State analysis · source documents checked 2026-09-24
Solar payback in Kentucky (KY) — 2026
For LG&E and KU customers, a new solar system earns a bill credit of 7.089 or 7.534 cents per exported kWh under Rider NMS-2. Kentucky Power credits a residential customer's net excess generation for the billing period at 9.746 cents/kWh. Duke Energy Kentucky, cooperative and TVA-distributor terms are not covered here.
What decides the answer in Kentucky
The credits in force are printed on each utility's Rider NMS-2, Original Sheet No. 58, effective for service rendered on and after February 16, 2026. LG&E's sheet (P.S.C. Electric No. 14, issued under the order in Case No. 2025-00114) lists a dollar-denominated bill credit of 7.089 cents per kWh. KU's sheet (P.S.C. No. 21, Case No. 2025-00113) lists 7.534 cents. These are the residential values the PSC approved in Case No. 2023-00404 by its August 30, 2024 order, and the sheets issued after the 2025 rate cases print the same values. [1] [2] [3]
Any LG&E or KU system that first reaches in-service status on or after September 24, 2021 takes NMS-2, and the rider is limited to systems of 45 kilowatts or less. The September 24, 2021 order in cases 2020-00349 and 2020-00350 drew the line: a facility had to be in service before that order took effect to qualify for NMS-1. The PSC's news release that day says “on or after September 25, 2021”, but the tariff sheets and LG&E/KU's net-metering page both say September 24, and the tariff is the governing document. Existing NMS-1 customers keep kWh credits, but the utilities' page says adding capacity or modifying the system moves them to NMS-2. Adding a battery does not count as a modification. [1] [2] [4] [5] [6]
NMS-2 does not net kilowatt-hours. Each billing period, the utility bills all energy the home takes from the grid at the standard rate and gives a dollar credit for each kWh the home sends to the grid. The credit applies only to the energy charge and per-kWh riders. It cannot reduce the residential Basic Service Charge, which Sheet No. 5 lists as 47 cents per day for LG&E and 57 cents per day for KU and names as the Minimum Charge. Unused credit carries forward. Credit left when service ends expires with the account and cannot move to another customer or location, although a joint account keeps it while one holder stays at the address. A customer who joins NMS-2 on a two-part rate may keep that rate structure for 25 years from the NMS-2 start date. [1] [2]
How the credit was first valued, in 2021: the PSC's September 24, 2021 release says LG&E/KU proposed a total avoided cost of 2.319 cents/kWh based only on avoided energy. The Commission instead set NMS 2 rates of 6.924 cents (LG&E) and 7.366 cents (KU), since replaced by the current sheet values, based on avoided energy, ancillary services, generation capacity, transmission capacity, distribution capacity, carbon and environmental compliance costs, and jobs benefits. The same release notes the cases remained open on matters for which LG&E/KU had been granted rehearing in an August 12, 2021 order. In 2023-00404 the Commission denied the companies' proposed NMS-2 rates and required more evidence on the other credit components in their next base rate case. What the 2025 rate cases decided about those components was not reviewed here; only the resulting credit values on the sheets were checked. [6] [3]
Kentucky Power works differently. Its net-metering compensation was first decided in a separate proceeding (Case No. 2020-00174, order of May 14, 2021, cited in the PSC release). Its current Tariff N.M.S. II (Original Sheet Nos. 19-1 and 19-2, effective for service on and after March 1, 2026, Case No. 2025-00257) nets usage and generation: energy charges apply only when the billing period's net energy is above zero, and excess generation accumulated for the billing period is credited at 9.746 cents/kWh for residential service. Credit larger than the billed energy charges and per-kWh riders carries over to later bills, and unused credit reverts to the company if the customer leaves the tariff. The sheet requires a two-direction time-of-use meter and speaks of netting periods without defining their length, so ask Kentucky Power how the netting is done. Systems in service before May 15, 2021 may stay on the original Tariff N.M.S., which carries a net kWh surplus to the next bill, until May 14, 2046, or earlier if a modification materially increases capacity. N.M.S. II customers cannot use the Equal Payment Plan or the Average Monthly Payment Plan. Duke Energy Kentucky, the rural electric cooperatives and TVA-served distributors have their own terms, and none of them was checked here. For an LG&E or KU quote the export credit is published, so the open question is how much of the production the home uses itself. Ask the installer for a monthly or hourly estimate of self-used energy versus exports. Then value self-used energy at the energy charge and exports at the Sheet No. 58 credit. The household illustration below prints its own export-price input; compare that input with the 7.089 and 7.534 cent credits. [7] [6]
How Kentucky pays for an exported kilowatt-hour
Export value differs from the full retail bill. The retail-value benchmark credits every kWh at the state-average import price. Under NMS-2 each exported kWh earns 7.089 cents (LG&E) or 7.534 cents (KU), and only against energy charges, so the benchmark overstates export value and ignores the daily Basic Service Charge. It is kept only for comparison across states.
