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 stars at night shine big and bright deep in the heart of Texas, but that big ol' daytime star shines awfully bright here, too. And though Texas bucks the nationwide trend toward more statewide regulation to support solar power, the state has seen some impressive gains in installed solar capacity over the past decade. Even with a minimal Renewables Portfolio Standard, no tax credits (heck, no tax!), and no statewide rebates, the Lone Star State is still a great place to go solar.
Municipal utility rebates are saving the day to some extent, but we’ve already seen some of those rebate programs close their doors. That's why it's more important than ever to look into solar now, before cities like Austin and San Antonio decide to end their very successful solar programs.
As we said above, there is great solar potential in Texas, so we've done a lot of work to provide information about all the statewide policy and incentives, along with estimates for how much money you can save with solar in the Lone Star State. In fact, we have specific pages for folks in the following cities:
If you don't happen to live in or around one of those great metropolises, feel free to scroll down and red the rest of the page, where we offer information about statewide solar policy and incentives, along with specific financial examples about solar leases, loans, and purchases.
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.
Guide to the Texas Page
We've designed this page to be the most complete guide to the complicated and sometimes confusing process of installing home solar panels in Texas. Since there's a lot of important information to consider, we've separated the page into logical sections to help you find what you are looking for. If you find this page useful, please support us by forwarding it to someone who might also find it interesting!
The Solar Strategy section is all about the various financial options you have in Texas. We've created a tool that asks you a few questions about what you hope to get out of a solar purchase and recommends whether you should pursue a solar lease, loan, or outright purchase. Then, we give you a detailed picture of how each could work for you.
The Policy Information section contains all of our latest research on the rules set by the state legislature and public utilities commission that determines how easy it is to go solar in Texas. These policies and rules govern everything from renewable energy mandates to whether you get paid retail or wholesale rates for the extra energy your system produces, and can have a huge effect on the viability of solar.
Finally, the Solar Incentives section lists all of the available financial benefits available to homeowners who go solar. This section includes information about money-back rebates and grants, tax credits, and tax exemptions. If you're looking for what Texas is doing to make solar more affordable for its citizens, you'll find it here.
Click any of the boxes below to go to that section of the page, or scroll down to read the page in order.
|Your Texas Solar Strategy|
|Comparing Solar Investment Options|
|Texas Solar Leases|
|Texas Solar Loans|
|Buying Solar in Texas|
|Solar Purchase Payback Time in Texas|
|Texas Solar Policy Information|
|Renewable Portfolio Standard (RPS)|
|RPS Solar Carve-Out|
Your Solar Strategy in Texas
Figuring out the best way to go solar in Texas can be a little daunting. From loans and leases to power-purchase agreements, there are a lot of options out there. To help you pick the one that might be best, we've created the handy decision tool below.
We'll ask you a few simple questions about you and your home. Once you're done, we'll recommend a good option. Further down this page, we provide cost estimates and example return-on-investment calculations for all the various options:
Compare the Return of Different Solar Investments in Texas
The chart above shows the 25-year returns for an investment in solar whether you choose to purchase a system with cash or pay over time with a loan or lease. One thing it's important to note is: solar makes you a lot of money in Texas. Yes, we said "makes!" You see, Texas gets so much sun, its relatively low electricity prices are no match for the awesome energy-generating ability of solar panels. Going solar in Texas starts paying off right away, and with great state and federal tax credits, solar has never been cheaper.
Now, because of the state's deregulated energy marketplace, it's a little more difficult to write this kind of one-size-fits-all review of the potential for solar. For one thing, there are some places where you can buy electricity from two dozen different companies, and some places, where you have to purchase it from your city's municipal energy company. That means you might get a better deal per kilowatt-hour (kWh) in Dallas, but you might get a bigger rebate on solar in Austin or San Antonio. So we've tried to use examples that are very neutral and use conservative estimates for how much you're paying.
