Is solar still worth it in Kentucky after the 30% credit?

Is solar worth it in Kentucky in 2026? For some homes it is, but the margin is thinner than most proposals admit. The 30% federal credit that cut the price of a homeowner-owned system ended with 2025. Since then, LG&E and KU raised rates, and the credit for exported power stayed where it was. Whether solar pencils on your roof now depends on four numbers you can check yourself: the installed price per watt, how much of your solar output you use at home, how long your roof will last, and how long you’ll stay.

The short version: if you can buy at a sharp price, use a large share of the power yourself, and plan to stay 20 years or more, solar can still beat your bill. If any of those is weak, a cash purchase in 2026 may earn less than a savings account. The rest of this article shows how to tell which side of that line you’re on.

As of November 1, 2026: the rates, credits and tax rules below are current as of this date. Utility tariffs change in rate cases, and tax guidance changes too. Check the sources at the end before you rely on any figure.

What changed on January 1, 2026

The residential clean energy credit, Section 25D of the tax code, ended for expenditures made after December 31, 2025. That change came from the 2025 budget reconciliation law, often called the One Big Beautiful Bill Act, signed July 4, 2025.

The timing rule catches people. The IRS treats a solar expenditure as made when the original installation is completed, not when you sign or pay. Its FAQ says plainly that paying in 2025 does not save the credit for a system finished in 2026. If you earned a 25D credit on an earlier system and couldn’t use all of it, the existing carryforward rules still apply. Your tax professional can confirm how that works on your return.

Here’s what moved, and what didn’t, for a homeowner in LG&E or KU territory:

Factor	2025	November 2026
Federal credit for a system you own	30% of cost	None
KU average residential bill (1,085 kWh/month)	$133.57	$142.30 under the February 2026 order, up 6.54%
LG&E average residential bill	$108.76	$113.90 under the February 2026 order, up 4.73%
KU NMS-2 export credit	7.534¢ per kWh	7.534¢ per kWh
LG&E NMS-2 export credit	7.089¢ per kWh	7.089¢ per kWh

The bill figures come from the Kentucky Public Service Commission’s February 16, 2026 orders. Interim rates took effect January 1, 2026, and the final order later trimmed them. In March 2026, the PSC corrected an error in the order’s appendix and confirmed that the NMS-2 export credits stay at their existing levels.

The 30% credit was one rung on the ladder. It’s gone, and the ladder still reaches the roof. You just have to test each remaining step more carefully.

The ratio that decides Kentucky solar

Under the net metering rider for newer systems (NMS-2 at LG&E and KU), you’re billed for every kilowatt-hour you pull from the grid at the normal rate. You get a fixed credit for every kilowatt-hour you push back. Those two numbers are not equal. In the tariff sheets in effect this fall:

• KU: energy charge 11.396¢ per kWh; export credit 7.534¢. An exported kWh earns about 66% of what a self-consumed kWh saves.
• LG&E: energy charge 11.499¢ per kWh; export credit 7.089¢. An exported kWh earns about 62%.

Both figures are before per-kWh riders like the fuel adjustment, which change monthly and add to what self-consumption saves. Neither number touches the daily basic service charge: $0.58 a day at KU and $0.48 a day at LG&E. You’ll pay that with or without solar.

That gap is why self-consumption, the share of your solar output you use as it’s produced, matters more than the panel count. A household that runs a heat pump, a pool pump or an EV charger during daylight gets more from each panel than one that’s empty from 8 to 6. Sequencing matters too. Our post on the order of home electrification covers when solar should come first and when it shouldn’t.

For context, the U.S. Energy Information Administration reported Kentucky’s average residential price at 13.80¢ per kWh in August 2026, against a national average of 18.16¢. Kentucky’s power is cheaper than most states’, so each kilowatt-hour you make saves less.

A worked example: a Lexington home on KU

These numbers are illustrative, not a quote. We use them to show how the pieces interact. Replace each one with your own.

Assumptions:

• KU residential customer using 13,020 kWh a year, about 1,085 kWh a month (the PSC’s average for KU)
• 8 kW system producing 10,000 kWh in year one, declining 0.5% a year
• 40% of output used at home; 60% exported at the NMS-2 credit
• KU’s energy charge rises 2.5% a year; the export credit stays flat
• 25-year horizon; future dollars discounted at 5% a year, roughly what the cash could earn elsewhere
• Riders, taxes, maintenance and an inverter replacement left out, to keep the example simple

Year-one value: 4,000 kWh × 11.396¢ = $455.84 saved, plus 6,000 kWh × 7.534¢ = $452.04 in credits. Total: about $908.

