Kentucky Net Metering Law: KRS 278.465–278.468

Senate Bill 100 (2019), effective January 1, 2020, raised Kentucky's net metering system size cap from 30 kW to 45 kW and extended coverage to rural electric cooperatives — but it also introduced a two-tier compensation structure for the state's largest investor-owned utilities that significantly reduced the value of solar exports for new enrollees.

TVA exemption: Utilities that distribute TVA power in far western Kentucky (including areas around Paducah) are not subject to KRS 278.465 and are instead governed by TVA solar tariffs and local power company policies, which are typically less favorable. If you are in a TVA-served area, do not assume the state net metering rules apply to you — contact your local distributor directly.

LG&E and KU: Rider NMS-1 vs. Rider NMS-2

The most consequential Kentucky solar decision for LG&E and KU customers is the September 24, 2021 cutoff date:

Kentucky Power (AEP) and Duke Energy Kentucky

Kentucky Power (AEP) serves eastern Kentucky and had an export credit rate set around 9.7 cents/kWh under its 2021 PSC order — higher than LG&E/KU's NMS-2 rates, though still below retail. As with LG&E/KU, this rate may have been revised in later rate cases. Check with Kentucky Power or the Kentucky PSC for the current figure.

Duke Energy Kentucky covers a small service territory in northern Kentucky (the greater Cincinnati area). Duke operates under its own PSC-approved solar interconnection and net metering tariffs. If Duke serves your address, contact Duke Energy Kentucky directly for current net metering terms.

Rural Electric Cooperatives

Dozens of electric cooperatives — including the distribution co-ops served by East Kentucky Power Cooperative — are subject to the KRS 278.465 net metering mandate under SB 100. However, each co-op files its own tariff, and the specific export credit rates and billing treatment vary by cooperative. Contact your co-op's member services office for its current solar interconnection agreement, export credit rate, and any local size or capacity limits before assuming the LG&E/KU rates apply to you.

Net Metering Program Cap

Once a utility's total net-metered solar capacity reaches 1% of that utility's single-hour peak load from the prior year, the Kentucky PSC may allow the utility to limit or suspend further net metering enrollment. If solar adoption is growing rapidly in your area, it is worth checking current enrollment levels with your utility to ensure the program is still open before committing to a project.

Kentucky Solar Incentives: The Honest Picture

PACE financing (Property Assessed Clean Energy) may be available through participating Kentucky municipalities or counties, allowing solar to be financed as a property assessment repaid through your property tax bill. PACE availability varies by locality — check with your county government or local economic development authority for current program status.

Low Electricity Rates = Longer Payback

Kentucky has historically been one of the cheapest states for electricity, powered largely by coal-fired generation. Residential rates commonly fall in the roughly 12–15 cents/kWh range depending on your utility and season — but check your own bill for your actual rate, as it can differ significantly by provider.

Lower electricity rates mean each kilowatt-hour your solar panels produce saves you less money than the same panel in, say, California or Hawaii. Combined with Kentucky's modest sun resource (~4–4.5 peak sun hours/day, an approximate figure for the Ohio Valley region), realistic payback periods in Kentucky often fall in the 10–15 year range — longer than the national average. Be skeptical of any solar sales projection that assumes dramatically shorter payback without showing you the actual electricity rate and sun hour assumptions it is using.

If you are on NMS-2 (enrolled September 24, 2021 or later), your savings on exported power are further reduced to ~6.9–7.4 cents/kWh for LG&E/KU customers, which pushes payback even longer. Sizing a system to maximize self-consumption — rather than exporting surplus — becomes more important under NMS-2 economics.

Where to Confirm Current Kentucky Solar Policy

• Kentucky Public Service Commission (PSC): psc.ky.gov — search current LG&E, KU, or Kentucky Power tariff filings for NMS-2 export credit rates
• LG&E and KU: lge-ku.com — net metering application and current tariff schedules
• Kentucky Power (AEP): kentuckypower.com — distributed generation interconnection and current export credit rates
• Your local electric cooperative: Contact member services directly for your co-op's current solar tariff
• TVA-served areas: Contact your local power distributor or visit tva.com for Green Power Switch and distributed generation programs