Now let's discuss that chart above. We've examined three scenarios for going solar in Texas, including a solar lease, buying solar with a home equity line of credit (HELOC), or buying solar with cash. As you can see, the cash purchase option leads to the highest dollar-amount returns over time, but look a little closer. Taking a HELOC and paying for the system over time (the orange bars) means you'll spend thousands of dollars less over time, while reaping a big financial benefit in year 1.
That's because you take a loan for the system, but you still get all the benefits of paying up front. In Texas, that means a 30% federal tax credit, and big annual energy savings. With those incentives, you'll actually come out way ahead after the first year. And even though you'll be making loan payments for 15 years, the first-year windfall is so big, you'll only begin spending your own money in year 9.
Finally, take a look at the blue bars. They represent a solar lease or Power-Purchase Agreement (PPA), which are also called third-party ownership. With a lease or PPA, the solar installation company puts panels on your roof at no cost to you, and you make monthly payments that save you about $11 per month from what you had been paying the utility company for their dirty energy. Leases in Texas are awesome, because the state's high electricity prices mean you start saving money right away. Your savings will start small but finish big, because the lease cost will rise by less than the electric company's annual rate hikes. Third-party ownership is an excellent option even if you have equity or cash to put down, because it can save you tons of money!
Read more below about each of three very good options for solar in Texas.
Solar Leases in Texas
Leasing is a great way to go solar if you haven't got stacks of cash or oodles of equity in your home. With a lease, it's possible to get solar panels for $0 down and see big savings over 20 years!
As for leases in Texas: the electricity costs here aren't very high—we're actually a bit lower than the national average—but the sun shines brighter here than almost anywhere else in the country! That means a lease saves you money starting on day 1. For now, the payments on a leased 5-kW solar system should be around $650 per year, but the energy the panels generate will save you $842 per year. That's $192 you get to keep in your pocket this year, just for saying yes to solar!
And those savings will only get larger over time. As the utility company raises rates, your lease costs will go up by a smaller amount, meaning you'll see greater annual savings. Over 20 years, our estimate shows a total savings of $7,229. And the best part is the panels will be owned and maintained by the installation company, so all you have to do is brag to the Joneses down the street about your green habits!
Here's a little more about how a Texas solar lease works:
Example Lease savings in Texas
Annual Electric Bill Before Solar
Annual Electric Bill After Solar
Est. Annual Solar Payment
Average Annual Savings
Annual Electric Bill Before Solar
Annual Electric Bill After Solar
Est. Annual Solar Payment
Average Annual Savings
The numbers above show the savings with a solar lease for an average home in Texas. The typical electric bill before solar power is super expensive, but with a solar lease, your monthly expenses will be lower. You'll be saving money and saving the planet all at the same time!
Here's how a solar lease saves you money:
With a lease, you're essentially renting your rooftop to a company who wants to install and maintain solar panels on it. You make a monthly payment to them and get all the power the system produces. The payment plus you new, lower power bill will be lower than you used to pay, netting you instant savings with nothing down out of pocket! How awesome is that?!
A PPA, on the other hand, is just what the name says. Your roof still plays host to the panels, but you pay only for the electricity the system generates, at a cost lower than what you've been paying GiantCo utility company. The money you save is only limited by how much sun your roof gets!
Here's the best part: whether you end up with a lease or a PPA, the installation company owns the panels and will do all the maintenance for you. Usually that means just a good cleaning every year, but if any part of that system fails, you're off the hook! That can be a great benefit to homeowners who are risk averse.
Keep in mind, the numbers above are based on an average home in Texas. If you're ready for a custom quote for a solar lease, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
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).
Solar Loans in Texas
You don't need $16,000 sitting around to pay for solar. As long as you have equity in your home, you can still own solar panels and reap all the benefits. Heck, even if you do have the cash, getting a loan to pay for solar is by far the best option when it comes to percentage return on investment.