LG&E tariff — Rider NMS-2 and Rate RS — Current LG&E credit, eligibility date, capacity cap, energy-charge-only offset, carry-forward and forfeiture, 25-year two-part-rate provision and the Basic Service Charge.
Document: P.S.C. Electric No. 14, Original Sheet No. 58 (NMS-2) and Sheet No. 5 (RS); Case No. 2025-00114. Effective/source period: Service rendered on and after February 16, 2026; issued March 6, 2026.
Applies to: LG&E customer-generators whose facility first attains in-service status on or after September 24, 2021; 45 kW maximum. Relevant passage: “Dollar-denominated bill credit: $0.07089 per kWh”.
Document: P.S.C. No. 21, Original Sheet No. 58 (NMS-2) and Sheet No. 5 (RS); Case No. 2025-00113. Effective/source period: Service rendered on and after February 16, 2026; issued March 6, 2026.
Applies to: KU customer-generators whose facility first attains in-service status on or after September 24, 2021; 45 kW maximum. Relevant passage: “Dollar-denominated bill credit: $0.07534 per kWh”.
Kentucky PSC order, Case No. 2023-00404 — Origin of the 7.534 and 7.089 cent residential credits; proposed rates denied; further evidence on other credit components ordered.
Document: Order of August 30, 2024; ordering paragraphs 4–6; Appendix A (KU) and Appendix B (LG&E). Effective/source period: Service rendered on and after August 30, 2024.
Applies to: LG&E/KU residential NMS-2 customer-generators. Relevant passage: “All excess customer generation, accumulated for the billing period, shall be credited for each month”.
Document: Order of September 24, 2021; Status of Pending Applications; Appendix B. Effective/source period: Historical: set the first NMS 2 rates and the NMS-1/NMS-2 boundary.
Applies to: KU (2020-00349) and LG&E (2020-00350) customer-generators. Relevant passage: “the eligible generating facility must be in service prior to the effective date of the Commission’s approval of NMS 2”.
LG&E and KU — net metering — Utility's own statement of the September 24, 2021 cutover and the NMS-1 modification rule.
Document: Net metering customer page (NMS-1, NMS-2, System Upgrades). Effective/source period: Retrieved September 24, 2026.
Applies to: LG&E and KU net-metering customers. Relevant passage: “Customers who began taking net metering service on or after September 24, 2021, receive dollar-denominated bill credits”.
Document: PSC Issues LG&E/KU Net Metering Order; cases 2020-00349 and 2020-00350. Effective/source period: Historical September 2021 decision; rates since replaced.
Applies to: LG&E/KU NMS 2 customer-generators. Relevant passage: “they proposed a recommended total avoided cost of 2.319 cents per kilowatt hour (kWh), based only on their estimated avoided energy costs”.
Kentucky Power tariff — N.M.S. and N.M.S. II — Kentucky Power's net-energy billing, 9.746-cent residential credit, carryover and reversion of credits, TOU meter, payment-plan exclusion, and the May 15, 2021 / May 14, 2046 legacy terms.
Document: P.S.C. KY. No. 14, Original Sheet Nos. 18-1 (Tariff N.M.S.) and 19-1 to 19-2 (Tariff N.M.S. II). Effective/source period: Service rendered on and after March 1, 2026; order of February 28, 2026 in Case No. 2025-00257.
