Big Bend National Park
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 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 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 Company||Rebate amount||Cap|
|AEP Texas Central||$1,750/kw||$17,500|
|AEP Texas North||$1,750/kw||$17,500|
|Bryan Texas Utilities||$2,000/kw||80% of costs up to $6,000|
|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.
State 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!
Texas’ Utility Prices
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.
5kW Example Return on Investment
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.
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 “C.”