The average Texas solar shopper will save $3,340 on solar panels with rebates and incentives.
Updated May 7, 2024
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Written by: Emily WalkerTexas can be an excellent place to go solar, especially if your utility company offers rebates or solar buyback programs. And, of course, there’s the big federal tax credit for solar panels (and batteries). Those incentives can add up to thousands of dollars in savings on the upfront cost of solar, and the long-term cost of electricity.
As a Texas homeowner, you have access to some great incentives that can substantially improve your return on investing in solar panels. The two below are some of the most impactful ways to bring down your solar costs.
Average savings in Texas DescriptionResidential Clean Energy Tax Credit, formerly the federal investment tax credit (ITC)
Lowers your solar panel system's cost by 30%
Depending on your utility company, additional rebates may lower your system's cost.
The Residential Clean Energy Credit , formerly known as the federal investment tax credit (ITC), can reduce your solar panel system's cost by 30%. Your entire system qualifies for this incentive, including equipment, labor, permitting, and sales tax.
The average cost for a 5 kW solar panel system is around $11,133 in Texas. Once you factor in the 30% credit, the cost comes down to $7,793.
When you file your federal income taxes, you can claim this incentive as a credit towards your federal tax bill. Just keep in mind that to qualify for the ITC, you need to purchase your system either with cash or a solar loan–if you lease your system, you won't be eligible.
You also need a high enough tax bill, though you can roll over any remaining credit year-to-year until the end of 2034 when the ITC expires. The only time you might be eligible for a direct payment for the ITC is if you're a tax-exempt entity, like a nonprofit organization.
Claiming the ITC is easy! Just follow these three simple steps:
Want some money back on your solar panel system? Here are some of the electric companies in Texas that offer rebates when you install solar panels:
In addition to the great rebates and incentives above, Texas also offers a solar property tax exemption. When you install solar panels, it generally increases the value of your home. But thanks to this exemption, you won’t have to pay extra taxes because of that increase.
Tax exemption DescriptionTexas solar property tax exemption
If you use solar energy as a source of power, you won't need to pay tax on the value your solar panels add to your property. The average property tax in Texas is 1.81%
Utility companies in Texas are not legally required to offer solar buyback programs—but many of them do anyway. These arrangements can help you squeeze the most value out of your solar panels by shrinking your utility bills as much as possible.
The best type of buyback program is known as net metering . Under this system, your utility company works like a bank for solar power—if you can’t use it all at home, you can send it to the grid for an energy credit. When the sun isn't shining and you need to pull electricity from the grid, your utility draws against those credits.
Depending on the weather, the utility’s specific rules, and how much energy you use, net metering makes it so you will often owe very little, or even nothing, on your electric bills with solar panels.
Another type of solar buyback program, net billing, ditches the concept of banked energy credits and instead offers a partial dollar-based bill credit for every kWh you send to the grid.
The details vary quite a lot between utilities and suppliers in Texas. Some utility companies will purchase your electricity at the wholesale rate (what they typically pay for electricity), which is significantly lower than the retail rate (what you pay for electricity). Others will pay a fixed rate. Some utilities also won't let you roll over credits month-to-month or year-to-year. Or, they'll pay you less for any electricity remaining at the end of a billing cycle, called net excess generation.
The good news is that you might be able to shop around for a supplier that offers the best terms to customers with solar power.
Here are some of the solar buyback programs available in Texas for deregulated and regulated utility companies:
Depending on where you live, you may be able to choose one of these companies to supply your electricity: