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Your Guide To Solar Panels In Texas

Oct 24, 2022

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Homeowners in Texas have a few great reasons to consider solar panels. With solar power, Texans can reduce their utility costs, clean up the environment and avoid outages that have impacted the Lone Star State in the past.

Let’s explore how clean energy from a home photovoltaic (PV) system can be a wise investment.

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How Much Do Solar Panels Cost In Texas?

Prices for solar panel installation have plummeted across the globe in recent years. In Texas, the price of installing solar panels is 53% lower than it was 10 years ago.

This reduction in the cost of solar panels is largely driven by advances in technology that have reduced manufacturing costs. The other costs of installation, such as labor, permitting and advertising – often called soft costs – have risen. Still, the end result is a far lower price for installing solar systems on both residential and commercial properties.

The out-of-pocket price range for installing a 5-kilowatt (kW) grid-tied solar panel system in Texas is estimated at $11,500 – $19,000. That means prices start at about $2.31 per watt. The national average is $3.04 per watt, so solar modules in Texas might pay for themselves more quickly than they do in some other states.

Remember that incentives from government agencies and utility companies, which we’ll discuss shortly, can bring the costs far lower.

Net Metering In Texas

Net metering, a billing method that credits solar homeowners for excess power they generate and feed into the electrical grid, can be a big-time motivation for adding solar panels to a house. While Texas has no statewide policy for net metering programs, many utility companies offer it for homeowners who produce renewable energy.

American Electric Power (AEP), CPS Energy, El Paso Electric, Green Mountain Energy and TXU Energy are just a few of the utility companies in Texas that offer net metering.

Texas Solar Incentives And Rebates

Texans have access to incentives for going solar. These incentives are available primarily from federal and local governments as well as solar rebate programs from local utility companies.

Below, you’ll learn about several of the incentives that may be available to Texas homeowners. With the number of local utility companies and governments in Texas, homeowners should check the Database of State Incentives for Renewables & Efficiency (DSIRE) for other potential incentives in Texas.

Federal Solar Tax Credit

The federal solar tax credit, otherwise known as the Investment Tax Credit (ITC), is the top incentive for homeowners across the U.S. to invest in solar energy at home. The tax credit was set to expire at the conclusion of 2023, but congressional lawmakers extended and raised the credit with the passage of the Inflation Reduction Act of 2022.

Now, the federal tax credit – which is retroactive to the beginning of this year – will allow homeowners who are eligible to deduct 30% of the cost on solar energy systems installed from January 1, 2022, through the end of 2032. The discount steps down to 26% in 2033 and then to 22% in 2034.

The ITC applies to the total system price, which consists of labor and equipment costs (solar panels, battery storage, mounting hardware and inverters). In some cases, it may also cover the cost of upgrading the home’s electric panel. Discuss your eligibility with a tax professional for more details.

Austin Energy Provides Net Metering And A Rebate

Homeowners served by Austin Energy may be eligible for a $2,500 rebate as well as the Value of Solar (VoS) rate.

Austin Energy bills solar customers for total energy use, but the bill is reduced by the VoS credit. For example, a home that uses 1,200 kilowatt-hours (kWh) in a month and produces 800 kWh will have their $127 bill reduced to $49.40 plus a city sales tax of a few cents.

CPS Energy Provides A Straightforward Rebate

Rather than stretching your solar savings over the lifetime of your system, CPS Energy provides eligible San Antonio homeowners with a one-time $2,500 rebate per solar project. Those who choose locally sourced solar panels may also be eligible for an extra $500.

Dallas Solar Homeowners Can Participate In Residential Solar Program

In Dallas-Fort Worth, homeowners served by Oncor may qualify for energy credits. To qualify, the system must be new, include a battery storage system and produce 3 – 15 kilowatts (kW). There are also technical requirements for tilt and solar azimuth, which is the horizontal orientation of the solar panels. Be sure to discuss these requirements with installers you’re considering.

Sunset Valley Offers Rebates For Eligible Homeowners

The City of Sunset Valley is one of the local municipalities in Texas that provides eligible homeowners a rebate. The rebate offers $1 per watt for systems up to 3,000 watts (or 3 kW), with a cap of $3,000 per household. Homeowners must have the project approved through the Austin Energy PV rebate program before they apply for the City of Sunset Valley rebate.

Texas Policy Protects Solar Homes From Added Property Tax

Solar panels often increase home values, which can mean a higher property tax burden. The state of Texas’ property tax exemption ensures that value added from solar panels doesn’t result in property tax increases.

TXU Energy Credits Homeowners For Excess Energy

The TXU Energy Home Solar Buyback automatically credits eligible homeowners who generate solar or wind power for excess energy every month. TXU Energy customers should log into their account for details on the amount of the credit.

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Texas Solar Companies Are Growing The Industry

Texas has more than 200 solar installers, ranging from national companies like Palmetto to local installers. The state is also home to 85 manufacturers and more than 200 other companies supporting the solar industry. These companies employ over 10,350 people.

Solar companies and their employees have installed enough solar projects for Texas to rank second in the nation in 2022, with more than 15,000 megawatts (mW) of capacity.

Despite the large solar capacity, solar only generates just over 4% of the electricity used in Texas, compared to nearly 10% in Arizona.

FAQs: Texas And Solar Panels

Next up are a few questions Texas homeowners may ask about solar panels.

Do I need a backup battery for a solar home in Texas?

Texas made national news for blackouts resulting from freezing temperatures caused by a polar vortex. This makes solar-plus storage projects, also known as hybrid solar systems, a potential asset for Texas homeowners who want to keep their power on during a future outage.

Nationwide, the number of solar projects with batteries has quadrupled since 2017.

For homes connected to a grid that uses net metering, home solar batteries can also reduce energy costs when using electricity during peak periods.

Are solar panels worth it in Texas?

With relatively low solar installation costs, an extended ITC, local incentives and plenty of sunshine, solar panels are a solid investment for Texas homeowners. Payback periods for residential solar are 9.3 – 12.6 years.

In Texas, the monthly average cost of electricity in 2021 was $132.40, which adds up to $1,588.80 per year based on figures from the U.S. Energy Information Administration. In the example shown above for Austin Energy, the household would save over $920 per year with solar panels.

However, the actual amount you save depends on your energy needs, your system size and cost, your utility company’s net billing prices and local electricity prices.

Can I make Texas greener by going solar?

Solar is a winner for Texans who want to improve the state’s environment. According to a recent study based at Georgia Institute of Technology (Georgia Tech), each 10 kW of solar capacity in Austin would keep nearly 20,000 pounds of carbon dioxide out of the atmosphere. Much of the power generation in Texas relies on fossil fuels, which adds more impact for every mW of added solar capacity.

Will my homeowners association allow solar panels?

Under a solar rights law passed in Texas in 2011, homeowners associations (HOAs) aren’t allowed to ban solar panels unless they pose a health or safety hazard, violate a law or void a material warranty. Solar panels must also not be placed in a common area maintained by the HOA or rise above a fence line if mounted on the ground.

The Bottom Line: Solar Can Be A Great Investment For Many Texas Homeowners

Texas utility companies still have issues with reliable energy generation, and a home solar system can protect homeowners from the danger of being without power for extended periods. Even when the grid is functioning, solar homeowners will see significant electric bill savings with tax incentives and rebates. With many of the grids in Texas relying on fossil fuels, solar also offers environmental benefits.

Rocket Solar does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.

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