Texas Solar Incentives: Tax Credits & Rebates Guide (2022)

By Jacob L.

Are you a property owner in Texas who is scared about the rising costs of electricity in your state? Well, you’re not alone. One of the best ways to save money in 2022 is by purchasing a renewable energy production system for your home. Solar power, in particular, can produce tons of electricity in a state as sunny as Texas, helping to minimize how much you spend on utility bills.

In fact, after the initial installation costs, a solar energy system can save you thousands of dollars per year. With the help of federal, state, and local financial incentives, your new solar photovoltaic (PV) system will be cheaper than ever.

For these reasons and more, it is a great time to buy solar panels in Texas. Keep reading to learn all about how your purchase and installation of solar panels in the Lone Star state can be made more financially accessible.

Why Go Solar in Texas?

They say that everything is bigger in Texas, and the size of residential electric bills is no exception. With residential energy bills that are 20% higher than the national average, Texans are desperate for some relief. That’s why it is a great time to buy a solar (PV) system in Texas.

Solar is the perfect energy source for a state that gets a lot of sun. Texas averages over 300 sunny days per year, which is leaps and bounds higher than the American average of 205 days per year. Indeed, Texas is well-positioned to produce massive amounts of solar power, so it is no surprise that it is ranked second in the country for solar energy system installations.

Instead of having to search for the one solar provider in a town hours away, as may be the case in some states, most large towns in Texas will have businesses ready to sell and install solar photovoltaic systems. Also, with many statewide financial and tax incentives available for purchasers of PV systems, it is no wonder Texans love solar.

Finally, solar panels can dramatically increase your home’s value. According to Zillow, the average home experiences a 4.1% increase in its value after the addition of a solar power system. In the United States, the average home will see its value increase from solar panels by close to $9,274.

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Texas Solar Cost

The average total cost of solar installations in Texas is $13,450 for a 5-kilowatt (kW) system. On a cost-per-watt basis, solar panel installation in Texas is $2.69. These costs have come down significantly in recent years, and they are well below the American average of $3.03 per watt.

Now, if you want to purchase a larger system (more watts), your system costs will increase in addition to the energy the system produces. But it is worthwhile to keep in mind that with energy bills increasing amid high oil and gas prices, the relative cost of solar is bound to decline further.

How Much Can You Save on Solar in Texas?

Although purchasing and installing solar panels comes with a steep up-front cost, you will ultimately end up saving lots of money per year, thanks to the electricity your system produces. Texas homeowners can save between $65 and $100 per month on electricity costs after paying back the cost of purchasing and installing a solar panel system that meets 50% or more of their energy needs. Consequently, you can amass over a thousand dollars per year in savings.

People who have invested in a solar energy system in Texas save as much as $16,803 on their energy bills over a 20-year period. With a payback period of just over 12 years, you can be saving thousands of dollars per year in almost half a decade. Over the 20 to 25-year lifetime of your solar photovoltaic equipment, you will experience loads of savings.

The Best Solar Incentives, Tax Credits, & Rebates in Texas

There are several public and private incentives in Texas that help you save on your purchase of solar panels in Texas:

Incentive Summary End Date
Federal Solar Tax Credit (ITC) Texas residents can take advantage of the Federal Solar Tax Credit and get a discount of 26% applied to their tax return. December 31st, 2022
Texas Solar Property Tax Exemption Texas will exempt property taxes on the added value to your home that comes with installing a solar energy system. None
Net Metering Net metering allows Texas homeowners that create excess energy to use it as a credit on their next electric bill. All energy providers are required to offer this option to homeowners. None
TXU Energy Home Solar Buyback Pan Customers can get paid for the excess energy their solar installation creates. You can earn credits to offset up to 100% of your energy changes on your monthly utility bills. This program is similar to net metering in other states. None
American Electric Power (AEP) Solar Rebate Texans that get energy from AEP are eligible for a cash incentive between $2,500 to $8,500 for the kW of solar power installed in their home. None
CPS Energy Solar Rebate Customers are eligible for a cash incentive that ranges from $2,500 to $8,500 for the kW of solar power installed in their homes. The cash incentive varies according to your electric provider, solar PV system size, location, and income. None
Austin Energy Solar Rebate If you live in Austin, you may qualify for a solar rebate program that ranges from $2,500 to $8,500 for the kW of solar power installed in your homes. This incentive varies according to your electric provider, solar PV system size, location, and income. None
Oncor Solar Rebate

