Commercial Solar

Tennessee has one statewide law that directly addresses solar development. During the 2022 legislative session, the Tennessee General Assembly established the “Decommissioning Law,” Tenn. Code Ann. § 66-9-207, which imposes requirements on solar power facilities regarding decommissioning obligations and the required removal of solar power facilities upon or prior to the expiration or termination of the solar power facility agreement. The Decommissioning Law includes requirements that must be present in agreements between landowners and owners or operators of solar power facilities entered into on or after June 1, 2022, the effective date of the legislation.

The original Decommissioning Law addressed solar-generating devices or structures at least 10 MW in size. However, effective July 1, 2024, the law was amended to apply to solar-generating devices or structures at least 5 MW in size. “Solar power facilities,” as defined in the Decommissioning Law, do not include solar-generating devices or structures less than 5 megawatts (MW) in size, measured at the point of interconnection; however, parties to a solar power facility agreement may elect to apply the requirements of the Decommissioning Law to smaller structures.

The 2024 legislation also tasks the TDEC Office of Energy Programs (OEP) with the responsibility of receiving and storing solar power facility agreements. Learn more about this process on the Statutory Requirements for Solar Facilities page. 

The Tennessee Solar Energy Industries Association, TenneSEIA, has a list of Frequently Asked Questions regarding this legislation.

Permitting solar development is treated similarly to permitting for other types of development in Tennessee. A solar construction site will require a National Pollutant Discharge Elimination System (NPDES) Stormwater Permit, sometimes called a construction general permit, from the Tennessee Department of Environment and Conservation (TDEC) Division of Water Resources. The site will also need an electrical permit, which can be purchased through the Tennessee Department of Commerce and Insurance. Additional permitting may be required by county or local municipalities; contact the local code or zoning office to learn more.

Additional requirements will be placed on any project that utilizes federal funding, including requirements pertaining to the National Environmental Policy Act (NEPA), such as a potential need to prepare an Environmental Assessment, which determines whether or not a federal action has the potential to cause significant environmental effects, or an Environmental Impact Statement (EIS), if a proposed action is determined to significantly affect the quality of the human environment. The EIS process requires the publishing of a notice of intent and an opportunity for the public to provide input, to be followed by the release of a draft EIS for public comment. As a federal agency, TVA regularly prepares NEPA environmental reviews. An example Environmental Assessment is available from TVA’s Adamsville Solar Project, and the TVA Solar and Battery Programmatic EIS provides an example of the documentation and requirements under the EIS process.  

Licensing

Solar installers are required to have a business license with the State, which would be acquired through the Secretary of State and be registered with the Tennessee Department of Revenue. Additional licensing requirements may exist from the local county or city municipalities.

The Tennessee Department of Commerce and Insurance requires a contractor’s license to complete any job over $25,000. Additional information is available on the Contractors and Home Improvements page, the License Requirements, and Licensing Steps pages. Contractor application documents can be found on the Forms and Documents page. Additionally, information on the various codes can be found on the Tennessee Fire Service and Codes Enforcement Academy’s Codes Program page. 

Solar Installation Certification

Currently, the State of TN does not require installers to be certified, though it is recommended. The North American Board of Certified Energy Practitioners (NABCEP) offers Solar Installation Certification. 

Electrical Code

The current, adopted electrical code for the State is the 2017 National Electrical Code (NEC). Article 110.3(B) of the 2017 NEC states that listed and labeled equipment shall be installed and used in accordance with any instructions included in the listing and labeling. For example, the installation instructions for Generac power cells state that Power cell batteries may be installed in dwelling units in the following locations only:

• Attached garages, separated from dwelling unit habitable spaces in accordance with local building code.
• Detached garages and accessory structures.
• Utility closets and storage or utility spaces.
• Basements.
•  Other locations not categorized as habitable space in a dwelling unit.

View TVA’s Local Power Company Partners and contact the local power company to obtain more information about solar options available to your organization.

The Tennessee Advisory Commission on Intergovernmental Relations (TACIR) released a report in 2023 on Managing Solar Energy Development to Balance Private Property Rights and Customer Protection with the Protection of Land and Communities to address common concerns about solar development in Tennessee. 

TenneSEIA, the state affiliate of the national Solar Energy Industries Association (SEIA), represents the interest of the solar energy industry in Tennessee and aims to promote the development of solar energy and complementary technologies, including storage. 

A variety of Tennessee Valley Renewable Energy programs are offered by TVA, with an emphasis on solar opportunities.  TVA offers dedicated pages about renewable resource opportunities for its Residential, Business, and Large Business and Industry customers. 

Under Tenn. Code Ann. § 67-6-346 [Pollution control credit], a taxpayer may take a credit, apply for a refund of taxes paid, or apply for authority to make tax-exempt purchases of machinery and equipment used to produce electricity at a “certified green energy production facility,” as defined in Tenn. Code Ann. § 67-4-2004. A  Certified Green Energy Production Facility is a facility certified by the TDEC as producing or storing electricity for use and consumption using clean energy technology.  See also, Tenn. Code Ann. Section 67-4-2108 relative to exempt property.

Federal Solar Tax Credits are available for businesses and other tax-exempt entities (e.g., nonprofits and local governments) that purchase solar energy systems. Tax-exempt entities (e.g., nonprofits and local governments) can also take advantage of solar tax credits through the elective pay provisions under the Inflation Reduction Act (IRA). Elective pay makes certain clean energy tax credits and the CHIPs manufacturing credit effectively refundable to tax-exempt entities; the entity can receive the full value of the credit because the IRS treats the elective payment amount as a tax payment. The first tax credit is the investment tax credit (ITC), which reduces the federal income tax liability for a percentage of the cost of a solar system that is installed during the tax year. This credit is available for projects that begin construction before January 1, 2025, and projects that begin construction after this date are eligible for the clean energy investment tax credit. The second is the production tax credit (PTC), a per kilowatt-hour (kWh) tax credit for electricity generated by solar and other qualifying technologies for the first ten years of a system’s operation, which reduces the federal income tax liability and is adjusted annually for inflation.

The Database of State Incentives for Renewables and Efficiency (DSIRE) provides a catalog of available incentives for renewable energy and energy efficiency across the U.S. 

The USDA Rural Energy for America Program (REAP) provides guaranteed loan financing (up to 75% of total eligible project costs) and grant funding (up to 25% of total eligible project costs) to agricultural producers and rural small businesses for renewable energy systems or to make energy efficiency improvements. For further inquiries about REAP, please contact the USDA Rural Business-Cooperative Service State Energy Coordinator for Tennessee.

The Tennessee Energy Efficiency Loan Program (EELP) was launched in 2010 to establish a low-interest revolving loan fund to assist commercial and industrial businesses and, later on, governmental entities in implementing energy efficiency and renewable energy improvements. Pathway Lending operates and manages this revolving loan fund, which has funded over 200 projects throughout the state with 100% financing. Financing for projects can range between $20,000 and $5 million.