Indiana ended full retail net metering in 2022. That single policy change reshaped the economics of residential solar in the state. Under the old rules, excess solar generation was credited at the same rate you paid for electricity. Under the current rules, it is credited at a much lower wholesale rate. The difference transforms solar from a strong investment into a marginal one that requires battery storage to make financial sense.
For an Indiana homeowner who installs solar with a battery, the payback period is 11 to 14 years with net savings of $8,000 to $14,000 over 25 years. For a solar-only system without storage, the payback extends beyond 15 years and may never reach breakeven depending on your utility and usage pattern. Here is the math and why the battery is no longer optional in Indiana.
What Solar Panels Cost in Indiana
Solar in Indiana costs approximately $2.70 to $3.10 per watt before incentives, which is competitive with the national average. A typical 7-kilowatt residential system costs $19,000 to $22,000. The installer market is strongest around Indianapolis, with competitive pricing in the metro area and higher costs in rural counties.
| System Size | Solar-Only Cost (Before Incentives) | After Federal Tax Credit | Solar + Battery (After Credit) |
| 5 kW | $13,500–$15,500 | $9,500–$10,900 | $15,100–$18,300 |
| 7 kW | $18,900–$21,700 | $13,200–$15,200 | $18,800–$22,600 |
| 10 kW | $27,000–$31,000 | $18,900–$21,700 | $24,500–$29,100 |
The battery adds $8,000 to $12,000 to the upfront cost but qualifies for the 30 percent federal tax credit. The net cost of adding a battery is $5,600 to $8,400. This additional investment is what makes solar work in Indiana’s post-net-metering environment.
Indiana’s Net Metering Phase-Out: What Changed
Prior to July 2022, Indiana offered full retail rate net metering. A kilowatt-hour exported to the grid was credited at the same rate as a kilowatt-hour consumed from the grid. Solar owners could build up credits during sunny months and use them during cloudy months at a one-to-one value.
Senate Bill 309, passed in 2017, phased out full retail net metering over several years. Systems installed after July 2022 receive an export credit at the wholesale rate plus a small adder, which totals approximately 3 to 5 cents per kilowatt-hour. This is roughly one-third to one-quarter of the retail rate of 12 to 13 cents. Systems installed before the phase-out deadlines are grandfathered under the original full retail net metering rules through at least 2032.
The practical effect is that exporting solar electricity to the grid is now worth very little. Self-consuming solar electricity in real time, or storing it in a battery for later use, is worth the full retail rate. The value of solar in Indiana has shifted almost entirely to self-consumption. A solar-only system that exports 60 percent of its generation during midday and imports electricity in the evening is selling low and buying high. A solar-plus-battery system that stores midday surplus and discharges it in the evening avoids both the low export rate and the high import rate.
Indiana Solar Incentives
The federal tax credit is the only significant financial incentive for Indiana solar owners. There is no state-level tax credit, no state rebate program, and no solar renewable energy credit market. Indiana does offer a property tax exemption for solar systems, which excludes the added value from property tax assessment.
The absence of state incentives is one reason Indiana solar has grown more slowly than in neighboring Illinois, which has a strong SREC market and state rebates. An Indiana homeowner’s solar investment is supported almost entirely by the federal tax credit and the electricity savings from self-consumption.
How Much Power Indiana Solar Panels Generate
Indiana receives 4.0 to 4.5 peak sun hours per day averaged across the year. The state is relatively uniform in solar exposure. A 7-kilowatt system generates approximately 9,000 to 10,000 kilowatt-hours per year. Summer production peaks from May through August. Winter production from November through February drops to 30 to 40 percent of summer levels.
Indiana’s solar resource is decent but not exceptional. It is comparable to Ohio and Illinois, slightly better than Michigan and Wisconsin, and slightly worse than Missouri and Kentucky. The solar resource is not the limiting factor. The policy environment is.
How Much You Save on Electricity
Indiana residential electricity rates average 12 to 13 cents per kilowatt-hour. Duke Energy Indiana, NIPSCO, and Indianapolis Power and Light are the major utilities serving different regions of the state.
For a solar-only system under the current export credit structure, the savings depend on how much generation is self-consumed versus exported. A typical home without battery storage self-consumes approximately 30 to 40 percent of solar generation. A 7-kilowatt system generating 9,500 kilowatt-hours per year with 35 percent self-consumption saves approximately $400 from self-consumed electricity at 12.5 cents, plus approximately $185 from exported electricity at 3 to 4 cents. Total annual savings approximate $585.