That’s because, in Texas, using a loan to pay for solar is like investing in a business that's sure to succeed, and also earns you a tax break!. You'll come out thousands ahead this year, and you'll see a spectacular profit over the 25-year life of your system. The reason this works so well is that you're paying over time, but reaping all the benefits now. Your yearly energy savings will offset over half the cost of the loan payments, too, which might sound like it's too good to be true... so let's take a look at the numbers.
A solar purchase like this will make sense for you if the following is true about you and your current situation:
- You can get a home-equity line of credit (HELOC) for $16,250, with a fixed rate of 5% or lower and a 15-year repayment period. Don't be put off if you're offered a higher rate. It just means a tiny bit less of the thousands of dollars you'll make with solar.
- You love making money without much risk.
Here’s how the numbers pencil out for a Texas homeowner who makes a solar purchase with a HELOC:
- Installing a typical 5-kW solar system should start at about $16,250. That's how big your loan will need to be to cover it.
- The electricity you'll save in the first year of operation would have cost $842, but your annual loan payments will be $1,542, meaning you would spend $700 on solar this year, but...
- You'll get a huge tax break! Uncle Sam will give you 30% of the cost of your system back as an income tax credit, which in this case means $4,875 you won't be paying the Feds this year.
- Getting that tax credit means you'll come out $4,175 ahead after year 1, and it's pretty smooth sailing from then on out. Your yearly net cost (electricity savings minus loan payments) for solar will be $670 in year 2, and will shrink as the cost of electricity rises but your loan payments don't.
- By the time you've paid off your loan in 2030, you'll see yearly savings of about $1,400. After 25 years, your total profit will be $14,556! Really awesome for a $0-down investment.
- On top of the green that will stay in your pocket, your system will mean green for the environment, too—127 trees-worth, every year!
Keep in mind, the numbers above are based on an average home in Texas. If you're ready for a custom quote for a solar loan, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Buying Solar in Texas
An outright purchase used to be the only way to get solar, and it's still the option that provides the "biggest" financial returns. The reason we put "biggest" in quotes here is because it's technically true—with lower equipment costs and that big Federal tax credit, solar costs less than ever before, and a solar installation pays itself off in 11 years. But if you're interested in solar as an investment, taking a loan to pay for the system is a better option.
With a loan, you can make monthly payments instead of putting $16,000 down on a solar system, which means you save money on electricity as you pay down the cost of your panels. If you have equity in your home or can get a large loan with an interest rate of 5% or less, a loan is the option to go with. It's like being able to start a business that is sure to succeed, just by having a roof. Read about loans below.
If you've got cash and you prefer to pay up front, you'll have to plunk down $16,250, but tax breaks and energy savings will erase a bunch of that after just 1 year. Over 25 years, your system will have produced over $21,000 in income, after your system cost is paid back. The reason this works is that solar offsets your electricity costs—enough to save you $842 in year 1—and it just goes up from there. As the electric company raises rates, you save more and more, and more...
Here’s how the numbers work for a 5-kW rooftop solar system in Texas:
- Installing a typical 5-kW solar system should start at about $16,250. That's cheaper than solar has ever been, but it still might seem like a big investment. Don’t worry, because after tax breaks and energy savings, your first-year costs will be considerably less than that.
- The Federal government offers a great income tax credit of 30% of system costs. That's $4,875 you won't be paying to Uncle Sam this year, and it brings your first-year investment down to $11,375.
- After that tax credit, we subtract your first year’s energy savings, which we estimate to be $842. That reduces your cost after the first year to only $10,533—a savings of about 35% off the cost of your system. That's a huge cost reduction!
- Those electricity savings will quickly pile up, and your system will pay for itself in year 11. But your panels carry 25-year warranties, and they'll likely keep on kicking out kilowatts for a few decades or more. You'll see a total net profit of $21,436 by the end of that warranty. The internal rate of return for this investment is an amazing 9.8%. That's well above the return of an investment in index funds, and it's more reliable, too!
