Full Guide to Residential Solar Panels In Texas (2021)

solar panels texas

You know as well as we do that everything's bigger in Texas, and that includes the potential for huge savings on your electric bill by installing solar panels on your home! There are a few factors that make Texas the premiere state for installing a solar system on your home:

  • A sunnier and more solar-friendly climate than most states
  • An incredible Federal Solar Tax Credit program (26% rebate in 2021!)
  • Many Texas energy providers have generous rebate and incentives programs for residential solar panels
  • Net metering is allowed by most electricity providers
  • Statewide tax exemption on solar panels

Financial Breakdown of Going Solar In Texas

Okay, so we've discovered that Texas is one of the best solar states, but what exactly does that mean for you? We know that going solar is great for the environment, that it enables you to survive without the power grid, that it adds value to your home, and that the benefits are expansive - but the real reason most people want to go solar is to save money on their power bill. Let's break down how that works.

Before we start, here is our infographic detailing the price breakdown of solar panels in TX:

cost of solar panels texas

The average size of a solar energy system is about 5kW (solar capacity needs vary based on energy consumption but this will work for many homes). We will be using this size installation and a initial home value of $200,000 for our financial breakdown.

We will use the following formula to determine the total cost of your solar system over 20 years:

-Raw cost of 5kW worth of solar panels

-22% Federal Tax Credits

-Conservative average of Texas electricity provider rebate programs ($2,000)

-Sales tax (6.25%)

-Property Tax exemption over 25 years (1.83%)

Then we will us this formula to determine your electricity savings over the lifetime of your installation.

Cost of Solar Panels in Texas After Tax Credit and Discounts

Raw Cost of 5kW producing solar panels = $13,800

-22% in Federal Tax Credits = $13,800 * .78 = $10,764 ($3,036 in tax credits)

-$2,000 conservative estimate of power company rebate = $10,764 - $2000 = $8,764

-Sales tax = $13,800 * .0625 = $862.50 in sales tax savings

-Property Tax savings over 25 years = $8,500 increase in home value * .0183 = $155.55 * 25 years = $3,888.75

So the cost of the installation after the Federal renewable energy credit is $8,764. This is what you'll pay after you file your taxes for the year and receive the tax incentive. But then you also have implied discount of $4751.25 through both tax exemptions AND $8,500 in added value to your property. We won't factor these into the total cost because they don't actually serve to affect the out of pocket price of solar energy systems.

Now let's look at decrease in cost of energy bills over the 25 year lifespan of the solar panels and how quickly you can recoup your investment.

Solar Power Savings Over 25 Years

Now let's run these numbers through the 2nd formula to determine how much you can save on your utilities over the next 25 years.

A 5kW system will produce about 6,750 kWh annually. The power prices vary state by state, but in Texas you're paying about 11.86 cents per kilowatt hour (kWh). We simply multiply your solar panel product by this price that you will no longer be paying the power company:

6,750 X .1186 = $800.55 in annual savings

Now we just multiply that by the estimated 25 year lifespan of the solar panels:

$800.55 * 25 = $20,013.75

Before we even factor in the tax exemptions and home value increase, that is a return on investment of $11,921.75.

But you're also adding $8,500 in equity to your home, becoming independent of the grid and the power providers that control it, and reducing your monthly costs which enable you to make other improvements to your property.

With $800.55 in annual cost reduction, you will pay off your solar panels in a measly 10.11 years!

 

Breakdown of Why Texas is a Solar Dream State

We're now going to walk you through all of these benefits and explain why, as a Texas homeowner, now is absolutely the time to install a PV system.

Texas Is One of the Best Solar States in Terms of Pure Sun Exposure

Texas has an average of 234 sunny days per year, about 29 days more than the national average of 205 sunny days. Even if you're in the northern part of the state where it's a bit cooler, the climate is still ripe for a residential solar system.

Here's a breakdown of sun hours per day by city:

Houston - 5.9 hours per day

Austin - 6.7 hours per day

Lubbock - 7.5 hours per day

Corpus Christi - 6.2 hours per day

Dallas Ft. Worth - 6.9 hours per day

Midland - 7.7 hours per day

El Paso - 8.6 hours per day

The US country average for peak sun hours per day is 3-5, so any region in Texas is an above-average location for solar panels.

Federal Solar Rebates and Incentives

There are a number of great Texas solar incentives, but the most important incentive you're going to encounter is the Federal Solar Tax Credit program. This was a rebate program that started, at least in its current form, in 2016. Back then, the government offered an incredible 30% return in tax credits on solar installations. That has since gone down to 22%, which is still an incredible incentive to go forward with a solar panel installation.

What you need to know is that this rebate program ends at the end of 2021. It could be renewed, we don't really know, but what we do know is that the ability to get essentially a 22% discount on a solar installation ends in about 12 months! We highly recommend that Texas homeowners who have any interest in buying a solar energy system try and make the transition before the calendar turns to 2022.

