Solar incentives can help you save money on a home solar project in Texas. Check out our guide to Texas solar programs to learn more.
Texas has become one of the leading states for solar energy, with an installed capacity of 17,247 megawatts — which is enough solar photovoltaic (PV) capacity to cover the energy needs of 1.9 million homes. Texas also offers solar incentive programs from local utility companies to help offset the cost of going solar and boost the state’s clean energy production.
In this article, we at the Guides Home Team will cover the solar tax credits, incentives and rebates available in Texas. Read on to see how these programs can lower your overall solar system cost, making the switch to solar energy more affordable in the Lone Star State.
Texas State Solar Incentives
Texas does not have a statewide solar rebate program for homeowners, but it does offer a property tax exemption for residential and commercial renewable energy systems.
Renewable Energy Systems Property Tax Exemption
- Incentive Value: Equal to 100% of your property tax value, including the assessed value of your solar power system
- Frequency: Annual tax exemption
If you install a solar energy system in Texas, you will not pay taxes for any corresponding increase in your home’s property value. For example, if a property owner in San Antonio has a $350,000 home and installs a $25,000 solar panel system, the city would calculate their property taxes at $350,000, not $375,000.
Texas Local Solar Incentives
Depending on your exact location in Texas, solar incentives may be available from local governments or your utility company. The following are some of the largest solar incentive programs offered throughout the Lone Star State:
Local Texas Solar Incentive | Eligible Location | Estimated Savings | Qualifications | Frequency |
Oncor Residential Solar Program | Oncor service territory, including the Dallas-Fort Worth area | Up to $9,000 per solar PV system | Available for 3–15 kW home solar systems with batteries | One-time |
CenterPoint Energy Residential | CenterPoint service territory, including | $225 per kW or $0.08 per kilowatt-hour | Offered through approved contractors | One-time |
Solar Program | Houston | (kWh) | ||
AEP Texas SMART Source Solar PV Program | AEP Texas service territory | Up to $3,000 per solar PV system | Available for home solar systems up to 30 kW | One-time |
Austin Energy Solar PV Rebate and Incentives | Austin | Up to $2,500 per solar PV system | Available for home solar systems with at least 3 kW of installed capacity, and you must take a solar course | One-time |
The table above covers the largest solar incentive programs in Texas. However, the state has a large number of municipal utility companies and electric cooperatives that operate in specific regions. If you’re considering rooftop solar and receive electricity from a small power company, check online to make sure you aren’t missing any financial incentives.
How To Claim Local Incentives
The solar incentive programs available in Texas are managed by different electric companies and eligibility requirements vary. Generally, these incentives are only offered through approved contractors.
Texas Net Metering Explained
Net metering is a solar buyback program that credits you for any excess energy your solar panels produce and send back to the grid. You can then use those credits towards future energy bills. Texas does not have a statewide net metering policy, but there are many retail electric providers with solar buyback plans. The benefit is also offered by some municipal power companies, such as Austin Energy.
Since net metering programs in Texas are managed by different electric companies, technical requirements and compensation rates vary.
Federal Solar Tax Credit
The federal solar investment tax credit (ITC) is a nationwide incentive established by the federal government in 2006. After installing home solar panels, you can claim a federal tax credit equivalent to 30% of your system costs. For example, if you buy a 10 kilowatt (kW) system for $33,000, your tax credit would equal $9,900.
It’s important to note that the ITC is a tax credit, not a refund or rebate. You can claim the credit the year you install your solar system by applying it to your federal income tax burden. If you don’t use the full amount, you can roll any remaining credit over for up to five years.
You can also combine this benefit with state tax incentives and other local programs, reducing the upfront cost of your home solar system. You can also claim the credit for other energy efficiency upgrades such as purchasing an electric vehicle.