Applies to: Kentucky Power customer-generators up to 45 kW; the 9.746-cent credit is the residential value. Relevant passage: “All excess customer generation, (net negative energy or “NNE”), accumulated for the billing period, shall be credited at the avoided cost rate of 0.09746 $/kWh for Residential service and 0.09657 $/kWh for non-residential service each billing period.”.
“Source documents checked 2026-09-24” means each linked document was retrieved on that date and the passage quoted under it is the text the claims in this section rely on. The date covers only those claims. It is not a household eligibility decision or a guarantee that a tariff is still current, so check the linked live documents before signing a contract, and report corrections via the contact page.
Common retail-value benchmark — not a household forecast
No incentives; every modeled kWh is valued at the historical state-average retail price. The household scenarios below separate assumed import/export prices, consumption share, cash cost and receipt timing.
How Kentucky compares with the other 50 records in this dataset
Measure
Kentucky
Dataset median
Rank of 51
Avg residential rate
12.79¢/kWh
14.91¢/kWh
40th highest
NSRDB daily sunlight (one location per state)
4.8 kWh/m²/day
4.9 kWh/m²/day
30th highest
Retail benchmark payback
15.2 years
13.0 years
44th fastest on this benchmark
Household scenarios below (range)
16.6 years to 21.5 years
—
Not ranked across states
The rank compares every state on the same full-retail basis; it is a benchmark, not a forecast for a new Kentucky customer. The household scenarios below, each with its own stated import price, export credit, cost and incentive timing, give 16.6 years to 21.5 years.
Rate: Calendar year 2024 annual average, from the EIA. Sunlight is NSRDB data via NLR PVWatts v8 at each state's 2020 Census center of population, one location per state (request settings and the values PVWatts returned are in state-insolation-pvwatts.json). Ranks and medians are computed across the 50 states and DC in this dataset. Every input behind the payback figure is printed in the assumptions block below, and the full 51-row table is at /states.
Reproduce the Kentucky household comparisons
These are hypothetical households, not customer results or offers. All start from an assumed 7 kW array producing 9625.71 kWh in year one; any row that changes production (a battery or a production-stress row) says so. The sunlight input is NSRDB data via PVWatts v8 for one location per state (request and response in state-insolation-pvwatts.json; see the methodology), not a production estimate for your roof. No federal credit is applied. No loan, income-tax effect on incentive revenue, battery replacement or future tariff change is modeled.
The benchmark row prices every kWh at the EIA average cited above. Where another row applies a published figure (for example a tariff or rider rate or charge, a program incentive rate, a statutory fee schedule, or a tax credit's rate, cap or carryforward period), that figure comes from a document in the sources list above. Every other price, consumption share, cost, fee, receipt date and amount of tax a household can use in a year is assumed. Eligibility remains conditional. The annual split does not reproduce monthly netting, time-of-use periods, credit caps, curtailment or minimum bills. Annual fees represent incremental solar costs, not charges you would pay with or without solar.
Production degrades by assumed 0.5% per year. The main result increases both import and export prices by assumed 3% per year; the flat-price column sets that to zero. Neither escalation is a tariff forecast. Fixed fees and scheduled receipts do not escalate. Energy savings accrue uniformly within a year for interpolation; incentives arrive only at year end.
Modeled results, not guarantees. No break-even means no crossing inside 25 years, not a calculated date beyond year 25.
Scenario
Initial cash cost
Year 1 energy value
Year 1 net cash incl. receipts
Payback
Flat-price payback
25-year net cash after cost
Common retail-value benchmark — no incentives
$22,400.00
$1,231.13
$1,231.13
15.2 years
19.0 years
Modeled $19,570.97
Hypothetical household — no incentives
$22,400.00
$962.57
$962.57
18.6 years
24.7 years
Modeled $10,415.46
Illustrative higher cash price — no incentives
$26,880.00
$962.57
$962.57
21.5 years
no break-even inside 25 years
Modeled $5,935.46
Illustrative 75% self-use — no incentives
$22,400.00
$1,106.96
$1,106.96
16.6 years
21.3 years
Modeled $15,337.78
LG&E: Rider NMS-2 bill credit (7.089 cents) — no incentives
$22,400.00
$966.85
$966.85
18.5 years
24.6 years
Modeled $10,561.49
KU: Rider NMS-2 bill credit (7.534 cents) — no incentives
$22,400.00
$988.27
$988.27
18.2 years
24.0 years
Modeled $11,291.63
Inputs, receipts and annual arithmetic: Common retail-value benchmark — no incentives
Historical state-average import value for ALL production; only a comparison, not an address-specific tariff.
