Texas is perhaps recognized for its oil wells and refineries, however the state additionally has a booming market for renewable energy, together with solar power. Texas was one of the top states in terms of adding solar energy capability within the first three quarters of 2023, in line with knowledge from the consulting agency Wooden Mackenzie.
Together with the federal tax credit for solar panels, Texas supplies its personal incentives to encourage residents to install solar panels and batteries. These incentives are robust sufficient to earn Texas a spot on CNET’s list of most solar-friendly states. These insurance policies to advertise solar energy can take the type of rebates on photo voltaic panels, exemptions from property taxes or a reimbursement for extra electrical energy generated.
Energy is just different in Texas. The state has its personal electrical grid referred to as ERCOT and it is deregulated — which means you possibly can choose from hundreds of electric companies reasonably than a single, centralized utility like different states.
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Power in most Texas cities is deregulated, which means about 85% of Texas residents can select from completely different electrical suppliers. Sixteen cities with municipal utilities — together with Austin and San Antonio — are nonetheless regulated; their residents haven’t got a selection of vitality corporations. Getting to decide on your supplier may present the choice of incomes a powerful monetary incentive for putting in solar panels.
Study extra about the entire native and state incentives for photo voltaic tasks in Texas beneath.
Word: These Texas photo voltaic incentives are for residential electrical clients solely. Texas has further photo voltaic incentives for organizations, corporations, colleges and farms. These incentives are additionally correct as of Feb. 7, 2024 — applications and legal guidelines in Texas change regularly, so make sure to comply with up together with your native authorities or vitality supplier to verify these incentives are at the moment energetic.
Evaluating Texas photo voltaic incentives
| Texas incentive | Description | Eligibility | Estimated worth* |
|---|---|---|---|
| Photo voltaic property tax exemption | Worth of photo voltaic installations are exempt from dwelling assessments for property taxes | All Texans | $403 per 12 months, although will differ significantly based mostly on dwelling value, photo voltaic set up and native taxes |
| American Electrical Energy photo voltaic set up rebate | Rebate for photo voltaic panel installations | AEP clients | $500 (1kW system) to $3,000 (methods over 7.5 kW) |
| Austin Power residential vitality rebate | Rebate for photo voltaic panel installations | Austin Power clients | $2,500 |
| CPS Power photo voltaic water heater rebate | Rebate for photo voltaic water heaters | CPS Power clients | 60 cents per kilowatt-hour of annual financial savings as much as $2,000 |
| Denton Municipal Electrical photo voltaic photovoltaic incentive | Rebate for photo voltaic panel installations | DME clients | $2,400 to $30,000 |
| Denton Municipal Electrical photo voltaic water heater rebate | Rebate for photo voltaic water heaters | DME clients | 30% of set up price capped at $300 |
| Oncor photo voltaic vitality residential rebate | Rebate for photo voltaic panel installations with battery storage | Oncor clients | Variable |
| SMTX Utilities Distributed Technology Rebate Program | Rebate for photo voltaic panel installations | SMTX clients | $1 per watt of capability as much as $2,500 |
| Sundown Valley Photo voltaic Rebate Program | Rebate for photo voltaic panel installations | Residents of Sundown Valley who’ve Austin Power service | $1 per watt of capability as much as $3,000 |
| Web metering | Cash or invoice credit for surplus photo voltaic vitality | Clients of collaborating utilities | Variable |
| Federal photo voltaic tax credit score | 30% tax credit score for photo voltaic panel installations and batteries | All People | $7,200 |
Texas state photo voltaic tax credit and incentives
Texas at the moment doesn’t have a state photo voltaic tax credit score, rebate program or internet metering plan. Most incentives for photo voltaic vitality in Texas come from native governments or particular vitality corporations. Texas does supply a statewide property tax exemption for photo voltaic panels.
Property tax exemption for photo voltaic vitality methods
Texas is one among many states that carve out a property tax exemption for solar installations. The worth of your photo voltaic panels and batteries is not going to be included in any respect in your house’s evaluation for calculating property taxes.
Texas doesn’t have state property tax — all such taxes are levied domestically — however section 11.27 of the state tax code says that “Individuals who set up or assemble on actual property a photo voltaic or wind-powered vitality machine that’s primarily for the manufacturing and distribution of vitality for on-site use are entitled to exempt the quantity of worth the machine contributes to the property, no matter whether or not the individual owns the actual property on which the machine is put in or constructed.”
The common property tax charge in Texas is 1.68%, in line with the impartial nonprofit group Tax Foundation. That implies that Texas’ property tax exemption on a $24,000 photo voltaic set up (the nationwide common) could be value about $403 per 12 months.
