Solar Incentives in Texas (Rebates, Tax Credits & More in 2023)
By Dan Simms /
In this guide, you’ll learn:
Texas homeowners pay an average of $30,935 to install solar panels or $21,654 after the 30% federal tax credit is considered, which is right around the national average. Given the massive upfront expense, many Texas homeowners wonder if solar panels are worth the investment.
With an average electricity price but the fifth-highest demand for energy in the entire country, most homeowners will save big in the long term from a home solar conversion.
Below, you’ll find an in-depth price analysis that will help you determine if solar panels are right for your home, plus information on the benefits of converting to this renewable energy source. We’ll also discuss some things you should consider before installing solar panels in the Lone Star State.
While Texas is the second most popular state for solar conversions, solar panel installation won’t be right for every Texas resident. It’s important that you assess your home and have a reputable solar installer help you decide if solar panels would benefit you and ultimately save you money. Below are some of the things to consider that can help you decide if solar panels are a good fit for your home.
Solar panel systems are sized based primarily on your energy needs, and the value of your panels also largely depends on this criterion. Homeowners who use fewer than 500 kilowatt-hours will typically find that solar panels aren’t worth the investment, as they pay for themselves by reducing or eliminating their energy bills.
Texas ranks fifth in the country for homes with high energy needs, with the average home consuming 1,132 kWh per month. While there are other factors to consider, this means the large majority of households will benefit from solar panel installation from an energy consumption perspective.
Texas has unusually high energy prices as well, making solar conversion even more beneficial to most homeowners. You can check your average energy usage on your past electric bills.
The price of solar energy systems in Texas is based on the average per-watt price of $2.69. With a typical system size requirement of 11.5 kW to offset electricity consumption, most Texans pay around $21,654 after the 30% federal tax credit is taken into consideration.
While this upfront investment might seem high, solar panels provide value in line with what you pay monthly for energy. The average energy bill in Texas is $132.59 per month, higher than in nearly every other state.
As such, most Texas homes have a great opportunity to save money and get immense value out of solar panels.
Solar panels are pricey, but, provided you confirm beforehand that solar is worth it for your home, they almost always pay for themselves if you acquire them with a cash purchase or a loan.
The timeframe in which your panels pay for themselves is called the payback period. With a reduction in your energy bills monthly, you’ll eventually save enough to offset the system expenses, after which savings will accrue much more rapidly.
The average solar panel payback period in Texas is 13 years, which is just above the national average of 12 years. Most Texans see a return on investment within 10 to 16 years, while the rest of the country sees an ROI in 9 to 15 years.
We recommend using a solar calculator to estimate your payback period. The shorter the time frame, the better solar is for your home. If your payback period is longer than 16 years, you’ll still likely see a return in the long run, but it will take longer, and the overall savings will be lower.
Most states have a net metering program or an energy buy-back policy. These are often state-mandated and allow you to offset your expenses for energy pulled from the grid — through interconnection at night or on cloudy days — by overproducing energy and selling it to your electricity provider for an energy credit on your bill.
Texas doesn’t have a statewide net metering program, but many of the larger utility companies have their own programs. Net metering in Texas isn’t a make-or-break factor for determining if solar is worth your investment, but it certainly helps, and your return on investment will be lower if you don’t have access to this perk.
If your electric company doesn’t offer net metering, you might want to consider coupling your panels with a solar battery system to store your own energy for offsetting your utility bills.
Solar panels only produce energy when sunlight is hitting your roof, so the amount of sun your property receives is a crucial factor when determining if solar panels are worth the investment.
Texas is a great place for direct and intense sunlight in the country, with most of the state experiencing 204 sunny days per year, right around the national average of 205.
However, there are some individual factors you need to consider as well.
Texas is one of the best places in the country for solar panel installation, second only to California. The solar industry is booming in the Lone Star State, and residents enjoy an average price for solar equipment and one of the largest average returns on investment for panels in the country, sitting around $21,350 in energy savings over the lifetime of the solar power system.
Solar is only becoming more popular in Texas as well. Residential and utility-scale solar have steadily increased in prevalence over the past decade.1 The next five years are expected to bring immense growth, with an estimated 4 gigawatts being installed throughout the state.