 

Oncor customers can get access to a solar rebate program that ranges from $2,500 to $8,500 for the kW of solar power installed in their homes. The cash incentive varies according to your electric provider, solar PV system size, location, and income. None
USDA REAP GRANT REAP assists agricultural producers and rural small businesses reduce their energy costs and consumption by providing loan financing and grant funding to purchase and install renewable energy systems. Eligibility for the REAP program is dependent on you being an agricultural producer, with at least 50 percent of your gross income coming from agricultural operations and small businesses in eligible rural areas. None
Property Assessed Clean Energy (PACE) Texas offers access to financing for energy-efficient power systems and upgrades through the PACE financing program. This program allows property owners to finance their purchase of solar energy systems and to pay back the money owed through a voluntary property tax assessment. While it may not lower the cost of going solar, it can be a great means of financing for homeowners that can’t take out traditional loans. None
Solar Energy Devices Franchise Tax Exemption The state of Texas allows businesses to deduct the cost of a solar energy device from franchise taxes.

Federal Solar Investment Tax Credit (ITC)

The Federal Solar Investment Tax Credit (ITC) is a 26% federal tax credit available for home solar systems purchased and installed by the end of 2022. This is a significant chunk of money taken off their personal income taxes. As well, the ITC has expanded the country’s solar industry. It has helped create hundreds of thousands of jobs while bringing billions of dollars into the economy since it was enacted in 2006.

Texas Solar Property Tax Exemption

Texas will exempt property taxes on the added value to your home that comes with installing a solar energy system.

Texas Net Metering

Electricity companies in Texas have all adopted net energy metering, which is a policy that ensures your solar panels will be connected to the public-utility power grid, and that surplus power created by your panels will be transferred to the grid. You can offset the cost of power drawn from the electricity grid as a result of net metering.

The minimum amount of compensation that you’ll receive is the avoided-cost rate, which is below the retail rate. While the policy specifics of net metering programs will vary among providers, it remains hugely beneficial for owners of solar energy systems.

TXU Energy Home Solar Buyback Plan

Customers can get paid for the excess energy their solar installation creates. You can earn credits to offset up to 100% of your energy changes on your monthly utility bills. This program is similar to net metering in other states.

American Electric Power (AEP) Solar Rebate

Texans that get energy from AEP are eligible for a cash incentive between $2,500 to $8,500 for the kW of solar power installed in their home.

CPS Energy Solar Rebate

Customers are eligible for a cash incentive that ranges from $2,500 to $8,500 for the kW of solar power installed in their homes. The cash incentive varies according to your electric provider, solar PV system size, location, and income.

Austin Energy Solar Rebate

If you live in Austin, you may qualify for a solar rebate program that ranges from $2,500 to $8,500 for the kW of solar power installed in your home. This incentive varies according to your electric provider, solar PV system size, location, and income.

Oncor Solar Rebate

Oncor customers can get access to a solar rebate program that ranges from $2,500 to $8,500 for the kW of solar power installed in their home. The cash incentive varies according to your electric provider, solar PV system size, location, and income.

Commercial Texas Solar Incentives

Solar Incentives for Nonprofits and Businesses in Texas,

Unfortunately, there are very few incentives available specifically for nonprofits and businesses in Texas. However, the Solar Energy Devices Franchise Tax Exemption enables businesses to deduct the cost of a solar energy device from franchise taxes.

USDA REAP Grant

The United States Department of Agriculture (USDA) has launched a program designed to increase investments in clean energy called the Rural Energy for America Program (REAP). REAP helps agricultural producers and rural small businesses lower their energy costs and consumption by financing loans and grant funding to purchase and install renewable energy systems.

You are eligible to participate in the REAP program if you are an agricultural producer with at least 50 percent of your gross income coming from agricultural operations or a small business in eligible rural areas.

Property Assessed Clean Energy (PACE)

Texas offers access to financing for energy-efficient power systems and upgrades through the PACE financing program. This program allows property owners to finance their purchase of solar energy systems and to pay back the money owed through a voluntary property tax assessment. While it may not lower the cost of going solar, it can be a great means of financing for homeowners that can’t take out traditional loans.