Installed price	System cost	Simple payback	25-year net present value at 5%	Approximate return
$2.50 per watt	$20,000	20.3 years	−$6,099	1.8% a year
$3.00 per watt	$24,000	23.9 years	−$10,099	0.4% a year
$3.50 per watt	$28,000	More than 25 years	−$14,099	Below zero
$3.00 per watt, 2025 rules (30% credit)	$16,800 net	17.3 years	−$2,899	Not computed

Two results stand out. First, under these assumptions the system needs to cost about $1.74 per watt to break even against a 5% alternative. At 60% self-consumption, the break-even rises to about $1.97 per watt. Second, the credit’s disappearance moved this example from “marginal” to “hard to justify on money alone.” The same panels, at the same price, lost about $7,200 of value.

Self-consumption sensitivity, at $3.00 per watt:

Share used at home	Year-one value	Simple payback	25-year net present value at 5%
25%	$850	More than 25 years	−$11,513
40%	$908	23.9 years	−$10,099
60%	$985	21.3 years	−$8,213

If you’d rather run these numbers on your own bills, our solar payback estimator uses the same structure.

Four things that change the answer

1. Installed price. We won’t tell you prices have fallen, because the quotes we see vary too widely to generalize. What we can say is that bids for the same roof can differ by thousands of dollars. Get at least three, compare them per watt of DC capacity, and make sure each one includes the same scope.

2. How much you use at home. Moving flexible loads into daylight hours raises the value of every panel. Oversizing a system to export more does the opposite. Each extra exported kWh earns only the flat credit.

3. Roof timing. If your shingles have fewer than about 10 years left, the cost to remove and reinstall the panels at reroofing belongs in the analysis. Often the cheaper path is to reroof first. A Solar Readiness Consultation is built for exactly this question.

4. Your horizon and your discount rate. A 2% return is poor if your money could earn 5%. It looks better if your alternative earns less, or if you value a hedge against future rate increases. Be honest about which one you’re buying.

Two more assumptions deserve a hard look. Proposals often escalate the whole savings stream with utility rates, but the export credit isn’t escalating today. If it rose with rates in our example, the $3.00-per-watt payback would drop from 23.9 to 21.5 years. It’s set by the PSC in rate cases and could move either way. Our Kentucky net metering explainer shows how it’s set.

The lease and PPA offers you’ll see now

Many installers now lead with third-party ownership, because the company that owns the system may still claim a federal credit under Section 48E. In Kentucky that usually means a lease. Residential power purchase agreements, where you pay per kWh to a company that sells you power, have an unclear legal footing here, so confirm that any PPA offer is permitted before you take it seriously. Under current law, that credit ends for solar placed in service after December 31, 2027, unless construction began by July 4, 2026. Projects that begin construction after December 31, 2025 also face restrictions on material assistance from “prohibited foreign entities.”

In Kentucky, there’s a wrinkle to raise before you sign. The net metering statute, KRS 278.465, defines an eligible customer-generator as a customer who owns and operates the generating facility. Ask any lease or PPA provider, in writing, how its arrangement qualifies for your utility’s net metering rider, and have your attorney review the answer. Our lease vs. PPA vs. loan vs. cash comparison walks through the rest.

Value that doesn’t show up in a payback table

Some reasons to go solar aren’t financial: you want to produce your own power, or you value a partial hedge against future rate cases. Those are legitimate. Just price them honestly. If the numbers show you paying $6,000 to $10,000 in present-value terms for that hedge, decide whether it’s worth that to you.

Backup power is a separate purchase. Grid-tied panels alone shut off when the grid does. If outages are your main concern, the battery question needs its own analysis.

What we’d do

• Pull 12 months of bills and note your monthly kWh, your rate schedule and whether you’re on NMS-1 or would be on NMS-2.
• Get three bids. Normalize them to price per watt, with matching equipment, scope and warranties.
• Model self-consumption from your actual usage pattern, not a default percentage.
• Hold the export credit flat. Test rate escalation at 1%, 3% and 5%.
• Decide your discount rate before you see the results, not after.
• If the system only works at the optimistic end, wait. Watch prices, finish the roof, or electrify first.

If you’d like an independent read on a specific quote, our Proposal Second Opinion delivers a written review in five business days. We don’t sell panels and take no commissions. A smaller project, or none at all, is a fine outcome for us.

This article is general information, not tax advice or legal advice. Confirm tax questions with a tax professional and contract questions with an attorney.