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Native photo voltaic tax credit and incentives for Texas
Past the photo voltaic property tax exemption on the state degree, many cities, cities and municipalities supply further incentives for residents who put money into photo voltaic panels.
American Electrical Energy photo voltaic set up rebate
Serving south and west Texas, American Electrical Energy runs a SMART Source Solar PV Program that provides clients who set up photo voltaic panels a reimbursement to offset the preliminary funding in renewable vitality.
AEP pays 50 cents per watt for photo voltaic methods with capacities lower than 3kW, and flat rebates for bigger installations — $1,500 for 3kW to 5kW capability; $2,250 for 5kW to 7.5kW capability; and $3,000 for methods with greater than 7.5kW capability. Photo voltaic panels should be put in earlier than Nov. 30, 2024, to be eligible for this 12 months’s funding. The SMART Source Solar PV Program Guidebook supplies all the main points and necessities for the photo voltaic rebate.
Austin Power residential vitality rebate
Austin Power supplies a hefty $2,500 rebate for new solar panel installations. Photo voltaic vitality methods should be owned (not leased) and supply at the least 3kW of energy with a view to qualify. Owners should additionally full a solar energy education course earlier than putting in photo voltaic panels and making use of for the rebate.
CPS Power photo voltaic water heater rebate
The municipal utility serving San Antonio gives money back to customers who switch to solar water heaters. The rebate is set by calculating the annual vitality financial savings in kilowatt-hours after which multiplying these financial savings by $0.60. Qualifying solar water heaters should be new and authorized OG-300 by the Photo voltaic Score Certification Company. The utmost potential rebate is $2,000.
Denton Municipal Electrical photo voltaic photovoltaic incentive
The municipal electrical firm of Denton supplies a beneficiant incentive for owners who set up photo voltaic panels. The quantity of Denton’s rebate for solar panels (PDF) is set by the facility output of the system, with further cash for installations that embody battery storage.
The utmost rebate for photo voltaic panels in Denton is $30,000, or 50% of the overall price of set up, whichever is decrease. To be eligible, a Denton electrical buyer should personal the property on which the photo voltaic panels are put in, and the photo voltaic set up should have at the least a 3kW capability. Dentons pays out for photo voltaic panels based mostly on the capability of the system and whether or not or not it has battery storage.
Photo voltaic installations with storage get $1.20 per watt for methods with capacities of 3kW to 5kW; 90 cents per watt for five.1kW to 10kW; and 60 cents per watt for 10.1kW and above. With out battery storage, you may get two-thirds of that payout for a similar capability ranges: 80, 60 and 40 cents per watt, respectively.
Meaning a 5kW system with storage will get you a formidable $6,000 rebate.
Denton Municipal Electrical photo voltaic water heater rebate
Together with its robust photo voltaic panel rebate, Denton additionally affords a pleasant rebate for customers who install solar water heaters. These clients can obtain as much as 30% of the overall set up price again, with a most of $300.
In an effort to qualify for the rebate, the photo voltaic heater should be at the least giant sufficient to accommodate a household of 4 and have a completely put in electrical backup.
Oncor photo voltaic vitality residential rebate
The most important electrical utility in Texas affords a rebate on solar photovoltaic systems with a view to “offset the preliminary funding” of putting in photo voltaic panels. The rebate is just for owners and is not out there for brand spanking new development.
Most notably, the Oncor rebate is barely out there to solar installations with included battery storage. Qualifying photo voltaic installations should even have a capability of at the least 3kW and not more than 15kW. Oncor supplies the rebate to photo voltaic service suppliers, who’re then alleged to move on the financial savings to their clients.
Oncor would not promote the worth of this photo voltaic vitality rebate, merely stating that it varies based mostly on “measurement, azimuth and different elements of your put in system.”
SMTX Utilities Distributed Technology Rebate Program
The municipal utility of San Marcos supplies a rebate for renewable energy systems, together with new photo voltaic panels. Residential owners who set up photo voltaic panels can obtain $1 per watt of energy as much as a most of $2,500. Your photo voltaic system should present at the least 1kW of energy and is probably not sized to provide greater than your annual electrical consumption.
Eligible photo voltaic panels should even be put in by an authorized installer and have a minimal 20-year guarantee. SMTX Utilities’ rebate for renewable vitality additionally applies to wind methods.
Sundown Valley Photo voltaic Rebate Program
The tiny enclave of Sundown Valley (situated to the southwest of Austin) offers its residents who’re electrical clients of Austin Power an extra rebate on prime of the $2,500 talked about above.