Assumed initial cash cost $22,400.00, not reduced by any upfront credit or rebate; any receipt is listed below and arrives at year end. Import 12.790¢/kWh; export 12.790¢/kWh; self-use 100%; incremental fixed annual cost $0.00.
Year-one modeled energy value = 9625.71 × [(100/100 × 12.79/100) + ((1 − 100/100) × 12.79/100)] = $1,231.13. Subtract the annual fixed cost and add only that year's receipts for net cash. Display rounds cents; the downloadable calculation retains full precision.
Incentive basis: None; no eligibility or benefit assumed. Modeled total receipts inside 25 years: $0.00. These are not subtracted from initial cash cost.
The exact input fields and all 25 modelled years for this row are in the JSON download above.
Inputs, receipts and annual arithmetic: Hypothetical household — no incentives
Assumed round 13-cent import price, slightly above the 12.79-cent EIA 2024 Kentucky average and not an LG&E or KU energy charge, and an assumed round 7-cent export price; the LG&E and KU rows below use the current Rider NMS-2 bill credits.
Assumed initial cash cost $22,400.00, not reduced by any upfront credit or rebate; any receipt is listed below and arrives at year end. Import 13.000¢/kWh; export 7.000¢/kWh; self-use 50%; incremental fixed annual cost $0.00.
Year-one modeled energy value = 9625.71 × [(50/100 × 13/100) + ((1 − 50/100) × 7/100)] = $962.57. Subtract the annual fixed cost and add only that year's receipts for net cash. Display rounds cents; the downloadable calculation retains full precision.
Incentive basis: None; no eligibility or benefit assumed. Modeled total receipts inside 25 years: $0.00. These are not subtracted from initial cash cost.
The exact input fields and all 25 modelled years for this row are in the JSON download above.
Inputs, receipts and annual arithmetic: Illustrative higher cash price — no incentives
Same production, prices, consumption share and fees, but cash cost is 20% higher; not a market-price estimate.
Assumed initial cash cost $26,880.00, not reduced by any upfront credit or rebate; any receipt is listed below and arrives at year end. Import 13.000¢/kWh; export 7.000¢/kWh; self-use 50%; incremental fixed annual cost $0.00.
Year-one modeled energy value = 9625.71 × [(50/100 × 13/100) + ((1 − 50/100) × 7/100)] = $962.57. Subtract the annual fixed cost and add only that year's receipts for net cash. Display rounds cents; the downloadable calculation retains full precision.
Incentive basis: None; no eligibility or benefit assumed. Modeled total receipts inside 25 years: $0.00. These are not subtracted from initial cash cost.
The exact input fields and all 25 modelled years for this row are in the JSON download above.
Inputs, receipts and annual arithmetic: Illustrative 75% self-use — no incentives
Assumes a different load profile serves 75% of production on site without added equipment cost. This is a sensitivity, not a promised behavioral saving.
Assumed initial cash cost $22,400.00, not reduced by any upfront credit or rebate; any receipt is listed below and arrives at year end. Import 13.000¢/kWh; export 7.000¢/kWh; self-use 75%; incremental fixed annual cost $0.00.
Year-one modeled energy value = 9625.71 × [(75/100 × 13/100) + ((1 − 75/100) × 7/100)] = $1,106.96. Subtract the annual fixed cost and add only that year's receipts for net cash. Display rounds cents; the downloadable calculation retains full precision.
Incentive basis: None; no eligibility or benefit assumed. Modeled total receipts inside 25 years: $0.00. These are not subtracted from initial cash cost.
The exact input fields and all 25 modelled years for this row are in the JSON download above.
