Solar in Arkansas: A Surprising Contender With Strong Net Metering

Arkansas is not a state most people think of when they think solar. But here is the surprise: Arkansas has one of the better net metering policies in the South, decent sunshine, and reasonable installation costs. It is not a top-10 solar state, but it is considerably better than its neighbors Alabama and Mississippi, and in some ways better than Texas.

If you are an Arkansas homeowner in 2026, the economics of solar are more favorable than you might expect — with some important caveats.

The Good News

Strong Net Metering Policy

This is the biggest factor working in your favor. The Arkansas Public Service Commission (APSC) requires utilities to offer net metering at the full retail rate for systems up to 25kW. Excess credits roll over month to month. At the annual true-up, remaining credits are paid out at the utility's avoided cost rate.

This means your excess summer production offsets your winter bills at full retail value. Entergy Arkansas, the state's largest utility, currently charges $0.10-$0.13/kWh retail. Every kWh you export is credited at that same rate. This is a massive advantage over states like Alabama or Arizona where export credits have been gutted.

Note: Net metering policies can change. The utility lobby in Arkansas has pushed for reductions, and the APSC has periodically reviewed the program. If you install under the current policy, you should be grandfathered, but confirm the terms with your installer and utility.

Decent Solar Resource

Arkansas averages 4.5-5.2 peak sun hours per day. The southern part of the state near Texarkana and El Dorado gets the most, while the Ozark region in the northwest gets slightly less. This is above the national average and comparable to states like Tennessee and North Carolina.

Low Installation Costs

Arkansas installation costs run $2.50-$2.85 per watt — below the national average. A typical 8kW system costs $20,000-$22,800 before incentives.

No Sales Tax on Solar Equipment

Arkansas exempts solar energy equipment from state sales tax. On a $22,000 system, that saves you about $1,430 (6.5% state rate). You may still owe local sales tax depending on your municipality, but the state portion is waived.

The Challenges

No State Tax Credit or Rebate

Arkansas has no state-level solar tax credit. No rebate program. No SREC market. With the federal ITC expired in 2026, the only financial incentives are the sales tax exemption and the strong net metering policy. The net metering policy is an indirect incentive — it does not reduce your upfront cost, but it maximizes the value of your production over time.

Moderate Electricity Rates

Entergy Arkansas rates are $0.10-$0.13/kWh — lower than the national average of $0.16/kWh. Lower rates mean lower savings per kWh produced, which extends your payback period. This is the fundamental tension in Arkansas solar: the policy is good, but the rates are low.

Severe Weather Exposure

Arkansas sits in a zone prone to severe thunderstorms, hail, and occasional tornadoes. Modern panels are rated for 1-inch hail at 50+ mph, and most handle Arkansas weather fine. But large hail events can damage panels and mounting hardware. Confirm your homeowner's insurance covers solar equipment, and consider the warranty terms carefully — hail damage claims are more common in this part of the country than on the coasts.

The Arkansas Solar Math (2026)

Typical 8kW system:

• Installed cost: $21,600 ($2.70/watt)
• Federal ITC: $0 (expired)
• State credits: $0
• Sales tax savings: ~$1,400
• Net cost: ~$20,200

Annual production: ~11,200 kWh

Average Entergy Arkansas rate: $0.11/kWh

Annual savings (full net metering): ~$1,230

Payback period: ~16 years at flat rates. With 3-4% annual rate increases, payback drops to ~12-13 years.

25-year savings: $14,000-$25,000

The payback is moderate. Not as fast as high-rate states, but the strong net metering policy means you get full value for every kWh — including exports. If Entergy rates increase faster than 3% (they have been increasing 4-5% in recent years), the math improves significantly.

Since installation cost is the main variable you can control in Arkansas, comparing quotes from multiple installers is the single best way to improve your payback math.

When Solar Makes Sense in Arkansas

Install if:

• Your Entergy bill is over $130/month
• You plan to stay in the home 12+ years
• You want to lock in energy costs and hedge against Entergy rate increases
• You have a south-facing roof in good condition
• You want to take advantage of net metering before any potential policy changes

Wait or skip if:

• Your electricity bill is under $80/month
• You plan to move within 7 years
• You are in a heavily forested area with major roof shading (common in the Ozarks)
• You expect a payback under 10 years — possible but only with above-average rate increases
• Your roof needs replacement in the next 5 years

Key Takeaways

• Arkansas has strong net metering at full retail rate — better than most Southern states
• No state tax credit or rebate — the sales tax exemption is the only direct incentive
• Electricity rates are low ($0.10-$0.13/kWh), which extends payback compared to high-rate states
• Installation costs are below average at $2.50-$2.85/watt
• Payback period runs 12-16 years depending on rate increases
• Net metering policy is the key asset — lock it in before potential regulatory changes
• Severe weather risk is real; confirm insurance coverage and warranty terms for hail
• Arkansas is a solid but not spectacular solar state — good policy, modest rates

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