Arkansas Solar Incentive Programs
12 yr
Avg. payback
$950/yr
Avg. annual savings
None
State tax credit
avoided cost (new)
Net metering rate
Two Arkansases: Before and After September 2024
Your installation date determines which net metering world you live in, and the economics are dramatically different.
Grandfathered Systems
Interconnection agreement submitted before September 30, 2024
- Export credit: 1:1 full retail rate
- Protection expires: June 1, 2040
- Law: Act 278 grandfather provision
- Value: Export kWh = full retail (~12 to 13¢)
- Action: Check with your utility before adding capacity
New Systems (Post-Sept 2024)
Interconnection agreement submitted after September 30, 2024
- Export credit: Avoided cost (~3.3¢/kWh at Entergy Arkansas)
- Rate basis: Prior-year 12-month MISO LMP average
- Value gap: Export = ~25 to 30% of retail value
- Strategy: Size for 90%+ self-consumption
- Retail offset: Self-consumed power still saves full retail
Grandfathered Customers: Don't Expand Your System
Rules for adding capacity to a grandfathered system, or moving one, are set by the Arkansas Public Service Commission. Confirm the current treatment with your utility before you change your system. If you're considering expanding, consult your utility and an attorney before signing any expansion contract.
All Arkansas Solar Incentives
| Incentive | Status | Detail |
|---|---|---|
| Federal Tax Credit (ITC 25D) | EXPIRED | Section 25D expired December 31, 2025. No federal residential credit for 2026 installations. |
| Net Metering (new systems) | NET BILLING ~3.3¢/kWh | Post-September 2024 systems receive avoided-cost credits based on the prior year's MISO or SPP locational marginal price average. Entergy Arkansas pays $0.0334/kWh through February 2027, roughly a quarter of the retail rate. |
| Net Metering (grandfathered) | 1:1 RETAIL THROUGH 2040 | Systems with interconnection agreements submitted before September 30, 2024, receive full retail 1:1 net metering credits through June 1, 2040. Source: Act 278 (SB 295, 2023). |
| State Income Tax Credit | NONE | Arkansas has no state income tax credit for residential solar installations. |
| Property Tax Exemption | NONE | Arkansas offers no property tax exemption for residential solar. Added home value from solar may increase property tax assessment. |
| Sales Tax Exemption | NONE | Arkansas's state and local sales taxes apply to residential solar equipment purchases. No exemption available for homeowners. |
| Utility Rebates | NONE | Entergy Arkansas and Arkansas Electric Cooperative do not offer solar rebates for residential customers. |
| USDA REAP | FARM/RURAL BUSINESS ONLY | Agricultural producers and rural small businesses may qualify for up to 50% cost coverage. |
Arkansas Solar Economics in 2026
New System Math: Payback Has Stretched Significantly
Without the federal ITC (expired) and with net billing at ~3.3¢/kWh, new Arkansas solar buyers face simple payback periods of 18 to 24 years on a typical 8 kW system. Self-consumption strategy (sizing to ~90% of load, adding battery storage) can improve this to 15 to 19 years. Arkansas has decent solar resource (4.5 to 5.0 peak sun hours) but the incentive gap is real. Grandfathered buyers who installed before October 2024 face dramatically better economics with 1:1 credits through 2040.
Self-Consumption Is the Lever for New Buyers
Every kWh you produce and consume yourself saves you the full retail rate (~12 to 13¢). Every kWh you export earns only ~3.3¢. Size your system to cover 85 to 90% of your monthly consumption, and consider pairing with a battery in summer months when AC loads spike. Ask your installer to model hourly self-consumption, not just annual totals.
Sources & Methodology
Net metering transition confirmed via Act 278 (SB 295, 2023) Arkansas legislature. Avoided-cost rate ($0.0334/kWh at Entergy Arkansas, March 2026 through February 2027, based on the prior year's MISO locational marginal price average) from Entergy Arkansas's Non-Legacy Net Metering rider. Grandfathering terms (interconnection agreement submitted before September 30, 2024; legacy terms until June 1, 2040) confirmed in the text of Act 278. Absence of state incentives consistent across all sources. Not financial or tax advice. Verified October 2026.
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