How Do Kentucky’s Private Solar Credits Work?

Kentucky’s private solar credit incentive program was designed and implemented at a time when very few people participated. It was meant to jump-start rather than serve as a permanent foundation for those interested in putting rooftop panels on homes or businesses.

As incentive programs have increased in popularity, the true costs of providing 24/7 electricity distribution are not being fully recovered by power providers serving private solar customers. Under state law, power providers in Kentucky are required to provide credits for any excess power generated by private solar customers which are then applied to future bills. The value of these private credits are based on the much higher retail rate of electricity which is roughly 300% higher than the competitive or market rate, and payments must be made available regardless of whether the excess solar power is needed to maintain our grid’s reliability.

Over time, this can lead to “cost-shifting” onto other non-solar customers to make up the difference from sustained energy distribution service losses.