Key Takeaways: The Best Texas Solar Incentives

Texas is by far one of the best states in the country to invest in residential, commercial, or industrial solar energy systems. With lots of sunny weather to power your systems, what more could you ask for? Additionally, the range of financial and tax incentives available to you means that purchasing solar panels has never been more cost-effective. You have all the reasons in the world to buy a solar energy system today, especially with variable energy prices around the world and climbing utility bills at home. If you are interested in purchasing, there are many great companies that will help get you set up.

Texas Solar FAQ

Is solar worth it in Texas?

Yes, you should definitely invest in solar energy in Texas. Solar will save you a load of money on your utility bills and help reduce your production of emissions and your carbon footprint. Plus, a variety of federal, state, and local financial incentives are available in Texas to make the purchase of solar panels accessible to anyone!

How much will my electricity bill go down with solar in Texas?

Texas homeowners can save between $65 and $100 per month on electricity costs after paying back the cost of purchasing and installing a solar panel system that meets 50% or more of their energy needs. People who have invested in a solar energy system in Texas save as much as $16,803 on their energy bills over a 20-year period.

With a payback period of just over 12 years, you can be saving thousands of dollars per year in almost half a decade. Over the 20 to 25-year lifetime of your solar photovoltaic equipment, you will experience loads of savings.

How much does it cost for solar panels in Texas?

The average total cost of solar installations in Texas is $13,450 for a 5-kilowatt (kW) system. On a cost-per-watt basis, solar panel installation in Texas is $2.69. These costs have come down significantly in recent years, and they are well below the American average of $3.03 per watt.

Can you get solar panels for free in Texas?

While it is not likely that you’ll find solar panels for free, Texans are fortunate to have the support of numerous federal, state, and local financial incentives that will help to lower the cost of purchasing a new solar energy system.

What solar rebates are available in Texas?

There are many federal, state, and local financial incentives for purchasers of solar energy systems in Texas. These include the federal government’s Solar Investment Tax Credit (ITC), the Texas Property Tax Exemption, and many local and private incentives.

How many homes in Texas have solar panels?

There is enough solar installed in Texas to power over 1.6 million homes, and solar accounts for 3.75% of the state’s electricity production.

Do solar panels increase property taxes in Texas?

Texas will exempt property taxes on the added value to your home that comes with installing a solar energy system. This is another excellent reason to invest in solar!

How much can you write off for solar panels on taxes in Texas?

Texas taxpayers can write off lots of the costs associated with the purchase of new solar panel systems. For more information about incentive programs, check out this database online.

House Method’s Solar Companies Rating Methodology

At House Method, transparency and trust are our most important values for the reader. That’s why we took the time to create an objective rating system and score each solar energy company/service according to our methodology.

Our research team dug deep into the fine print of contracts, combed through more than one hundred customer reviews, and thoroughly investigated all of each solar energy company’s services, costs, and products. We’ve done the homework for you by researching nearly all of the solar energy companies on the market so you can have the information you need to make the best choice for your home.

We developed a formula to objectively determine the best solar energy companies and give each a score out of 100 based on the following criteria:

  • Plan Options (30): Do they provide a variety of plan options? We looked at the number of plans each solar energy company offered and the flexibility of adjusting the plan.
  • Services offered (20): How many services are offered in each plan? We looked at whether the company manufactures its own solar panels, whether it contracts out installation, and what additional products each company offers.
  • Trust (10): What do customers say after their solar panels are installed? Does this company offer a guarantee? We considered how satisfied customers are post-service if the company does what it says it will, BBB accreditation, and service guarantees.
  • Prices (10): How reasonable are the costs of the plan or service in comparison to the industry average? We compared the costs of each company to competitors that offer the same solar energy services.
  • Unique perks (10): Does the company offer discounts or special services such as financial incentives, rebates, or a useful mobile app? We looked for extras each company offers that set them apart from the competition.
  • Customer Service (10): How is the customer experience when contacting the company? We considered the speed of response, weekend/holiday availability, and ease of communication through phone calls, email, and online chat functions.
  • Nationwide availability (10): How many states does the company offer its services? Companies that operate nationally and in all zip codes are favored over those with limited availability.

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