Solar in Alabama: how the rules work
How Alabama credits the power solar panels send back to the grid, what homes there pay for electricity, and what to check when a home with solar is bought or sold.
How exported power is credited
Power sent to the grid is credited at an export rate well below retail, often tied to the utility’s avoided cost.
Alabama has no net metering statute or PSC rule. Alabama Power residential solar customers take service under Rider RGB. On-site self-consumption offsets retail purchases, and all exported energy is bought under Rate PAE (Purchase of Alternative Energy) at avoided-cost energy prices. The Rate PAE sheet retrieved (44th revision, effective April 2023 billings) pays about 4.40-7.69 cents/kWh depending on the TOU option, season and period, plus a small monthly metering charge (~$0.97 single-phase). Credits can carry forward on the bill. Separately, Alabama Power charges rooftop solar customers a Capacity Reservation Charge of $5.41/kW-month (about $39/month for a 7.2 kW system). It has been in place since 2012 at $5/kW, and a federal court upheld it on March 26, 2026 by dismissing the PURPA challenge. In 2024 the PSC cut avoided-cost payments to third-party generators of 100 kW or more (Rate CPE, e.g. ~7.33 to ~3.65 cents), and a 2025 filing raised that to ~3.94 cents. It is unconfirmed whether Rate PAE was revised the same way, so current small-generator prices may be lower than the 2023 sheet. There is no grandfathering regime because there was never retail net metering. Share basis: ~5 cents typical PAE value vs ~16 cents residential retail (estimate). The capacity charge further reduces net value.
What changes for a home with solar
A savings estimate that assumes full retail credit for exported power overstates the value of that power for systems on the current rules. Power used in the home still offsets the full retail rate.
Older systems are often grandfathered on earlier, better terms for a set number of years. Which rules a particular system is on depends on its interconnection date, stated in the note above.
Electricity here costs about 16.5¢ per kWh (2026) and has risen about 2.8% a year over the last decade. A lease or PPA escalator above that pace makes the solar payment rise faster than utility rates have.
When a home with solar is sold in Alabama
- Owned outright: proof it is paid off, the warranties, and the utility’s interconnection or net-metering agreement, which has to move into the buyer’s name.
- Loan: a payoff letter, and whether the buyer can assume the loan. Many solar loans are secured by a UCC-1 fixture filing that title will find.
- Lease or PPA: the transfer process and how long approval takes, the buyer’s credit check, the current payment or rate and its yearly increase, and a buyout quote.
- Every case: whether the export-credit terms above stay with the home after the sale, and the last 12 months of production from the monitoring app.
Have the solar contract for a Alabama home?
Upload it and get a letter-graded report card: price, production, payment changes, value and transfer terms, measured against Alabama’s rates and rules.
Grade a solar contractSources
- www.alabamapower.com/content/dam/alabama-power/pdfs-docs/Rates/Rate_PAE.pdf (2023-04-01)
- insideclimatenews.org/news/31032026/alabama-power-solar-fee-ruling/ (2026-03-31)
- alabamareflector.com/2024/08/29/alabama-power-gets-green-light-to-reduce-price-it-pays-to- (2024-08-29)
- alabamareflector.com/2025/02/18/alabama-power-plans-to-discontinue-third-party-power-fee/ (2025-02-18)
- Electricity prices: EIA Electric Power Monthly, Table 5.6.B (2026) and EIA state annual averages 2014–2024
- Installed price: EnergySage marketplace, September 2026