract, the remaining term, the monthly payment and the transfer process in writing before the inspection period starts.
What should buyers ask for before making an offer?
1. Ownership documents. Purchase invoice, loan payoff or lease contract.
2. System size and install date. The nameplate kW drives the monthly capacity charge.
3. 12 to 24 months of electric bills. These show the real net cost, including the capacity charge and any credit for exported power.
4. Warranties and the installer. Panel, inverter and workmanship warranties, and whether they transfer. Confirm the installer is still in business.
5. Roof age and condition. Replacing a roof under panels means removing and reinstalling them, which adds cost. Add a roof-focused question to your home inspection, and if you are counting on a FORTIFIED roof discount, ask how the panels were mounted.
6. Insurance and HOA approval. Tell your insurer about the system (see our Alabama homeowners insurance guide), and in a subdivision confirm the panels were approved under the covenants. Solar is one of the usual architectural-approval flashpoints in our Alabama HOA guide.
What should sellers with solar do before listing?
Gather the paperwork above before you list, so buyers can see the economics on day one. If the system is leased, call the solar company now to learn the transfer or buyout process; a lease that has to be approved by a third party can slow a closing. Alabama is still largely a caveat emptor state, but you cannot misrepresent the home, and a lease or loan will surface in the contract and title work anyway. Our seller disclosure guide explains where the line is.
On price, resist the urge to add the system’s installed cost to the list price. An appraiser values the house based on what similar homes sold for, and our appraisal guide and pricing guide walk through how that works.
Local TWG perspective
The Williams Group at Keller Williams Realty sells homes across Tuscaloosa County, West Alabama and Greater Birmingham, and homes with rooftop solar remain uncommon in both markets. Alabama ranks last in the nation in residential solar capacity per person, according to Canary Media’s reporting. That scarcity cuts both ways: a well-documented, owned system can stand out to the right buyer, but there are often few comparable sales to support a value adjustment. The sellers who do best show the bills, the warranties and the ownership papers up front and price the house on the house, letting the panels be a reason to choose it. If you want a number grounded in local sales, start with a free home valuation.
Frequently asked questions
Do solar panels increase home value in Alabama?
They can, but usually by less than they cost. Owned systems add the most; leased systems generally add no appraised value. Because few Alabama homes have solar, appraisers often lack comparable sales to support a large adjustment.
How much is Alabama Power’s solar fee?
Alabama Power charges grid-connected residential systems a capacity reservation charge of $5.41 per kW of nameplate capacity per month under Rate Rider RGB. A 5 kW system pays about $27 a month, or about $325 a year. A federal court upheld the charge in March 2026.
Can I claim the 30% federal solar tax credit if I buy a house that already has panels?
No. The Section 25D credit belonged to the owner who paid for the installation, and it ended for systems completed after December 31, 2025. A later buyer does not inherit it.
Is a house with leased solar panels harder to sell?
It adds steps. The buyer usually has to qualify with the solar company and assume the lease, or the seller has to buy it out. Starting that process before listing avoids delays at closing.
Does Alabama have net metering?
No. Alabama does not require retail-rate net metering. Power you export is credited at about the utility’s avoided cost, which is well below the retail rate you pay.
Whether you are buying a home with panels or selling one, The Williams Group can help you read the bills, the contract and the comps before you commit.
Buying or selling a home with solar in Alabama?
Get straight, local answers on value, contracts and closing from The Williams Group.
Call or Text 205-292-2108 (West Alabama)Call or Text 205-292-7142 (Birmingham)Get a Free Home Valuation
Follow The Williams Group
Daily market updates, new listings, open houses and life around West Alabama & Greater Birmingham:
FacebookInstagramTikTokLinkedInYouTube
See why neighbors trust us on our reviews page · West Alabama 205-292-2108 · Greater Birmingham 205-292-7142
Sources
- Alabama Power: Rate Rider RGB (Supplementary, Back-Up or Maintenance Power)
- Alabama Reflector: Federal court rules Alabama Power can impose extra charge on customers with solar panels (March 2026)
- Canary Media: Alabama Power can keep charging steep rooftop solar fee
- IRS: FAQs on modification of Section 25D under Public Law 119-21