Just an hour of sunlight generates sufficient solar panel energy to power the world’s homes for a complete year. Texas has plenty of sunlight, but solar electricity generation in the state as a whole lags because state policies do not strongly support solar. But Texas is a big state and there is lots of room in it for communities to do their own thing. The City of Houston does the rest of the state one better with its own pro-solar programs. And, when you add in the Federal pro-solar programs and the falling cost of photovoltaic equipment, you can save a lot of money by going solar.
Plus, switching to renewable energy generation is the right thing to do. It’s good for the planet, good for your finances, and since fossil-fuel-based energy generation is sure to get ever more expensive going forward, it’s good for the economy as a whole. The more people go solar, the easier it will be for other people to follow your lead.
The more people go solar, the less solar equipment will cost. That, in essence, is the Swanson Effect, named for Richard Swanson, who noticed that solar photovoltaic modules dropped 20% for every doubling of global manufacturing. As you can see from the graph, if home solar panel systems used to be expensive, they aren’t anymore.
You have three options for going solar: you can buy equipment with your own money; you can buy with someone else’s money (taking out a loan); or you can lease. As you can see from the graph, each one has advantages and disadvantages.
Cash purchase is a good option because it is simple. You do have to put down a lot of money upfront, but then you own your system free and clear. And in a few short years, the system will pay for itself. Depending on the size of the system, the payback time in Texas is around 11 years, thanks to the Federal solar panel tax credit. In Houston you can do it faster because there are local businesses that offer residents significant rebates on equipment. By the end of your system’s 25-year working life, your savings could total more than $20,000.
Purchasing a solar panel system using a home loan is a good option if you don’t want to pay any money up front but still want the advantages of ownership. You do have to make loan payments, but at least for the first few years, your savings are bigger than your payments are. Depending on the size of your system and how much energy you use, you might pay more than you save for a few years near the end of your repayment period.
Leasing solar panels means you don’t get any rebates or tax credits, but you don’t get maintenance or repair costs either, and you don’t have to make any upfront payment. You either lease the panels for a monthly payment that is less than your electricity bill used to be (so you come out ahead) or you agree to let the provider put their panels on your roof for free and you pay for the electricity you use (which is still probably less expensive than what you pay before). Either way, you save money from day one and you keep saving every day for the 20-year life of the lease. Your total savings will be less than with either cash purchase or credit purchase, but you have no risk and no initial investment.
A renewable portfolio standard is a law that sets a certain minimum percent of renewable energy that state utilities have to source by a certain date or pay fines. These laws provide incentive for energy companies to help customers go solar, something the companies otherwise would not want to happen. Unfortunately, Texas has repealed its RPS law, which was never very ambitious to begin with. Houston has no RPS of its own, but it does have some strong pro-solar policies.
Texas can be a difficult place to go solar, since it has no net metering law, no RPS law, and no solar carve-out. The interconnectedness policy is decent, meaning that setting up your system is fairly straight-forward, but there is a lot of room for improvement. Texas has no solar tax exemption, but then the state has no income tax at all so it can’t have tax exemptions for anything so that doesn’t really count. Electricity prices are relatively low, which is bad news for two reasons. First, low prices usually mean that a lot of the power comes from coal, which has pretty much the worst carbon footprint. Second, low prices mean that your savings from solar panels are not as dramatic—they are still significant, however, and likely to get better over time as energy prices inevitably rise.
But there are some bright spots, especially in Houston. Texas does have a great property tax exemption; all of the value your solar system adds to your property is tax free. And despite the lack of a statewide net-metering law, some utility companies, including some that operate in Houston, do pay for additional solar electricity generation, at least up to a certain point. And many Houston offer their own rebate program for solar equipment.
Public utilities in Houston also offer residential purchasers an exemption of 100 percent of the energy conservation subsidy. The overall value of a renewable utility installation, regardless of its energy conservation capability, will not be included in the gross income of the buyer.
Customers who decide to participate in their utility company’s conservation initiative might be offered a reduced rate for the electricity they use or a non-refundable credit of the cost of electricity on the household’s monthly utility bill.
The bottom line is that in Houston, Texas, solar is the way to go—not just because of the money you save. You also get to help bring Houston into the solar age.