Electric Bill Before Solar
Electric Bill After Solar
Est. Solar Payment
First, take a look at a typical electric bill before considering solar power. That's a nasty outlay of cash. Imagine what you could do with all that immediate savings above every month.
As a result of what state legistlatures in leasing states have accomplished, you could instead save a bunch of cash. Imagine getting this bill in the mail instead. Whew!
Now, while you have a drastically cut back power bill, you also have a solar lease payment. Essentially, you're renting out your rooftop to a company who then pimps it out with solar panels. Then, you pay a lease payment to them for the power it produces. In each case, this payment added to your existing power bill will be lower than your previous bill, netting you instant savings with nothing down out of pocket! How awesome is that?!
Leasing vs. Buying If you decide not to go with the leasing option, we've calculated the amount of time it would take for your home solar panel system to pay for itself if you put up the cost of the install out of pocket or financed it yourself. This calculation (see the bottom of the page under "5kw Solar System Purchase Payback Time") takes into account all the rest of the incentives below, and assumes you meet all the criteria to take advantage of them (e.g. - having a tax appetite, south facing roof with limited shade, etc.)
5,880 MW by 2014
What's an RPS? Your state legislature paves the way for strong solar energy incentives to flourish by setting standards for renewable energy generation within their territories. Those standards are called the state’s renewable portfolio standard (RPS). If utility companies do not meet these standards, they must pay alternative compliance fees directly to the state. Many utilities then determine the best ways to source their energy from renewable sources that are less expensive than this fee.
An RPS is a mandate that says "Hey utilities! Y'all now have to make a certain percentage of your electricity from renewable sources. If not, you'll have to pay us huge fines." The consequences are good, because utilities usually try to meet these RPS standards by creating solar power incentives for you, the homeowner.
RPS solar carve out
What's a solar set aside? A solar set aside guarantees a specific portion of the overall renewable energy mix generated comes from the sun. For those states with progressive standards, high alternative compliance payments, and clear solar carve outs, the faster those areas become ripe for solar.
Some states have higher alternative compliance fees than others, and some states have more progressive alternative energy standards and deadlines than others do.
For instance, New Jersey has an overall RPS of 22.5% by the year 2021. That requires local utilities to source 22.5% of their energy mix from renewable sources by the year 2021. Pretty good. However, New Jersey also has a specific solar set aside of 4.1% by 2028. That’s the type of firm commitment which really gets the industry rolling forward. No wonder why New Jersey is one of the hottest solar markets right now!
Texas Electricity Prices
Why are electricity prices so important? Because that is what solar power is directly competing against. The cost to produce power with solar is relatively constant (of course how much sun hits your area has an effect), so if you are paying $0.40 per watt for power, then you make FOUR TIMES AS MUCH as the guy or girl paying $0.10 per watt electricity.
The caveat here is that if the $0.10 per watt person has a HUGE rebate, they may be better off than the $0.40 per watt person. Because of that, states without any renewable standards tend to be heavily reliant on cheap coal for electricity, and also have very low electricity prices. When electricity prices are artificially low, that hinders the ability of solar energy to achieve meaningful payback in the state.
Texas Solar Power Rebates
How do solar rebates work? Similar to getting a rebate card from your local big box store for a dishwasher purchase, state legislatures also provide rebates for solar panel purchases to spur on investment and create new jobs. If you purchase the solar panel system yourself, you qualify for this free cash, which many times is a lump payment back to you. Some solar installers like to take this amount directly off the total installed price, and they'll handle the paperwork for you to make things a lot less complex.
The availability of state and utility rebates were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The better the rebates, the higher the grade.
Texas Solar Power Tax Credits
About state solar tax credits: State tax credits are not technically free money. However, they are 'credits' and not 'deductions' which means that if you have the tax appetite to take advantage of them, then they can be a 1-to-1 dollar amount off your taxes instead of a fraction of the cost of the system. So that means they can be an important factor to consider. In certain circumstances, state tax credits can provide a very powerful incentive for people to go solar.
(Keep in mind, we are not tax professionals and give no tax advice so please consult a professional before acting on anything we say related to taxes)
The availability of personal tax credits for solar energy were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the tax credit amount, the higher the grade.