- And here's a nice bonus to consider: your home's value just increased by $16,848, too—your expected electricity savings over 20 years—and thanks to Texas's property tax exemption for solar, none of that is subject to taxation!.
- In addition to all that cash (and home value), you’ve created some green for the earth as well by not using electricity from fossil fuels. It's like planting 127 trees a year, every year your solar power system is humming.
Keep in mind, the numbers above are based on an average home in Texas. If you're ready for a custom quote for a solar panel system, our network of experts are on call to assist you. Simply sign up for personalized assistance on our special solar deals page.
Texas Solar Policy Information
Ever wonder why solar seems to be everywhere in some states, but not in others? We did too.
State legislatures and public utilities commissions can enact rules to make solar power accessible for everyone. Favorable rules explain why some of the cloudiest states—New York, New Jersey, and Connecticut, are doing so well with solar, and yet some of those with the most natural solar resources—like Alabama, Mississippi, and Florida—are doing so poorly.
Below is important information about the public policy, rules, and economic reasons that affect your ability to go solar here in Texas:
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 sets targets for a certain percentage of total energy generation to come from renewables, but in Texas, the targets are 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.
But wind power in Texas is hugely profitable, and by 2009, Texas had already surpassed their 2025 goal. As of 2015, the state has 15,635 MW of installed wind capacity. Despite wildly exceeding even their voluntary "pie-in-the-sky" 2025 goal, the state has yet to increase their RPS targets.
and while 15,635 MW of wind capacity may seem like a lot, it actually accounted for only 10.6% of total electricity generated in the state. 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—especially one that is as power hungry as Texas—10.6% is far too low of a goal for renewable generation. 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, and there are even states (Hawaii) taking aim at 100% renewables by mid-century.
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 2015), 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, but you might pay more or less than that, because of the companies who are selling in your area within Texas's deregulated market.
12 cents is just 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 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.
Solar Incentives in Texas
Texas Solar Power Rebates
As we mentioned earlier, Texas lacks any statewide rebate program. Given that most folks outside of big cities have their choice of electric company through the state's open energy marketplace.
For those of you lucky enough to live in a place with a municipal electric company, there are some rebates available. Here's what we've found in the Lone Star state:
|AEP Texas Central Company||$1,050/kW||Subject to additional requirements|
|AEP Texas North Company||$1,050/kW||Subject to additional requirements|
|Austin Energy||$900/kW||Maximum of $9,000. Incentive amounts decrease over time. Other requirements must be met.|
|City of Denton||$1,500/kW||Maximum of $30,000, not to exceed 50% of total costs.|
|City of San Marcos||$2,000/kW, $5,000 max.||Subject to additional requirements.|
|City of Sunset Valley||$1,000/kW||Must be eligible for Austin Energy rebate. Sunset Valley rebate offered in addition to Austin Energy rebate.|
|CoServ Electric Cooperative||$1,000/kW||Subject to additional requirements.|
|CPS Energy||$1,300 - $1,600/kW||Amount varies based on whether system was installed by a certified contractor, $25,000 max.|
|El Paso Electric Company||$750/kW||2015 fully subscribed. 2016 rebates TBD.|
|Farmer's Electric Co-op||Up to $1,000||Must meet all program criteria.|
|Guadalupe Valley Electric Cooperative||$1,000/kW||Subject to additional requirements.|
|Oncor Electric Delivery||$538.8/kW + $0.3462/kWh in 1 year||Subject to additional requirements. Calculations for kWh per year are based on expected production. For example, a 5-kW array might produce 7,020 kWh in one year, and its owner would therefore be awarded $2430.32 in addition to the initial $2,694 rebate.|
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 connect with our expert partner installers in Texas, who'll make sure you get all the rebates and savings available.
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.
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 target were increased to 30% or more of annual production, 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
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).
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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.”