Against a net system cost of $14,000 after the federal credit, the simple payback period for a solar-only system is approximately 24 years, which is near or beyond the warrantied life of the panels. This is why solar-only systems rarely make financial sense in Indiana under the current policy.
Adding a battery increases self-consumption to 70 to 85 percent. The same 7-kilowatt system with a battery saves approximately $890 from self-consumed electricity and $55 from exported electricity, for a total of approximately $945 per year. Against a net system cost of $20,000 to $21,000 for solar plus battery, the simple payback period is 21 to 22 years. While still long, the battery shifts solar from a likely money-losing investment to a marginally positive one, particularly when the backup power value is considered.
Why a Battery Is Essential in Indiana
In states with full retail net metering, the grid acts as a free battery. Excess solar is exported during the day and drawn back at night at the same value. Indiana eliminated that mechanism. A physical battery is now required to capture the same value that net metering once provided for free.
The battery charges from excess solar during midday, when the home’s consumption is low and export rates are negligible. It discharges in the evening when the home’s consumption is high and grid electricity costs the full retail rate. This shifts kilowatt-hours from the low-value export column to the high-value self-consumption column. The financial return on the battery itself is marginal, but the battery enables the solar system to generate a positive return at all.
25-Year Financial Picture
Over 25 years, an Indiana homeowner with a 7-kilowatt solar-plus-battery system can expect net savings of $8,000 to $14,000 after recovering the initial investment. A solar-only system may not reach breakeven within the panel warranty period. The inverter replacement at year 12 to 15 is factored into these numbers. The battery may require replacement at year 10 to 15, which adds $5,000 to $8,000 at that time and is the largest uncertainty in the lifetime cost projection.
Indiana is one of the weakest solar states in the country from a financial perspective, not because of geography or electricity rates, but because of policy. Neighboring Illinois, with strong state incentives and full retail net metering, produces returns three to four times higher on the same solar investment.
Cash vs. Loan vs. Lease
Cash purchase produces the highest return for the limited return that exists. A solar loan adds interest cost that further extends the already long payback period. Leasing is not recommended in Indiana because the third-party owner captures the federal tax credit, leaving the homeowner with electricity savings that are too small to justify the lease payments.
When Solar Is Almost Certainly Not Worth It in Indiana
No battery. Under the current export credit structure, a solar-only system exports surplus at a loss and likely never recovers its cost.
Low daytime electricity usage. If the home is empty during the day, self-consumption is minimal even with a battery because there is no daytime load to charge the battery from. The system exports nearly all generation at the low export rate.
Moving within 15 years. The long payback period requires staying in the home for a long time.
Old roof. Indiana’s severe thunderstorms and occasional tornadoes reduce roof life. Replace before installing solar.
NIPSCO or Duke Energy customer without grandfathering. If your system is not grandfathered under the old net metering rules, the current export rates apply.
Frequently Asked Questions
Am I grandfathered if I installed solar before the net metering change?
Yes. Systems installed before the phase-out deadlines are grandfathered under the original full retail net metering rules through at least 2032. After the grandfathering period ends, those systems will transition to the current export credit structure. If you are grandfathered, your solar economics are significantly better than the numbers presented above for new installations. Protect that grandfathering by keeping your interconnection agreement and not making major system changes that could trigger re-evaluation under the current rules.
Is solar in Illinois really that much better than Indiana?
Yes. Illinois has full retail net metering, a strong SREC market with prices of $50 to $70 per credit, and state rebate programs. A 7-kilowatt system in Illinois has a payback of 5 to 8 years and net savings of $20,000 to $30,000. The same system in Indiana under the current export credit rules has a payback of 15 to 24 years and net savings of $8,000 to $14,000 with a battery or near zero without. The difference is entirely policy. The sun is the same on both sides of the state line.
Does Indiana have community solar?
No. Indiana does not have enabling legislation for community solar. Unlike Illinois, Minnesota, and many other states, Indiana residents cannot subscribe to a share of a remote solar farm and receive credits on their electric bill. Rooftop solar is the only option for Indiana homeowners who want to participate in solar energy generation directly.