Property Tax Exemption
About solar property tax exemptions: Property tax exemption status is a pretty big factor when putting together your investment considerations. Many argue that solar power adds approximately 20 times your annual electricity bill savings (if you are owning the system and not leasing. Leasing still has a positive impact on the ability to sell your home though, in our opinion).
For many average-sized solar power systems on a house, that can mean $20,000 to your home value. (Edit April, 2014: Some companies, like Solar Mosaic, are starting to offer traditional style equity-based home loans for such a thing). An additional $20,000 in property tax basis in many states amounts to a big chunk of change owed back to the state. However, many states have complete exemptions from added taxes when you install solar on your home!
The availability of a property tax exemption for solar energy was also sourced from the Database of State Incentives for Renewables and Energy Efficiency. The stronger the tax exemption, the higher the grade.
Sales Tax Exemption
What's the deal with solar power sales tax exemptions? When states give you a sales tax break on solar, we notice. You should too. State sales tax exemption status for the purchase of solar energy systems were sourced from the Database of State Incentives for Renewables and Energy Efficiency. Sales tax exemptions, if present, were all 100%. A handful of states are completely exempt from sales tax regardless, and therefore received ‘A’ grades by default (OR, DE, MT, AK, and NH).
Solar Power Performance Payments
Varies; calculated using Value of Solar Algorithm
Explanation of performance payments: Performance payments represent a big chunk of the financial rationale for going solar, and in many instances they make your decision a wise one. For certain states, if you’ve got solar panels on your roof, not only will you be cutting your electric bill down to size, but you'll be getting paid additional cash from your utility company. Pretty awesome, huh? Not only are you generating electricity for yourself, freezing your own popsicles with sun, and feeling like you’re doing something smart for your children or any of the other 4 reasons people go solar, but you are getting PAID!
Utility companies are paying people with solar panels on their roofs because their states say they have to, otherwise they will pay a fee. Therefore, the payment amount to homeowners is typically a little bit less than the amount they would be billed for by the state. For states with these alternative compliance fees, Solar Renewable Energy Credit (SREC) exchanges have popped up. In the above chart, we outlined an estimate of yearly payments a homeowner might expect from the utility company for the SREC credits from their solar energy system.
Expected SREC payments were calculated by using the latest trade values in the SRECtrade database. The availability of feed-in tariffs were sourced from the Database of State Incentives for Renewables and Energy Efficiency. The higher the expected monthly payments, the higher the grade.
If you don’t know what an SREC is, or how they work, check out this great SREC video
Time it Takes for 5kW of Solar Power to Pay for Itself
Texas Net Metering
What is net metering? Net metering is the billing arrangement where you can sell excess electricity back to your utility for equal the amount you are charged to consume it. The more customer friendly net metering policies, the higher the grade.
The grade here specifically reflects individual solar system capacity, caps on program capacity limits, restrictions on “rollover” of kWh from one month to the next (yep just like cell phone minutes), metering issues (like charges for new meters), Renewable Energy Credit (REC) ownership, eligible customers and technology (the more renewables the better), being able to aggregate meters across the property for net metering, and safe harbor provisions to protect customers from solar tariff changes.
Texas Interconnection Rules
Interconnection rules are a little technical, but they basically allow you to “plug in” to the electric grid with solar panels on your roof. The more complex, out of date, or nonsensical the state rules are for plugging into the grid, the lower the grade.
Specifically, the grade reflects what technologies are eligible, individual system capacity, removing interconnection process complexity for smaller systems, interconnection timelines and charges, engineering charges, prohibiting the requirement of unnecessary external disconnects, certification, spot interconnection vs. wide area interconnection, technical screens, friendliness of legalese, insurance requirements, dispute resolution, and rule coverage.
Home Solar Power: Leasing Vs. Purchasing
To lease, or not to lease? Willsolar Shakespanels would be proud we're discussing this. Here's the basic deal. If you choose to lease your panels, you benefit from no out of pocket costs and an immediately reduced total electricity payment. Because of this, many regard this option as a no-brainer, since there isn't any downside to think of. The only hiccup you'll start to experience is when you consider the long term financial benefit of owning the solar panel system yourself.