If you want to get an easy solar quote and learn about potential $0 down financing for your Texas home, just enter your Zip Code below and get started!

Texas Utility Company Rebates

Many energy companies throughout Texas offer their own rebates, which make going solar in the Longhorn State that much more attractive. Here's a rundown of solar incentives offered by various TX suppliers.

Austin Energy —  Austin Energy customers are eligible for a rebate of $2,500 if they install a solar system on their home. Not only that, but they also have a generous "Solar Tariff" buyback program which we will cover in the next section.

CPS Energy — If you live in the San Antonio area, CPS Energy also offers a $2500 rebate program to help reduce the cost of solar panel installations.

Guadalupe Valley Electric Cooperative — If you live in Seguin, Cuero, Gonzalez, Shertz, Shiner, or Goliad, GVEC offers a rebate of $1.00 per watt up to $4,000. So even if you get the industry average solar system size (5kW or 5,000 watts) you would already be receiving the max rebate of $4,000.

Oncor Electric Delivery — Oncor, one of Texas' largest electricity providers, also offers generous rebates that it calculates based on the size of a home's solar system and estimated decrease in energy usage. The average rebate is approximately $5,400 and the max is $8,500

TXU Energy - TXU Energy doesn't offer installation rebates but they also have a great power buyback program that we will cover in the next section.

Garland Power & Light — GP&L offers Garland area residents a rebate up to $500 which falls under their Energy Efficiency Rebate Program.

City of Sunset Valley —The City of Sunset Valley also offers a $1.00 per watt rebate up to $3,000 per household.

So, as you can see, there are plentiful incentives offered by Texas utility companies to help you alleviate the cost of installing solar on your home. If your local provider isn't listed here, we would recommend doing a quick search for "[Your Power Company] Solar Rebates" to see if there are any great programs that we may have missed.

One important note on these rebates is that the programs are often limited in overall budget. The county or municipality that funds these solar incentives often have a set amount earmarked, and once that amount runs out, there are no more rebates available to property owners for the rest of the year.

Net Metering Throughout Texas

Net metering (NM or sometimes called an Energy Buyback Program) is absolutely vital to getting the most out of your home's solar energy. NM is essentially a connection of your photovoltaic system back to the electrical grid, and it allows all the excess electricity that your panels create to be fed back into the overall power supply. The power company who owns the grid keeps track of how much electricity (in kilowatt hours) that your home has provided and then discounts your power bill based on the going rate. If net metering isn't available, any excess power created simply goes to waste because it is famously difficult to store large amounts of power in a battery (though battery technology should solve this issue soon!). So interconnection to the grid and a power provider that actually buys your excess energy is crucial to paying off your system quickly and reducing your power bill each month.

Many of Texas' largest REPs (Retail Energy Providers) provide quality net metering programs. It's worth nothing that Texas' power industry is deregulated and there is no requirement for these companies to offer net metering at all (and some don't). But the tides are shifting and more REPs are offering it as more homeowners express a desire to go solar. Definitely research your local provider to determine whether they have an Energy Buyback Program.

Statewide Tax Exemptions

Solar panels are notoriously tax-friendly, and that's no different in Texas. When you install solar panels, you pay zero sales tax. That is essentially a 6.25% discount on a product that costs multiple thousands of dollars. Not bad!

But Texas also offers a property tax exemption for the increase in property value that comes with installing solar systems. A typical Texas solar installation will add 4.25% to a home's value, and that does not factor back into your home's value appraisal.

So if your home is worth $200,000 now, it would be worth $208,500 with a new solar PV system. If property taxes are 1.83% and you don't have to pay that on the $8,500 increase in property value, you basically save $155.55 per year on taxes. That may not sound like a lot, but $155.55 * 25 years (the average lifespan of a solar installation) is $3,888.75.

The Future Will Thank You

Not only do solar panels offer an incredible 5-figure return on investment, but they help enable you to better prepare for a future that is sure to be complicated by difficult energy decisions that we all have to make. Energy costs are on a steep rise so it's almost certain that your annual savings will far exceed $800.55 in a short amount of time. We aren't sure what the state of energy in this country will be in 10 years, but with a solar panel installation you can be assured that you're better prepared for it than most.

Navigating the World of Solar Companies

If you decide to install solar panels on your house, chances are you will be working with one of the state's solar companies. Installing a solar PV system involves a lot of complex electrical wiring and is a DIY project that should be undertaken only by the most electro-educated homeowners.

Solar companies vary in everything from customer service to quality of installation, so it's important to only engage with the best ones. Here at Solar Action Alliance, we help to inform you on how residential solar works, but we also partner with trustworthy, gold-standard solar companies that will help you to get a high-quality solar PV system on your home at a low cost. They can walk you through all of the incentives and make sure that your system meets your individual energy needs.

To see if you're eligible for $0 down financing and to receive solar quotes from the best solar providers, just enter your zip code below to start the process! And remember that 2021 is essentially the last year to get huge solar energy tax incentives from the Federal Government.

Interested in Going Solar? 

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