Inputs, receipts and annual arithmetic: LG&E: Rider NMS-2 bill credit (7.089 cents) — no incentives
LG&E's P.S.C. Electric No. 14, Original Sheet No. 58, Rider NMS-2 (service on and after February 16, 2026, Case No. 2025-00114) lists a “Dollar-denominated bill credit: $0.07089 per kWh” for each kWh sent to the grid, applied only to the energy charge and per-kWh riders. This row applies 7.089 cents to every exported kWh, with the same assumed 13-cent import price and 50% self-use. LG&E territory only.
Assumed initial cash cost $22,400.00, not reduced by any upfront credit or rebate; any receipt is listed below and arrives at year end. Import 13.000¢/kWh; export 7.089¢/kWh; self-use 50%; incremental fixed annual cost $0.00.
Year-one modeled energy value = 9625.71 × [(50/100 × 13/100) + ((1 − 50/100) × 7.089/100)] = $966.85. Subtract the annual fixed cost and add only that year's receipts for net cash. Display rounds cents; the downloadable calculation retains full precision.
Incentive basis: None; no eligibility or benefit assumed. Modeled total receipts inside 25 years: $0.00. These are not subtracted from initial cash cost.
The exact input fields and all 25 modelled years for this row are in the JSON download above.
Inputs, receipts and annual arithmetic: KU: Rider NMS-2 bill credit (7.534 cents) — no incentives
KU's P.S.C. No. 21, Original Sheet No. 58, Rider NMS-2 (service on and after February 16, 2026, Case No. 2025-00113) lists a “Dollar-denominated bill credit: $0.07534 per kWh”, applied only to the energy charge and per-kWh riders. This row applies 7.534 cents to every exported kWh, with the same assumed 13-cent import price and 50% self-use. KU territory only.
Assumed initial cash cost $22,400.00, not reduced by any upfront credit or rebate; any receipt is listed below and arrives at year end. Import 13.000¢/kWh; export 7.534¢/kWh; self-use 50%; incremental fixed annual cost $0.00.
Year-one modeled energy value = 9625.71 × [(50/100 × 13/100) + ((1 − 50/100) × 7.534/100)] = $988.27. Subtract the annual fixed cost and add only that year's receipts for net cash. Display rounds cents; the downloadable calculation retains full precision.
Incentive basis: None; no eligibility or benefit assumed. Modeled total receipts inside 25 years: $0.00. These are not subtracted from initial cash cost.
The exact input fields and all 25 modelled years for this row are in the JSON download above.
Formula and modeling limitations · Use the editable calculator below to test your own cash price and energy split. It cannot confirm utility enrollment or tax eligibility.
Assumptions behind the Kentucky retail-value benchmark
A common full-retail comparison, not an address-specific forecast. Size alone does not change payback when cash cost and production both scale proportionally. Use the worksheet to vary cash price, production, self-consumption, export value and recurring costs.
System modeled
7 kW DC
Assumed installed cost
$22,400 (assumed $3.20/W DC)
Annual production, year 1
9,626 kWh
Production basis
NSRDB daily sunlight on a 20° south-facing panel at Kentucky's 2020 Census population center (4.83 kWh/m²/day, via PVWatts v8). Annual production = system kW × this input × 365 × assumed performance ratio. PVWatts' own modelled AC output for the same request is 1,350.7 kWh per kW, or 9,455 kWh for 7 kW, so this shortcut runs 1.8% above it; on the PVWatts figure the benchmark payback would be 15.4 years.
Performance ratio (system losses)
0.78
EIA state-average retail rate
12.79¢/kWh — Calendar year 2024 annual average
Panel degradation
0.5%/yr
Assumed electricity price escalation
3.0%/yr, not a forecast
Model horizon
25 years
Federal tax credit applied
None included in this benchmark
State or utility incentives applied
None deducted in this benchmark. Where a household scenario above applies a published tariff rate or a conditional receipt, its row says so; this benchmark applies none of them
Assumed value of all production
Full retail rate, including exports; not a utility tariff lookup
Recurring operating costs applied
None in this benchmark; editable in worksheet
How the payback figure reconciles
Modelled $22,400 ÷ modelled $1,231 of year-one savings = 18.2 years — the straight division, if electricity prices never move and the panels never age.
With 0.5%/yr degradation and prices held flat: 19.0 years.
With the same degradation and electricity prices rising 3.0%/yr: 15.2 years — the retail-value benchmark, not a household forecast.
Production stress test, same assumed prices: 20% less production (shading, a poorer roof angle) gives 18.2 years; 20% more production gives 13.0 years. This is a what-if range, not a confidence interval.
These price-growth rates are assumptions, not forecasts of your utility's tariff. None of these cases models financing, taxes, battery dispatch or actual utility settlement. No crossing within 25 years does not establish a crossing later. Full wording on the methodology.
Solar cash-flow worksheet
Compare assumed cash flows, not an address-specific forecast. No tariff, roof or incentive eligibility is looked up. Your worksheet entries are calculated in this browser; the worksheet does not send them anywhere or save them between visits. The site also loads Google advertising code; the privacy page explains what that code may collect and your choices.
Starting retail rate: 12.79¢/kWh — Calendar year 2024 annual average (Kentucky), from EIA Table 2.10. It is not your current tariff. All cost, export, usage, escalation and incentive entries are assumptions.
With no incentives or recurring costs, fixed cost/W and proportional generation mean that increasing size scales cost and savings equally: payback years cancel out. Unedited price and production follow that rule here. Once you edit either, it stays fixed when size changes; update it deliberately. Different cash prices, shading/production and export shares can change payback.
Optional assumed cash incentives — zero by default
No federal, state or utility incentive is inferred. Check eligibility and actual receipt timing. Recurring and delayed incentives arrive at year end; do not enter the same benefit in multiple fields. Operating cash is approximated uniformly within each year.
Your entered scenario — modelled, not a quote
Modelled installed cash price
$22,400
Modelled initial outlay after upfront rebate
$22,400
Modelled year-one net cash, including receipts/costs
$1,231
Modelled first cash-flow break-even
15.2 years
Modelled 25-year net cash after initial outlay
$19,571
Modelled production in year one
9,626 kWh
Modelled year-one energy value before costs/incentives: $1,231.
No break-even inside 25 years means the model never crosses within its horizon; it does not predict a later crossing. This is undiscounted cash flow, not investment return. A first crossing can reverse if later operating costs exceed cash benefits. Financing, taxes, changing export rules, time-of-use settlement, credit expiry and battery dispatch are not simulated.
Assumed price-escalation sensitivity
Same entered inputs, degradation and nominal fixed costs; only import/export price escalation changes. These are scenarios, not forecasts.
0%/year: 19.0 years
3%/year: 15.2 years
6%/year: 13.0 years
Separate common retail-value benchmark
This comparison uses 7 kW, assumed $3.20/W, production from the state's one-location NSRDB sunlight input and 12.79¢/kWh (Calendar year 2024 annual average) for every kWh. It ignores your entered cash price, production, tariff, costs and incentives; assumes 0.5% degradation and 3% escalation. It is not an address forecast.
Benchmark assumed cash price
$22,400
Benchmark modelled year-one value
$1,231
Benchmark modelled break-even
15.2 years
Reproduce the 25-year modelled cash flows for your entered scenario
Annual cash = degraded production × weighted import/export price × price-escalation factor − annual fixed cost + eligible year-end receipts. Cumulative cash starts at negative initial outlay. Incentives after year 25 are excluded.
Use your utility tariff and a site-specific production assessment to refine inputs. Methodology and limitations.
Estimate only. State comparisons are common retail-value benchmarks, not forecasts for your roof. Custom scenarios depend on the cash price, production, import/export prices, self-consumption and other assumptions entered. They are not quotes or guarantees. Listed incentives do not establish eligibility or a payment date. The Residential Clean Energy Credit (Section 25D, the 30% federal tax credit) expired for systems placed in service after December 31, 2025. Verify all numbers with a licensed installer and your utility before making a purchase decision. See full disclaimer.
Compare every state
Kentucky is one of 17 jurisdictions with a written analysis on this site: 16 states and the District of Columbia. The rate, sunlight, modeled payback and recorded incentives for all 50 states and DC — including those without a page — are in one sortable table.