Residents who qualify for the Austin Power photo voltaic rebate can get an extra $1 per photo voltaic panel wattage as much as $3,000. Town says that funds can be found on a “first come first serve foundation,” however competitors for that cash is restricted — the US Census Bureau estimates the inhabitants of Sundown Valley to be 643 individuals.
Web metering and photo voltaic buyback applications in Texas
Net metering and photo voltaic buyback applications give a reimbursement to households with photo voltaic panels that generate extra electrical energy than they devour. Texas would not have a state net-metering program, however native electrical suppliers and municipal energy corporations have their very own plans that compensate clients for giving vitality again to the grid.
Web metering plans usually give clients credit score towards their electrical invoice for any surplus vitality generated, as much as the quantity of their complete electrical invoice. Photo voltaic buyback applications could as an alternative pay photo voltaic vitality producers cash straight for extra electrical energy. Credit for surplus vitality are calculated by multiplying a set charge by the kilowatt-hours generated again into the system. Some utilities use the phrases interchangeably or have distinctive phrases of their very own for comparable applications.
The next Texas utilities present internet metering or photo voltaic buyback applications for his or her clients. This listing of suppliers will not be exhaustive. You should definitely verify together with your electrical firm to see if it affords internet metering for extra photo voltaic vitality manufacturing.
Austin Power
Austin Power offers a reimbursement to clients who present extra photo voltaic vitality to its grid utilizing what the utility calls a Value of Solar rate. That VoS charge depends upon the scale of the photo voltaic system. Photo voltaic installations with capacities below 1 megawatt AC at the moment obtain 9.91 cents per kWh, whereas installations bigger than that get 7.24 cents per kWh.
Brenham distributed technology program
The municipal electrical utility operated by the town of Brenham supplies a reimbursement for surplus vitality generated by photo voltaic panels, often within the type of credit on electrical payments. The surplus vitality put again into the Brenham electrical grid will probably be paid based mostly on an “averted price of technology” charge equal to the wholesale price Brenham pays its industrial vitality suppliers.
Brownsville PUB photo voltaic buyback program
Town of Brownsville will purchase again extra electrical energy generated from photo voltaic panels, on the similar value that it pays different photo voltaic vitality suppliers. The current rate for that electrical energy is about 7.8 cents per kWh, however the charge was below 3 cents for a number of years.
CPS Power
CPS Power in San Antonio reimburses clients with surplus photo voltaic vitality at what it calls the “averted price charge,” in line with the Database of State Incentives for Renewables & Efficiency. That implies that clients are credited for extra vitality based mostly on the charges that CPS Power must pay for it elsewhere.
El Paso Electrical
Like CPS Power, El Paso Electric additionally supplies a internet metering program that reimburses clients for extra photo voltaic vitality on the similar charge that the utility would pay for that electrical energy if it acquired it from a industrial supplier.
Inexperienced Mountain Power
The Renewable Rewards photo voltaic buyback program from Inexperienced Mountain Power supplies clients with invoice credit once they present extra vitality again to the utility. The surplus vitality credit are capped at your complete vitality utilization from the grid.
We weren’t capable of finding present charges for extra photo voltaic vitality on the Inexperienced Mountain web site, however the instance on the Renewable Rewards web page exhibits a charge of 13 cents per kWh.
Reliant Power
Reliant’s Solar Payback Plan supplies internet metering for its clients with photo voltaic panels. Contributors obtain limitless invoice credit for the excess photo voltaic vitality that they generate. The plan is accessible to all clients with photo voltaic installations smaller than 50kW capability who’ve present interconnection agreements with their utilities.
Shell Power photo voltaic buyback program
Serving Texas vitality clients throughout the state, Shell Energy Solutions offers credit score for the surplus vitality that clients with photo voltaic panels create. The cash again is offered within the type of renewable energy certificates.
Shell would not promote its fee charge for extra photo voltaic vitality. Its residential terms of service state that credit score worth will probably be established when a buyer enrolls within the photo voltaic buyback program.
TXU Power
TXU Power supplies internet metering for purchasers throughout the state. Its Home Solar Buyback program reimburses clients for extra photo voltaic or wind vitality as much as 100% of their electrical payments. Any extra vitality you generate that goes past your billing doesn’t carry over to future months.
Federal photo voltaic tax credit and incentives for Texans
The federal solar tax credit is perhaps essentially the most worthwhile incentive for putting in photo voltaic panels in Texas. Technically referred to as the residential clean energy tax credit, the inducement offers eligible taxpayers 30% of the cost of their solar panel installation again as a credit score on their federal taxes.
The tax credit score is nonrefundable, which means it may solely be used to offset the taxes you’d in any other case owe, however additional quantities might be carried over to future tax years. There isn’t any restrict to the quantity of the tax credit score for photo voltaic panel installations.
