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They call it Space City, and it sure seems get a lot of love from that giant yellow orb shining down from 93 million miles away. Sometimes it feels like too much.
But why not take advantage of all that sunshine with some solar panels? You can save a huge amount of money with by installing a solar system on the roof, eliminating most or all of your power bill by signing up with your retail electric provider to sell your extra energy back to them.
Important numbers for solar on the average Houston home
Average System Size
Cost after incentives
Years to payback
Savings after 25 years
The system outlined above can eliminate your power bill for years to come, and provide you with 25 or 30 years of clean power and energy bill savings. You’ll save $21,500 over the lifespan of the panels.
Those numbers look pretty good, and they can get even better depending on your installer and increases in the cost of electricity. Keep in mind, those numbers are for an average home in Houston, and many factors determine how much you could save. If you’re looking for a custom estimate for your home, connect with our solar experts in Houston today.
If you’d like to learn more about how we got those numbers, read on! Here’s our guide to the ins and outs of going solar in Houston, Texas:
The cost of solar panels in Houston in 2018
To know how much solar panels will cost for your home, you first need to know your energy usage. The average Houston home needs about 11,500 kilowatt-hours (kWh) per year, and spends about $1,200 on electricity bills. That’s an average of about $.105/kWh, for those of you looking to compare your rates with the average.
A solar system that can make all that electricity would consist of 22 solar panels, each rated to produce 350 watts under full sun. Multiply 22 by 350 watts and you get 7.7 kilowatts (kW). A 7.7-kW system will set you back between $24,000 and $26,000, depending on the installer and options you select. That might sound like a lot, but there are great incentives to bring down the cost, and financing available to eliminate the up-front payment.
Solar incentives available in Houston
The most important incentive to know is the federal solar tax credit, equal to 30% of the up-front cost of your system. So at the end of the first year, the average system will earn you a tax credit of $7,500, bringing the cost of the system to $17,500 after the first year.
On top of the federal solar tax credit, your solar system adds value to your home. The total value added varies by home, but it’s about 70% of the cost, on average, or $17,500. The state of Texas offers a property tax exemption for all that value, meaning you won’t pay a penny more to the assessor, even though the value of you home just increased!
Year 1 cost after incentives: $17,500. Now let’s move on to energy bill savings!
Savings from solar panels in Houston
This is where things get a little complicated, on account of Texas’s deregulated energy market. The majority of the Houston area is served by CenterPoint energy, which is the Transmission and Distribution utility company (TDU) your installer will work with to get your panels connected to the grid and pumping out power for your home.
But you buy electricity from a Retail Electric Provider (REP), like TXU, Green Mountain Energy, or Southwest Power & Light. Your REP is who bills you for your electricity every month.
When you have solar panels, some of the electricity goes to power your home, keeping your lights, appliances, and air conditioning running through the day. But those panels are often pumping out more juice than your home needs. That’s called oversupply, and only certain REPs will buy it back from you. Of the many choices you have on the deregulated energy market, four will pay you for your excess solar power.
REPs that offer buyback
If you want to go solar in Houston (or any part of Texas that has a deregulated energy market), you can choose from one of these 4 providers:
Green Mountain Energy
Green Mountain offers the closest to full-retail net metering that Texas has. The company offers full credit for every kWh your system produces, with rollover of additional credits until you can use them. That means if your system makes more than you use in a month, 6 months, or 12 months, you’ll still have that extra credit banked in case you need to use a ton of electricity some month down the line.
Green Mountain offers contract terms of 24 months with a current rate of $.129/kWh (pdf) in Houston.
MP2 offers a solar buy-back program that gives you full retail rate credit for every kWh your system generates, and a contract term of 24 or 60 months. At the time of this writing, their contract offered a fixed rate of $.117/kWh with no monthly base charge.
The only drawback with MP2 is if/when you produce more solar than you use. If you have a credit balance after your October bill, it is reset to zero kWh, and you lose any additional credit you have.
Reliant offers two renewable buyback programs. The first is called the “Simple Solar Sell Back 12 plan,” and it’s similar to Green Mountain Energy’s plan, but has a contract term of only 12 months. The second is simply called the “Solar Sell Back plan,” and offers market-based rates, based on the cost of natural gas, that change on the 15th of every month.
From our perspective, Reliant’s rate plans don’t offer enough protection from changes in the price of energy.
TXU does things a little differently, offering a flat buyback rate of around $.07/kWh for any excess solar generation, as long as you don’t exceed the total amount generated in a year. You can pair this rate with any of TXU’s existing plans. From our perspective, this would only make sense if you could find a TXU plan that offers rates as low as $.07/kWh for the energy you weren’t getting from solar. Anything else and you won’t be getting the appropriate amount of credit, compared to the other options out there.
Payback estimate for an average Houston home with solar panels
Now let’s put it all together. We’ll use the Green Mountain Energy Solar Buyback plan to look at savings over time. The plan is a 24-month contract for electricity at a fixed rate per kWh. Usually, we’d compare going solar to the cheapest alternative, and in Texas, with its deregulated energy market, there are REPs promising super-low rates, but the restrictions and the busywork con be onerous.
We like the Green Mountain Energy plan because it’s simple, and because its rates don’t fluctuate wildly like some other companies out there. Here’s a look at the current savings estimate for the first year operation of a 7.7-kW solar array in Houston:
Estimated 1st-year savings for a 7.7-kW system in Houston
|Month||Usage (kWh)||Rate||Solar kWh||Bill before solar||Bill after solar*||Credit balance|
*Any amount of kWh over usage is credited to the customer's account and used to reduce future months' bills.
Estimated lifetime savings for an average Houston home with solar panels
That 1st-year estimate looks good! You’ll save almost $1,500 a year, and have a few bucks left over at the end. That $17.67 credit would roll over to the next year, by the way, so next January, you’d probably end up using some of it up.
So we know solar can save us some money in year 1, but how about after? Solar panels last for 25 years, but lose a tiny sliver of their energy-generating mojo each year. The top panel manufacturers have gotten this number down to 0.5% per year, or so, which means they’ll still be kicking out 88% of their rated capacity (7.7-kW becomes 6.8-kW) at the end of year 25.
Electric rates in Texas have fluctuated since deregulation, but we estimate you’ll still see increases after each 24-month contract period, based on inflation and other factors. Our estimates call for 5% increases in the Green Mountain Energy rates every 2 years. That’s a little bit below the national average of 3.5% per year, but it’s close to what Texas has experienced overall (although sometimes you see increases of 40% in REP rates. Ouch.).
As we mentioned above, it’ll take about 12 years to pay back the initial cost of your system, at which time you’ll essentially be generating “free” electricity. After 25 years, you’ll have saved $21,500 after paying back the cost of your system. Here’s how that looks as a bar graph:
What about going solar for $0-down?
If you’ve been looking for solar panels for your home, you’ve probably seen ads that promise “free solar panels!” and “$0-down solar.” While the latter is the more correct term, it is technically possible to get solar panels installed for free, and then pay over time, either buying the system with a loan or buying the electricity only with a power purchase agreement (PPA).
The offerings, prices, and financing terms for loans and PPAs vary widely by installer. If you’d like to see what’s available near you now, your best bet is to connect with one of our solar installer partners to find out more!
Last modified: October 4, 2018