Solar power in Texas is a wonderful option for most homeowners and affords a number of benefits that are too good to pass up for many people. We’ll discuss some of the financial and environmental benefits you’ll enjoy when you install solar panels on your home.
Most people understand that solar panels help you reduce or eliminate your electric bills, and this is one of the most significant benefits. Texans have some of the highest energy prices in the country, with each household consuming an average of 1,132 kWh and paying $132.59 monthly.
If you can eliminate your electric bills, that’s an annual savings of over $1,500! Over the expected lifespan of solar panels, the average Texas resident saves a staggering $21,350, and that’s after the panels have paid for themselves.
In reality, the long-term savings will likely be even higher, as energy rates have risen historically, and they will likely continue to do so in the future. Converting to solar reduces your dependency on utility companies and essentially lets you lock in your energy rates for the 25+ years your system is expected to last.
The state and federal governments provide some incentives for homeowners to make converting to solar more affordable and more appealing. There are a few solar incentives in Texas, and the most notable is the federal solar investment tax credit (ITC).
The ITC is a credit to your federal tax liability for a massive 30% of your total expenses of going solar. In Texas, the ITC averages out to $9,211, bringing the average effective installation price down from $30,935 to $21,654.
Although Texas doesn’t have a statewide tax incentive, many utility companies and local municipalities — including Austin Energy and the cities of Denton, Sunset Valley and San Marcos — provide local rebate programs for solar installations. We recommend you check with your utility company and city government or check the DSIRE database for more information.2
One benefit of going solar that many homeowners don’t know about is that panels increase property value.
When you buy or finance your panels, your home value goes up by approximately 4.1%, according to data from Zillow.3 In Texas, where the average home value is $289,252, that’s a typical increase of around $11,859.4 This bump in value is expected to be even higher in more expensive areas, including Dallas, Fort Worth, Houston and San Antonio.
It’s important to note that your home value is not expected to go up if you lease your panels or enter into a power purchase agreement (PPA), which is a major downside to these financing options. Additionally, Texas does not offer a property tax exemption for solar installation, so your property taxes will go up as a result of installing solar panels.
While financial benefits are great, homeowners who care about the environment more than saving money will be pleased to know that going solar is a great way to reduce their carbon footprint. Using this clean energy source helps fight global warming and reduces air and water pollution.
Not only will the environment benefit from your solar conversion, but you’ll also be less dependent on your local utility company and fossil fuels, which are detrimental to the ecosystem and are only expected to rise in price in the future.
Once you decide that solar is worth it for your home, there are still some things you’ll need to keep in mind as you look for a solar installer and proceed with the installation. We’ll discuss some things you should think about below.
The upfront expense of going solar is quite high in Texas, but it’s important to remember that the system will very likely provide you with overall savings in the long run — an average of over $21,000 throughout the state. You can keep your upfront expenses low by opting for a no-money-down solar loan to pay for panels and opting not to install additional equipment, like solar batteries or electric vehicle chargers.
You can also choose more affordable panel brands to keep expenses down.
It’s crucial that you use a solar calculator or have a reputable solar installer estimate your solar panel payback period. This will help you understand not only if solar is worth it for you but also how long it will be until you start to see a return on your investment.
If your payback period is longer than 16 years — the high end in Texas — you’ll still likely save overall but will see fewer savings than the average homeowner.
Since there is no mandated net metering policy in Texas, every utility company will have a different program, and some will have none at all. This is an important factor to consider before committing to solar because it can help you decide if you need a solar battery to offset your electricity bills. Net metering isn’t a make-or-break factor for most Texans, but having a net metering policy or a solar battery will drastically reduce your payback period and increase your return on investment in most cases.
Make sure to check your utility company’s policy before signing anything.
The solar industry is still growing and improving, which means policies, prices and incentives can change rapidly. This is especially true in Texas, where solar is expected to become far more prevalent in the next five years or so. Make sure you do some research before going solar to make sure you fully understand any changes to net metering programs, solar incentives and rebates.
Although some things could improve, we don’t recommend waiting for better incentives to come along because going solar now will likely save you money in the meantime.
Solar panels are most valuable where there is abundant and direct sunlight, which means they’re best in areas closer to the equator. In the United States, there are few states better than Texas for sun intensity.
