Welcome to the Texas solar power information page
Note: The numbers above are just estimates for a 5kW solar system, and your home is unique. The best way to know exactly how much money solar power can save you is to connect with one of our partners nearby. A friendly solar expert we trust will give you a buzz and help you craft a personal plan to get the absolute most out of a solar power system for your home. It's 100% free (yes, that’s right, 100% free) and you aren't obligated to buy anything.
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.
Questions? Our network of solar experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page. You can get discounted on-grid pricing as low as $4,000/kW! This is paired with the Texas solar incentives you see below.
Annual Electric Bill Before Solar
Annual Electric Bill After Solar
Est. Annual Solar Payment
Average Annual Savings
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 the money you'll save each year with solar.
As a result of what state legislatures 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.)
3% by 2015 (exceeded)
A Renewables Portfolio Standard (RPS) requires utilities in the state to eventually source at least a certain percentage of their electricity from clean, renewable sources like solar panels.
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). The Texas RPS was first passed in 1999 with a target of 2,000 MW of energy from renewable resources. In 2005, the legislature increased the requirement to 5,880 MW by 2015 and set a voluntary goal of growing this capacity to 10,000 MW by 2025. Texas had already surpassed their 2025 goal by 2009 though, and has yet to up their standards. As of 2009, Texas boasts a renewable energy capacity of 13,359 MW.
While that figure may seem like a lot, those 13,359 MW will represent a measly 3.25% of Texas’ total energy use in 2012. In fact, Texas leads the country in total energy consumption, which may seem unsurprising given its size. Yet, the Lone Star State still ranks in the top five for energy consumption when distributed per capita. For any state, but especially one that is as power hungry as Texas, 3.25% is far too low of a goal. We’ve seen other high-population, high-energy demand states like New York (30% by 2015) and California (33% by 2022) set much loftier goals.
Texas’s RPS is critical to strong renewable energy policy. Utility companies aren't really all that gung-ho about you producing your own power. After all, it costs them money when you use less of their electricity. They also don’t naturally want to give you big payments for energy you're feeding back into the grid. The main reason the utilities are aiding your transition to lower electric bills and offering you incentives to put solar on your roof is because the state forces them to. If the utilities don't hit their RPS numbers, they have to pay large fees back to the state.
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
Though Texas requires at least 500 MW of their 2015 goal come from renewable resources other than wind (since about 96% of their renewable energy was sourced from wind in 2013), they do not specify that it must come from solar and this target remains largely voluntary. If the RPS contained specific carve-outs for clean and efficient technologies like solar panels, or mandates for the environmentally necessary increases in distributed generation, you’d see even stronger incentives for residential solar power.
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
Electricity runs about 12 cents per kilowatt-hour (kWh) here. That’s right under the national average of 13 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.
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
As we mentioned earlier, Texas 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. In addition, there are a couple local options available to residents of San Marcos and Sunset Valley. Here’s a quick summary with links to more information:
Key: Utility/Locality – Rebate – Cap
- AEP Texas Central and AEP Texas North – $1,200/kW – $12,000
- Austin Energy – $1,100/kW – $15,000
- City of San Marcos – $2,500/kW – $5,000
- City of Sunset Valley – $1,000 – $3,000
- Coserv – flat $1,000
- CPS Energy – $1,600/kW – $25,000
- Denton Municipal Electric – $1,500/kW – 50% of invoice cost up to $30,000
- El Paso Electric Company – $750/kW – $7,500
- Guadalupe Valley Electric Cooperative – $2,000/kW – $8,000
- Oncor Electric Delivery – $538.79/kW + $0.41/kWh – 20% of program funding
Since our last update, many rebates have come and gone, but there is still a lot of opportunity for solar savings in Texas thanks to these utility-based incentives. You can check your utility’s website for the most recent information on program status and application procedures. Or you can relax and let the installers we partner with on the ground make sure you get the largest rebates and savings possible.
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
No State Income Tax
Since Texas doesn’t have any income tax, there aren’t any solar tax credits to redeem! Luckily, you will still benefit from the 30% Federal Solar Tax Credit. Sample calculations follow below -- keep scrolling!
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
Finally! Score one for the Texas lawmakers -- coming through with a solid property tax exemption. When you install that shiny new solar power system, the resulting increase in home value (details on how much later) is exempt from 100% of the resulting property tax increase.
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
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!
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
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 3.25% target were higher, you can bet some of those utilities, maybe even the state, would start offering cash payments for renewable energy production.
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 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.
How do all the numbers typically add up? Glad you asked! Let’s see:
- 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 about $1,400/kW and since we’re installing 5 kW, that means we subtract $7,000, for a new price of $18,000.
- We calculate the 30% federal rebate from the price after the utility rebate. That means another $5,400 off your bill, for a new cost of $12,600
- Finally we subtract your first year’s energy savings, which we estimate to be about $796. That brings your final cost after the first year to $11,804. 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 12 years.
- Don’t forget, your home goes up in value too because of those electricity savings. In fact, it goes up in value by nearly 16 grand – all of it property tax free!
- On top from all that green in your wallet, you’re 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 120 trees every year!
Keep in mind, these numbers are estimates, and your home is unique. Your cost (and your savings) will depend on a lot of factors, including your utility company, roof type, energy usage, and lots of other things. In fact, check out these 9 ways it could be more expensive.
The best way to know exactly how much money solar power can save you is to connect with one of our partners nearby. After you fill out that form, a friendly solar expert we trust will give you a buzz and help you craft a personal plan to get the absolute most out of a solar power system for your home. It's 100% free (yes, that’s right, 100% free) and you aren't obligated to buy anything.
Texas Net Metering
Net Metering requires your utility to monitor how much energy your solar power system produces and how much energy you actually consume, and make sure you get credit for the surplus.
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 smattering of localities do offer their own net metering laws -- and more are popping up. In the cities of Austin, Brenham, El Paso (El Paso Electric), and San Antonio (CPS Energy), 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.
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
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 10 MW. 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.
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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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 12 year payback timeframe is, in fact, pretty decent. Normally that would be strong enough for a “C” grade from us. Unfortunately, with a poor showing on net metering and interconnection requirements, a return lower than average, 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 “D.”