To assert the federal photo voltaic tax credit score, taxpayers ought to file IRS Form 5965, which is well managed by the entire best tax software.
Texas solar energy buy agreements
Solar power purchase agreements permit clients so as to add photo voltaic panels to their houses with out paying for the set up or upkeep. Clients then lock in a charge for that solar energy that is decrease than what they often pay for electrical energy.
Whereas solar energy buy agreements let clients get solar energy with no upfront prices, there are just a few necessary disadvantages to notice. Since you do not personal the photo voltaic panels and gear, you possibly can’t take the federal photo voltaic tax credit score and will not qualify for many native photo voltaic incentives. Additionally, the solar energy buy settlement will probably be tied to your private home for the size of the contract, making it probably tougher to promote your own home.
Solar energy buy agreements are authorized in Texas, though they appear extra widespread at photo voltaic corporations, not electrical utilities. Alba Energy, Sunnova and Wells Solar are three main photo voltaic corporations at the moment offering solar energy buy agreements to Texans.
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Texas group photo voltaic applications
Community solar projects assist present photo voltaic vitality to electrical clients who do not personal their houses or cannot afford to put in photo voltaic panels. As an alternative, they be part of a group with a large-scale industrial photo voltaic panel set up after which buy the renewable vitality it supplies, getting the environmental and financial advantages of photo voltaic vitality with out putting in panels on their property.
Some Texas community solar programs are at the moment at capability, however all of them recommend becoming a member of their ready lists for when spots turn into out there.
The next Texas electrical suppliers present group photo voltaic tasks:
Inexperienced Mountain Power affords a program that is much like group photo voltaic however with a twist. As an alternative of buying your electrical energy from one group photo voltaic challenge, Inexperienced Mountain’s Go Local Solar plan buys renewable vitality certificates which can be used to buy your energy from a number of photo voltaic installations throughout the state.
Texas photo voltaic panel incentives FAQs
Is it value going photo voltaic in Texas?
Whether or not or not putting in photo voltaic panels will probably be a great monetary funding for you’ll rely on many elements similar to your vitality supplier, electrical energy utilization, dwelling measurement, solar publicity and value of photo voltaic panel set up.
The common time throughout the US for photo voltaic panels to pay for themselves usually ranges from six to 12 years. A number of on-line vitality calculators estimate the time to repay photo voltaic panels in Texas to be nearer to the higher vary of that common. In case your electrical utility supplies a rebate on photo voltaic panels, that may enhance your monetary equation significantly.
How do photo voltaic tax credit work?
Solar tax credits present financial reduction for taxpayers who set up photo voltaic panels. When it comes time to file state or federal taxes, taxpayers eligible for credit usually get a share of their set up price again as a discount of their taxes. Tax credit for photo voltaic are often solely out there for the tax 12 months through which the photo voltaic panels had been put in.
How does the federal photo voltaic tax credit score work?
The federal solar tax credit, technically referred to as the residential clear vitality credit score, supplies tax reduction to People who set up new “clear vitality” methods. Together with photo voltaic panels, eligible methods embody photo voltaic water heaters, wind vitality, geothermal warmth pumps, biomass fuels and gasoline cells.
The tax credit score offers again 30% of the price of photo voltaic panels put in between 2022 and 2033. The credit score drops to twenty-eight% for photo voltaic panels put in in 2034, after which 26% in 2035, after which the credit score is scheduled to run out. Taxpayers can declare the residential clear vitality credit score by submitting IRS Kind 5695.
What number of occasions are you able to declare photo voltaic tax credit?
Photo voltaic tax credit can often solely be claimed as soon as, for the tax 12 months through which you put in your photo voltaic panels. One exception happens with the federal residential clear vitality tax credit score — if the quantity of your tax credit score is greater than the overall taxes you owe, you possibly can carry that credit score over to subsequent tax years.
How does vitality deregulation work in Texas?
Because the passage of Senate State Invoice 7 in 2002, the vitality market in Texas has been “deregulated.” Deregulation implies that corporations have to compete available on the market for purchasers, who’ve a bigger array of vitality utility decisions. Previous to deregulation, most Texans had no selection of vitality suppliers.
Not solely can a number of corporations now compete for a similar vitality clients, however completely different corporations can present completely different vitality providers. As an alternative of 1 utility dealing with all energy-related providers like electrical energy technology, supply, billing and power-line upkeep, these providers can all be carried out by completely different corporations.
Confusingly, deregulation doesn’t suggest there are not any laws for vitality corporations — they’re nonetheless ruled by the Public Utilities Commission of Texas and there are strict licensing requirements.
