The Nation Faces Energy Crossroads
Every nation is defined not only by its military or industrial capabilities but also by its ability to be self-reliant. It’s easy to forget how much our lives depend on a constant supply of energy, from brewing that first cup of coffee in the morning to using ChatGPT on our laptops. Now more than ever, energy isn’t just a convenience — it’s a matter of national security.
As the world experiences a monumental leap in artificial intelligence, energy becomes more of a fundamental necessity than it's ever been. Over the past several fiscal years, the United States has not only met but consistently surpassed its energy requirements. Yet, this is only the beginning. With the rapid expansion of data centers across the nation and a wave of new technologies on the horizon, our energy requirements can only be expected to rise.
Various studies indicate that energy consumption could rise between 25% and 50% by 2040, thus highlighting a vital necessity for energy across the nation. But here’s the thing—meeting these demands isn’t as simple as pouring more resources into our existing non-renewable energy infrastructure. As the consequences of climate change become increasingly potent, experts warn that immediate action is needed to break the negative feedback loop driving global warming. The path forward means shifting away from our dependence on greenhouse gases and working toward a cleaner, more resilient grid.
From a purely environmental standpoint, the importance of clean energy has never been greater. Among the policies that catalyze growth in the renewable energy sector, net metering stands out as the most promising solution. Research indicates there are more benefits — it reveals net metering beyond its environmental benefits—it reveals a potential for increased energy independence, economic growth, expansion of local jobs, strengthened grid resilience, and long-term savings for consumers.
Net metering is a policy that incentivizes energy customers to invest in renewable energy systems by allowing them to receive credit for the excess energy they sell back into the grid.
A System That Shortchanges Solar Customers
How does renewable energy work right now for the state of Tennessee? The Tennessee Valley Authority (TVA) is the primary utility in the state and compensates individuals for their excess solar power at an avoided cost rate. This means that homeowners usually receive 2 to 4 cents for every single kilowatt-hour they send to the grid.
Meanwhile, the electricity people pay from TVA is substantially more: around 12 cents per kilowatt hour for homeowners and roughly 11.87 cents per kilowatt hour for business owners. This is stark. In other states, people usually get paid the same rate they pay for power — this is what’s known as net metering. Tennessee’s approach ranks among that nation’s most restrictive.
Tennessee’s Solar Potential
Tennessee receives 4.25 to 4.75 sun hours a day. That’s enough to make solar panels a valuable investment. A typical home solar setup, about 6 to 8 kilowatts, can generate 8,000 to 11,000 kilowatt-hours (kWh) of electricity per year. Data from EnergySage shows the average electricity customer in Tennessee uses 17,196 kilowatt-hours annually, meaning that solar can cover a substantial portion of all needs.
During summer, solar panels produce more electricity than a house or business can ever use. This extra power is very valuable because it flows into the grid when demand peaks. The timing is ideal.
The Economics Tell a Sharp Story
- For a 6 kW solar setup, it costs $18,000 before incentives and $12,600 after the federal tax credit (30% of the cost)
- People might send about 3,000 kilowatt-hours of extra power to the grid annually.
- TVA compensates for that, but at a rock-bottom rate. TVA pays roughly 2 cents per kWh, amounting to a compensation of $60.
- At this rate, it would take more than 210 years to pay the system off. That’s unrealistic.
But, if Tennessee had net metering like how 40 other states are in this moment:
- Residents would get credited for all extra electricity sent to the grid at the same rate they pay for electricity (about 12 cents).
- A homeowner with 3,000 kWh of excess power would get $360.
- The total annual savings could reach $1,200 to 1,500.
- The total time to pay off the system would be 8 to 10 years. That’s a real difference.
Perfect Alignment with Grid Demands
Tennessee’s electricity demand peaks during summer afternoons because that is when people turn up their AC. That’s exactly when solar panels are pumping out the most power. Every megawatt of solar added reduces the grid’s need for additional capacity at these times. This alignment helps TVA save money and avoid spending on expensive new power plants. The match between solar and grid demand could not be better.
Tennessee Trails Behind Neighbors
Tennessee is clearly behind. Among our neighbors’ solar production, the numbers are striking:
State
Solar Capacity (2023, MW)
Virginia
6,009.35
North Carolina
7,356
Georgia
7,281
Tennessee
903
In 2024, Tennessee ranked last among all U.S states for total installed solar capacity. The state also ranked last for new solar installations. Solar energy makes up just 1.65% of all electricity generated in the state, very low compared with neighboring states.
Chattanooga Shows the Way Forward
Chattanooga’s Electric Power Board (EPB) has already led the way with modern energy infrastructure, installing smart meters that have connected all homes/businesses in EPB’s 600-square-mile area to the Smart Grid Management System. EPB also has advanced voltage controls, helping earn Chattanooga recognition for having one of the world's fastest internet connections. These advancements in Chattanooga’s energy grid create a perfect environment for net metering success.
Chattanooga is uniquely positioned: the city receives more annual sunlight than most cities across the country, indicating great potential for solar energy. This isn’t hypothetical — the success of EPB’s community solar farm (Solar Share), located in downtown Chattanooga, demonstrates that solar energy works well in Chattanooga. The popularity of EPB’s Solar Share program demonstrates Chattanooga residents’ interest in renewable energy investment. Net metering would give them the practical means to participate in this clean energy revolution.
The city has the necessary ingredients for net metering success.
Economic Benefits Extend Statewide
Clean energy is already important in Tennessee. In 2022, the sector employed more than 82,000 people and added $56 billion to the state’s Gross Domestic Product. Each megawatt of solar creates about 5.5 jobs and brings in $1.2 to 1.5 million in investment. States with net metering see much faster solar growth and a significant increase in jobs. The benefits ripple compoundly throughout the economy.
Multiple Policy Options Available
Net metering could be implemented in several ways:
- Full retail rate credit (1:1)
- Time of use rates (higher pay during peak sunlight hours)
- Value of solar rates (based on benefits on the grid)
Research shows that full retail credit is the best way to start until solar makes up at least 10 to 15 percent of the grid.
Addressing Utility Concerns
Studies show that solar on the grid does not cause problems when proper rules are established. Tennessee is projected to have among the lowest amount of solar installed compared with six Southeastern states, so the cost to people who don’t install solar is minimal. Utilities can protect their revenue through fixed charges and by saving money on peak demand periods.
Some critics argue that an influx of solar energy on the grid can create challenges for utilities. But studies and examples from other states show that when clear rules and best practices are established, solar adoption doesn’t impact grid reliability. Moreover, utility companies can utilize various tools to maintain financial stability, such as implementing reasonable fixed charges and capitalizing on cost savings during periods of peak electricity demand, when solar production is typically the highest.
The Path Forward
Tennessee’s current solar compensation policies pose barriers to renewable energy investment, thereby limiting economic opportunities and progress toward achieving its energy goals. The state has outstanding resources, existing grid infrastructure, and consumer interest. However, Tennessee has ranked last nationally in solar installations because of inadequate policy frameworks.
Net metering would bring Tennessee in line with the rest of the nation, unlock private investment, and create more jobs. All without any cost to taxpayers.
For policymakers, the choice is stark. Continue with the current policy, which limits economic development and innovations, or implement a proven strategy that harnesses the state’s natural advantages for economic growth. Net metering is the smart policy for Tennessee’s future. It’s an opportunity the state cannot afford to miss.
Tennessee Lags in Solar Energy as Climate Stakes Rise