In many situations, if you can afford the outlay or can easily secure financing, the cost of the install becomes an investment with a return outpacing even the strongest performing mutual funds. In addition, there's significantly less principal risk, since the energy credits you will be producing are tied to the sun coming up in the morning instead of our financial markets!
Additionally, if you go the leasing route, you must forfeit all the credits and performance payments you would receive by owning the system yourself to the solar leasing company (after all, that's how they can afford to give you such a no-brainer proposition in the first place).
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Welcome to the Texas solar power information page – Details Section
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The Lone Star State certainly is a loner when it comes to renewable energy policy. Bucking the nationwide trend toward more statewide regulation to support solar power, Texas has done almost nothing on the legislative front. Only a minimal Renewables Portfolio Standard, no tax credits, no statewide rebates, not even net metering!
Utility rebates are saving the day to some extent, but we’ve already seen some of those rebate programs close their doors because they’re generating all the renewable energy they need to meet those minimal state goals. Texas is going to have to get back on it, and fast. If more rebate programs fill up, there will be virtually no solar power incentives here whatsoever.
Texas’ Renewables Portfolio Standard
A Renewables Portfolio Standard mandates that a certain amount of a state’s total energy production comes from renewable sources by a target date. Normally an RPS is constructed around percentages of total energy generation, but in Texas the RPS targets specific amounts of electricity produced, measured in megawatts (“mw”). Texas’ RPS was first passed in 1999 with a target of 2,000mw of energy from renewable resources. In 2005 the legislature increased the target to 5,880mw by 2015.
While that figure may seem like a lot, those 5,880mw will represent only about 5% of Texas’ total energy use. Even for a state like Texas, 5% is far too low of a goal. We’ve seen other high-population, high-energy demand states like New York (22.5% by 2020) and California (33% by 2022) set much loftier goals.
A strong RPS is integral to the effective incentivizing of renewable energy like residential solar power systems. Without strong mandates to push them, utilities and legislators have no motivation to make the switch to solar easier for you. With a strong RPS, now that’s a different story. With strong goals in place, utilities are far more likely to offer rebate and performance payment programs to new solar power systems, so that the utility can meet their renewable resource production goals.
Texas Solar Power Performance Payments
Texas lacks any performance payments for residential solar power systems. Not even individual utilities are offering them, as we’ve seen in some other states that lack a uniform system. See what we were saying about that weak RPS? If the 5% target were higher, you can bet some of those utilities, maybe even the state, would start offering cash payments for renewable energy production.
Texas Solar Power Rebates
Texas also lacks any statewide rebate program. Luckily this time the utilities have filled in the gaps, at least to some extent. Many of Texas’ utilities offer their own rebates on the installation of a residential solar power system:
Utility – Rebate – Cap
AEP SWEPCO – $1,750/kw – $17,500
AEP Texas Central – $1,750/kw – $17,500
AEP Texas North – $1,750/kw – $17,500
Austin Energy – $2,500/kw – $15,000
Bryan Texas Utilities – $2,000/kw – 80% of costs up to $6,000
Coserv – $2,000/kw – $5,000
CPS Energy – $2,000/kw – $25,000
El Paso Electric Company – $2,000/kw – $20,000
Guadalupe Valley Electric Cooperative – $2,500/kw – $10,000
Oncor Electric Delivery – $2,000/kw – $20,000
Texas New Mexico Power Company – $1,750/kw – $17,500
Unfortunately Oncor just filled up it’s pilot program a couple of weeks ago, and is not currently accepting new applications. We kept them on our list because of the possibility that the program might reopen for new applications in the future. Don’t worry, regardless of which energy company and which rebate you are targeting, the installers we partner with on the ground are experts at making sure you get the largest rebates and savings possible.
Texas Solar Power Tax Credits
Looks like the legislature dropped the ball on this one too. Texas has no state tax credits available for solar power systems. Thank goodness the utilities stepped in with those individual rebates. Otherwise the solar landscape here would be more barren than the Texas desert.
Finally! Score one for the Texas lawmakers. When you install that shiny new solar power system, the resulting increase in home value (details on that later) is exempt from 100% of the resulting property tax increase.
Now if only we could get a matching sales tax exemption. Sales tax ranges from 6.25% to 8.25% here, depending on the local tax rate. You may not notice it in small purchases, but that sales tax adds up for big-ticket items. A sales tax exemption is a simple and efficient way to save you a couple thousand bucks on those solar panels. No checks, no mess. Just discounts for you right off the top. Let’s get on that, lawmakers!