Estimated Solar Savings in Texas
Texas is one of the sunniest states, as you can see on the World Bank Global Solar Atlas, and ranks second in the country for solar power. Say a typical 6 kW home solar system generates over 9,500 kWh of energy per year under favorable site conditions, and residential customers in Texas pay an average electric tariff of 14.26 cents per kWh, according to the U.S. Energy Information Administration. Based on these figures, 9,500 kWh of solar generation could save you over $1,350 in electric bills in Texas each year.
According to a 2022 study by the National Renewable Energy Laboratory (NREL), residential solar systems have a market price of $2.95 per watt in the U.S. This means that a typical 6 kW solar panel installation costs around $17,700. Here’s how solar incentives can help lower your system cost in Texas:
- You can claim the 30% solar federal tax credit — worth $4,410 in this case — and your project cost decreases to $13,290.
- Assuming you can claim additional incentives through one of the programs available in the state, your upfront cost will drop even more. For example, the AEP Texas SMART Source Solar PV Program would drop your cost by another $3,000, bringing your total to $10,290.
A home solar system with a net cost of $10,290 and annual savings of $1,350 has a payback period of seven to eight years. Plus, high-quality solar panels have a warranty of up to 30 years, which means the payback period is only a small fraction of their lifespan.
Top Solar Installers in Texas
The incentive opportunities and abundant sunlight make it attractive to go solar in Texas, but choosing one of the many solar installers available can feel overwhelming. We have compiled a list of the top solar companies in Texas based on cost, financing options, services offered, reputation, warranty offerings, customer service, industry experience, and sustainability to make this process simple. Before making a final selection, we recommend getting quotes from at least three of the providers mentioned in the list below.
Company | Star Rating | Cost of an 8 kW System* | BBB Rating | Visit Site |
---|---|---|---|---|
$25,000–$30,000 | A+ | GET QUOTE | ||
$24,000–$36,000 | A+ | GET QUOTE | ||
$20,000–$25,000 | A+ | GET QUOTE | ||
$20,000–$25,000 | A+ | GET QUOTE | ||
$20,000–$25,000 | A- | GET QUOTE | ||
$20,000–$22,500 | A | GET QUOTE |
Company | Star Rating | Cost of an 8 kW System* | BBB Rating | Visit Site |
---|---|---|---|---|
$25,000–$30,000 | A+ | GET QUOTE | ||
$24,000–$36,000 | A+ | GET QUOTE | ||
$20,000–$25,000 | A+ | GET QUOTE | ||
$20,000–$25,000 | A+ | GET QUOTE | ||
$20,000–$25,000 | A- | GET QUOTE | ||
$20,000–$22,500 | A | GET QUOTE |
Are Solar Panels Worth It in Texas?
Texas has abundant sunshine, which increases the productivity of solar panels. In addition, many of the power companies operating in the Lone Star State have solar incentive programs, which you can combine with the federal tax credit to capitalize on savings for your solar project. Texas does not have a statewide net metering policy, but many local electricity providers offer the benefit. These factors make it worth it for homeowners to make the switch to solar in Texas.
Each incentive program has its own conditions and eligibility requirements. However, the best solar companies are familiar with the application process of each program and can check to see if your solar installation qualifies.
Frequently Asked Questions About Texas Solar Incentives
There are no Texas solar rebate programs. However, the utility companies operating in the state offer several incentive programs, some of which include solar rebates. To qualify for a specific incentive, your home must be located in the service territory of the power company managing the program.
Texans get a property tax exemption for renewable energy equipment. So if you install solar panels, any resulting increase in your home’s value is exempt from your property taxes. As a U.S. resident, you also qualify for the federal solar tax credit. Plus, local solar rebate and incentive programs are available from power companies such as CPS Energy, TXU, Oncor, CenterPoint, AEP Texas, Austin Energy and Green Mountain Energy.
Texas does not have a statewide net metering policy, but some electricity providers offer solar buyback programs. The compensation rate for energy bill credits varies depending on the program. You can contact participating electricity providers for more information.
As a Texas resident, you have access to the 30% solar investment tax credit, which is a federal incentive available in all states. Texas does not offer a local tax exemption for solar systems, but there is no state income tax in the first place.
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