The state as a whole receives an average of 204 sunny days, which is right around the national average and is usually plenty to make solar panels worth the investment.
Texans are no stranger to extreme weather, including tornadoes in the northern parts of the state and intense thunderstorms and hurricanes throughout the entire state. Overall, the weather isn’t a major detriment to solar conversion, but some homeowners will want to consider panels that come with an extensive warranty to protect their equipment.
The panels will drop in efficiency during cloudy days and thunderstorms, but the abundance of sun throughout the year still makes panels worth it, and rain can actually help keep your panels free of dirt and debris that can reduce efficiency as well.
Finally, you should put some thought and research into the solar panel installation company you choose. Some of the less reliable companies offer “free panels” or push bad solar leases and power purchase agreements (PPAs).
Free panels aren’t really free, and leases and PPAs are far less beneficial in Texas than buying your system outright or financing. Leases and PPAs don’t increase your home value, take far longer to pay off and don’t let you take advantage of the federal solar tax credit.
Unfortunately, some companies are even more nefarious and outright lie to solar customers. KRIS 6 News in Corpus Christi reported solar scams where companies misinform consumers about tax credits and savings, and Solar United Neighbors of Texas have reported on the illegitimacy of some of the door-to-door solar sales companies in Texas.5,6
We highly recommend going with a reputable and vetted solar installer to guarantee a smooth installation process and reliable customer service.
Texas is the second-best state in the country for solar installations, according to the Solar Energy Industries Association (SEIA). However, solar conversion isn’t right for everyone in the Lone Star State. To confirm that your home would benefit from solar, you should consider your monthly energy consumption and utility bills, how much sunlight your home receives, the direction your roof faces, the net metering program offered by your utility company, and financing options available to you and more. We recommend using a solar calculator to determine your solar panel payback period and the estimated return on investment you’ll enjoy in the long run from going solar.
All in all, the solar market continues to grow rapidly in the U.S., and there are no signs that this trend is slowing down. An EcoWatch study of 1,000 homeowners found that 27% of respondents planned to go solar in the next five years, with Texas and Florida residents the most interested in making the switch. You can also a reputable solar installer in your area to help determine if solar panels are right for your home.
Read More About Going Solar in Texas
The EcoWatch team is thrilled to get questions daily from Texas residents about the process of going solar, the benefits panels can bring, and how to determine if conversion is right for them. Below are some of the questions we see most often from homeowners in your area. If you have specific questions that aren’t answered here, reach out to our team of solar experts at email@example.com.
The solar panel payback period in Texas depends on many factors, including how much sun your property gets, the direction your roof faces, your average monthly energy bills, and much more. It’s impossible to say with certainty how long it will be before your panels pay for themselves without assessing your home. We recommend having a local solar installer come inspect your house to estimate your payback period. The average homeowner in Texas will find that their system pays itself off in about 13 years, and most solar customers in the state experience a payoff in between 10 and 16 years. After that time, your panels will continue to save you money on your electric bills for their entire expected lifespan, which is 25 years or more.
In most cases, yes, solar panels will save you money, but only if you buy the panels outright or finance them. If you use a cash purchase to acquire your panels and assume your home uses an average amount of energy per month and receives the average amount of sunlight, you can expect your panels to pay for themselves in about 13 years. The remaining 12+ years of life in your system will then save you an additional $21,350, on average, which is one of the highest solar savings in the country. Your total savings will be slightly lower if you opt for a solar loan, and they will be significantly lower — or nonexistent — if you choose a solar lease or power purchase agreement.
Yes! Solar panels always increase your home value in Texas if you buy or finance them. Based on research done by Zillow, most homes experience a bump in the value of around 4.1%, which averages out to $11,859 in Texas. Solar leases and PPAs will not increase your home value. It’s also important to note that Texas doesn’t have a statewide solar property tax exemption, so your property taxes will go up after installing panels.
Yes, permits are required in Texas to install solar panels. The permitting process is in place to ensure connection to the electric grid is done safely and that your home can structurally support the weight of the panels. Most Texas solar companies will handle permitting for you.
You can install your own panels in Texas, but DIY solar panel installation is strongly recommended. The process involves a lot of work on your roof and electrical work, both of which are inherently dangerous. We strongly recommend choosing a reputable solar installer to tackle your solar project for you.
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