Kentucky Solar Calculator

Enter your utility and monthly bill — get system size, federal ITC, Kentucky sales tax savings, net metering credits, and 25-year projections for Louisville, Lexington, and beyond.

Your Kentucky solar inputs

Monthly electric bill?

Electric utility?

System size?

Kentucky solar estimate

20 × 400W panels (8 kW system)

Recommended size for your bill: 12.1 kW

Monthly usage1,182 kWh/mo

Annual production (KY 4.1 PSH)9,578 kWh/yr

Annual savings (net metering 1:1)$1,054/yr

Gross system cost$22,400

Federal ITC (30%)-$6,720

KY sales tax exempt (6%)-$1,344

State income tax creditNone

Net cost after incentives$14,336

Payback period13.6 yrs

25-year savings$26,338

Kentucky's net metering credits exported solar at full retail rate (1:1). Solar equipment is exempt from Kentucky's 6% sales tax — saving $1,200-$1,700 on a typical system.

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How to Use This Calculator

Enter your bill and select your Kentucky utility

Kentucky has four major electric utilities: LG&E (Louisville Gas & Electric) serves Louisville at $0.11/kWh; KU (Kentucky Utilities) serves Lexington, Bowling Green, Owensboro, and most of central and western Kentucky at $0.11/kWh; Duke Energy Kentucky serves northern Kentucky near Cincinnati at $0.12/kWh; Kentucky Power (AEP) serves eastern Kentucky at $0.12/kWh. Select your utility to get the accurate rate for your area.

Kentucky's sales tax exemption is a real incentive

Kentucky exempts solar energy equipment from the state's 6% sales tax. On a $22,000 system, this saves approximately $1,320 upfront — a meaningful reduction on top of the federal ITC. This exemption applies automatically at point of sale; your solar installer should not charge Kentucky sales tax on equipment. The sales tax exemption is one of Kentucky's most straightforward solar incentives because it requires no application or tax filing.

Net metering at retail rates improves Kentucky economics

Kentucky utilities offer net metering, and the law requires credits at the retail rate (1:1) — meaning every kWh exported to the grid earns the same credit as a kWh you purchase. This "retail rate" net metering is better than states that credit at wholesale/avoided cost. Credits can be banked and used against future bills. Kentucky's 4.1 PSH is lower than Sun Belt states, but the retail net metering policy ensures all solar production is valued fairly.

The Formula

Monthly kWh = Monthly Bill ÷ Electricity Rate Annual Production = System kW × 1000 × 4.1 PSH × 365 × 0.80 efficiency ÷ 1000 Annual Savings = Annual Production × Retail Rate (net metering at 1:1) Gross Cost = System kW × 1000 × $2.80/W ITC Credit = Gross Cost × 30% Sales Tax Saving = Gross Cost × 6% (KY sales tax exemption) Net Cost = Gross Cost − ITC Credit − Sales Tax Saving Payback = Net Cost ÷ Annual Savings

Kentucky uses 4.1 peak sun hours — Louisville gets 4.2 PSH, Lexington gets 4.1, eastern Kentucky gets about 4.0. The $2.80/W installed cost reflects Kentucky's growing installer base. Because net metering credits all solar at retail rate, the calculation is straightforward: all production saves at your utility rate, whether self-consumed or exported.

Example

Laura — Louisville LG&E customer

Laura pays $130/month to LG&E at $0.11/kWh. She wants an 8 kW system for her Louisville home.

Monthly bill$130 (LG&E, $0.11/kWh)

System8 kW, south-facing

LocationLouisville, KY (4.2 PSH)

Result

Annual production~9,562 kWh/yr

Annual savings (net metering)~$1,052/yr

Gross system cost~$22,400

Federal ITC (30%)-$6,720

KY sales tax exempt-$1,344

Net cost after incentives~$14,336

Payback period~13.6 years

25-year savings~$26,300

Kentucky's lower solar irradiance (4.1 PSH) pushes payback to 13-15 years, but 25-year savings of $26,300 comfortably exceed the net cost of $14,336. The sales tax exemption saves Laura $1,344 upfront — automatically, at point of sale. No state income tax credit is available in Kentucky, making the federal ITC and sales tax exemption the primary incentives.

FAQ

Does Kentucky have a state solar tax credit? ▼

No — Kentucky does not have a state income tax credit for solar energy systems. The primary Kentucky-specific incentive is the 6% sales tax exemption on solar equipment, which saves $1,200-$1,700 on a typical system upfront. The 30% federal Investment Tax Credit (ITC) is the main financial incentive for Kentucky homeowners. Some Kentucky utilities may offer additional small rebates — check with LG&E, KU, Duke Kentucky, or Kentucky Power for current programs.

How does Kentucky net metering work? ▼

Kentucky law requires utilities to offer net metering with credits at the full retail rate (1:1). Each kWh of excess solar you send to the grid earns a credit equal to what you'd pay for a kWh from the utility. Credits accumulate monthly and roll over. This retail-rate net metering is favorable — many states only offer wholesale or "avoided cost" rates (often 3-7 cents/kWh less). Kentucky's 1:1 retail net metering means every kWh your panels produce is worth the same, whether you use it directly or export it.

Is solar worth it in Kentucky given lower sunshine? ▼

Yes, though payback periods run 12-16 years versus 7-11 years in Sun Belt states. Kentucky gets 4.1 PSH — less than Texas (5.0) but more than many think. Key advantages: retail-rate net metering values all solar production equally; the 30% ITC reduces upfront cost significantly; sales tax exemption saves another $1,200-$1,700; and Kentucky utility rates have been rising 3-5% annually, which improves future-year economics. The 25-year lifetime value of a solar system typically exceeds net cost by a comfortable margin.

Does Kentucky exempt solar from property taxes? ▼

Kentucky does not have a statewide solar property tax exemption. Solar installations may increase your home's assessed value, and that increase would be subject to property taxes. Kentucky property tax rates are moderate (approximately 0.8% of assessed value). If you're concerned about property tax impact, check with your county property valuation administrator, as assessment practices vary by county. The absence of a property tax exemption is partially offset by the sales tax exemption at purchase.

What size solar system does a Kentucky home need? ▼

Kentucky homes typically need 6-10 kW of solar. Average monthly usage in Kentucky is about 1,100 kWh. With 4.1 PSH, an 8 kW system produces approximately 9,562 kWh per year — covering about 72% of average annual usage. Homes with electric heat or large A/C loads may need 10-14 kW to approach full coverage. Use the recommended size shown in this calculator based on your actual bill. Note that Kentucky's lower PSH means you need about 20% more panel capacity than a Texas home for the same production.

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