Solar panels in Alabama: payback, production and savings

In Birmingham, each kW of south-facing panels produces about 1,367 kWh a year, #27 of 51 states for sunshine. Homes in Alabama paid 16.40¢/kWh on average in July 2026 (#24 highest in the U.S.; national average 18.31¢), up 3.0% from a year earlier. Below-average power prices stretch the payback, so sizing and the export credit matter more.

Output by month (kWh per kW)

May is the best month (143 kWh) and Dec the weakest (80 kWh).

Example: 7 kW system, 10,500 kWh/yr home

	Full net metering	Credit ½ retail	Credit ¼ retail
Year-1 savings	$1,569	$1,129	$909
Payback	12.6 years	16.9 years	20.2 years
25-year net gain	$26,671	$13,349	$6,689

Assumptions, not quotes: $21,000 installed ($3,000/kW), no incentives, 40% of use during daylight, power prices +2.5%/yr. Change them below.

How roof direction changes output in Alabama

kWh per kW per year, and the difference vs. south at 20°.

Facing	20° pitch	30° pitch
South	1,367 (+0%)	1,382 (+1%)
Southeast	1,321 (-3%)	1,318 (-4%)
Southwest	1,317 (-4%)	1,314 (-4%)
East	1,205 (-12%)	1,161 (-15%)
West	1,200 (-12%)	1,154 (-16%)
East-west (split)	1,202 (-12%)	1,157 (-15%)

What to check before going solar in Alabama

How your utility credits exports. Net metering rules differ by state and by utility, and several states have moved to lower "net billing" credits worth a fraction of the retail rate. The example table shows three cases; look up your utility's current program in the DSIRE database.
Federal tax credit. The 30% residential clean energy credit does not apply to systems placed in service after December 31, 2025 (IRS). Count only state or utility incentives that are still open.
Your real price per kWh. Divide your bill's energy and delivery charges by the kWh used; fixed monthly fees don't go away with solar.

Run your own numbers in Alabama

Your roofLocation

FacingRoof pitch

System sizekWA typical modern panel is 0.4 kW.

Your usageAnnual electricity usekWh/yrAdd up 12 months of bills. U.S. homes average roughly 10,000–11,000 kWh.Use while the sun is up%30–40% if nobody is home during the day; 50–60% if you work from home.

PricesElectricity price$/kWhBlank = Alabama average from EIA ($0.164/kWh). Use your bill's all-in rate.Credit for exported powerInstalled cost$/kWYour quote divided by system size. Example value.Rebates and incentives$The 30% federal credit ended for systems placed in service after Dec 31, 2025.

Advanced

Maintenance & insurance$/yrElectricity price change%/yrAssumption. Try 0% for a conservative case.

First-year savings

$1,569

Payback

12.6 years

25-year net gain

$26,671

Return (IRR)

6.9%

Production vs. use by month

9,566 kWh/yr produced · covers 40% of your use directly · 44% of output used on the spot.

Production Use

Which size pays off best?

Same usage and prices, only size changes. Best 25-year net gain: 8 kW.

kW	Cost	Year-1 savings	Payback	25-yr gain
3	$9,000	$672	13.6 years	$10,002
4	$12,000	$896	13.1 years	$14,169
5	$15,000	$1,121	12.9 years	$18,336
6	$18,000	$1,345	12.7 years	$22,504
7	$21,000	$1,569	12.6 years	$26,671
8	$24,000	$1,722	12.7 years	$30,499
10	$30,000	$1,722	15.3 years	$26,320
12	$36,000	$1,722	17.7 years	$20,320

Estimate based on NLR PVWatts and EIA data. See the methodology.

States with similar sunshine

Data: NLR PVWatts v8 (U.S. DOE National Laboratory of the Rockies, formerly NREL), TMY weather for Birmingham (33.52, -86.81), 14% losses, retrieved 2026-10-11. Prices: U.S. EIA Electric Power Monthly, Table 5.6.A (July 2026). Methodology.