Electricity runs about 11.04 cents per kilowatt-hour (“kwh”) here. That’s right around the national average of 11.43 cents/kwh, but by our standards that national average is far too cheap. Energy is cheap because it’s generated from dirty-burning fossil fuels, at giant power plants that emit greenhouse gases by the billions of tons.
We’re already seeing energy prices start to rise, as we become more and more aware of the effects of all those fossil fuels. As the price of energy continues to climb, the savings on your solar power system are going to rise along with it. Just remember to thank us for the tip when you’re spending all that cash on vacations instead of electricity.
Net Metering and Interconnection
Net metering is program in which the utility track how much energy you consume, and how much your solar power system produces, and gives you a credit on future bills for any surplus you run in a given month. It’s a great money-saver, where it’s available.
Net metering in Texas is … wait what?! There is no net metering here?! Yikes! We’ve seen some states that don’t do much to incentivize solar power at the legislative level, but even most of those states still have a statewide net metering law! Sadly not Texas.
A few localities do offer their own net metering laws. In the Cities of Austin and Brenham, net metering is available to residential solar power systems and any surplus is credited to future bills at the avoided-cost rate. In addition, customers of Green Mountain Energy are eligible for net metering, with surplus energy production credited to future bills at Green Mountain’s retail rate.
While most of Texas does not ensure that you can have your energy consumption and production monitored for potential surplus, the state does have regulations designed to help ensure that you can get connected to the grid. Texas provides for standard interconnection procedures for all systems up to 10mw. The regulations prohibit the utilities from requiring pre-interconnection studies, set 4-6 week time limits on how long the utilities can take to consider your application for interconnection, and offers fast-track pre-certification procedures to speed up the interconnection process.
That’s not too shabby. We’d like to see a prohibition on the requirement of redundant external disconnect switches and separate liability insurance, but compared to the rest of the state’s legislation, interconnection is a big step in the right direction.
Example 5kW (5000 Watt DC STC) Solar System Return on Investment in Texas
So, what’s the bottom line for you and your wallet? Let’s check.
Texas is so large that sunlight and energy prices can vary pretty widely. For this example we took a middle road and used sunlight measures for the east-central population areas, the state’s average electricity price, and the average rebate available in Texas’ mostly deregulated energy marketplace. Remember though, these numbers are just estimates. Your home is unique. To find out exactly how much money solar power can save you, just grab one of our free quotes and one of our expert partners will draw up an estimate designed specifically for your house.
- Installing a typical 5kW solar system should start at about $25,000. Don’t worry – that’s gonna drop fast!
- First we knock off the utility rebate. The average Texas rebate is $2,000/kw. Since we’re installing 5 kws, that means we subtract $10,000, for a new price of $15,000.
- We calculate the 30% federal rebate from the price after the utility rebate. That means another $4,500 off your bill, for a new cost of $10,500
- Finally we subtract your first year’s energy savings, which we estimate to be about $775. That brings your final cost after the first year to $9,725. We told you that price tag was gonna drop!
- With a conservative estimate of the future electricity prices, you can expect your new solar power system to pay for itself in about 10 years.
- Don’t forget, your home goes up in value too because of those electricity savings. In fact, it goes up in value by more than 15 grand – all of it property tax free!
- On top from all that green in your wallet, your making a bunch of green for the planet. Tree green that is. The fossil-fuel produced electricity you’re not using is just like planting 124 trees every year!
Yes, these numbers are just estimates. But man – that is some savings! Go grab one (or two, or three) of those free quotes and see how much money you can save with solar power at your home.
The consensus on Texas solar power rebates and incentives
Despite the lousy statewide regulations, those big fast utility rebates manage to keep the overall picture from being a total failure. The 10 year payback timeframe is, in fact, pretty decent. Normally that would be strong enough for a “B” grade from us. Unfortunately, with no statewide net metering requirements, only mediocre interconnection standards, and a minimal RPS keeping us in fear of closing rebate programs, we can’t bring ourselves to give the Lone Star State anything higher than a “B.”
Our older archived Texas Solar Power costs and savings breakdown images for reference: