Texas Solar Incentives: Cost of Solar Panels in Texas (Rebates, Tax Credits)

Georgette Kilgore headshot, wearing 8 Billion Trees shirt with forest in the background.Written by Georgette Kilgore

Solar Panels | March 18, 2024

Woman holding a solar panel accepts money from a man in the state of Texas thanks to texas solar incentives which explain how to reduce the cost of solar panels in texas using federal tax credits, texas solar rebates, and the Texas solar power buyback program.

Have you ever thought about switching to clean electricity using Texas solar incentives offered by the state and federal government?

Do you have a property in Texas and are constantly worried about how high your electric bill gets every month? There are countless residents like you who have thought about the same thing and can’t wait to turn to renewable energy to save on costs.

There is no better time than now to make the switch, especially since there are government, local and commercial rebates and incentives up for grabs. What does this mean for you as a property owner or for the entire solar power industry?

Read on to find out why and how Texas solar incentives have a massive impact on the cost of solar panels in Texas and how you can be independent from the grid, reducing emissions by generating electricity using the sun.

Solar Power in Texas

As one of the largest states in the country, it is obvious that Texas has a high demand for electricity; look at its massive size and population. The residents and industries rely heavily on energy for various needs, and it is no wonder solar power is becoming popular in the state.

Solar energy Texas makes a lot of sense in the state because, as you already know, the region receives some of the strongest and longest sunshine hours.

After California, Texas is next in line in terms of the highest solar power generation, and the numbers currently stand at 12.4% of the nation’s total, which is pretty impressive.

This is because of the number of sunlight hours each day that the state receives. The total daily peak sun hours for Texas vary by county, from roughly 4 to nearly 7 each day.

Map of the state of Texas with each county colored to show the daily peak sun hours in each Texas county ranging from 4.4 to 6.5 daily hours of sunlight.

The state’s solar industry was still lagging behind about a decade ago. But now, things have radically changed, and Texas is now one of the highest producers and consumers of renewable energy.

Besides the high demand for solar power, the growth of the industry can be highly attributed to the fact that the local and federal governments have widely popularized rebates for solar panels.

There are now so many Texas solar incentives from the local government: the state offers property owners the chance to receive tax relief whenever they install solar power. It is welcome news for homeowners, and it explains why now is the best time to embrace renewable energy.

What Is the State of Solar Power in Texas?

Based on findings from SEIA, more than 200,000 homes in Texas have fully adopted solar power, but on the other hand, the commercial sector is still developing at a slow pace.2

While the energy is taking a minute to gain more ground, there is a ray of hope for the industry because the local governments are adopting solar energy tech to help supplement their needs.

Just recently, Austin made major strides by purchasing a 150 MW solar power plant to increase the city’s energy supply.

Map showing locations of solar plants in Texas using yellow markers and Texas solar panels with a US cut out showing the location of the state of Texas.

On the plus side, that, together with wind power, means that it is only a matter of time before Austin can have more than half of its energy supply coming from renewable energy.9

Why Go Solar in Texas?

Texas is massive, and so is its residential electricity bill. It is shocking that the residential energy costs are about 20% higher than that of the national average, and it goes without saying that something must be done to ease this burden.

If you have often had issues with your energy uses and want a break from the hefty utility costs, maybe it is the perfect time to go solar.

By location, Texas is one of the best places to set up solar panels, why? For one, it receives a whooping 300 sunny days a year, which cannot be said for states in the north.

It is way better than most parts of the country, especially considering that the American average stands at 205 days of sun annually.

Obviously, its position makes it the perfect spot for harnessing solar power. In fact, it is no surprise that the state is number 2 in the entire country when it comes to installation of PV systems.

Another thing to celebrate about Texas’ adoption of solar power is that there is a ready market, considering that the towns are larger and the population is equally massive.

The icing on the cake is the fact that there are Texas solar incentives and federal energy credits to help boost you if the cost of solar panels in Texas seems overwhelming.

Pie chart showing Texas renewable energy consumption including Texas wind energy, biomass energy, geothermal energy, hydroelectric energy and solar energy in the state of Texas for 2022.

Another strong reason why you should go solar in Texas is the impact it has on your property or home. Findings show that the average home with solar panels installed increases in value by 4.1%, and that should tell you a lot about the solar market.1

Buyers will never complain or haggle much when the house already has PV systems installed because, basically, it means reduced cost on their electricity bills.

Which Solar System Is Right for Your Home in Texas?

What you want going forward with your plan to fully revert to renewable energy sources is to make sure that you are making the right decision. Any professional will tell you that the first step is to find out just how much your total energy bill comes to, in essence, how much power your household uses and whether it is all worth it or not.

What you need is a home audit. Make a point to understand your expenditure which will go a long way in determining whether solar power will be energy efficient for you.

It will also make more sense if your location receives sufficient sunlight, although this should not be a problem for you as a Texan.

It will be thrilling if you could cut down the electricity costs of your home after switching to solar power. But first, you want to make sure that the installation and maintenance costs of solar panels are reasonable, and there is where experts come in to help.

They can answer the pressing question, how many solar panels do I need, by considering how much your total energy usage is and several other factors.

What Is the Cost of Solar Panels in Texas? How Much Are Solar Panels in Texas?

One of the factors holding people back from buying and installing solar panels is the fear that they are pretty costly. It is understandable because the manufacturing cost of the panels and the related wires and equipment can be quite high,10 that is, if you are looking into buying the best quality materials.

Graphics of average construction costs in the U.S. from 2013 to 2019 showing years and types of technology on the x-axis and prices on the y-axis.

(Image: U.S. Energy Information Administration19)

Before you panic, there is good news. So far, the price tag on solar panels has significantly reduced, all thanks to Texas solar incentives and other government programs.

There is a lot to be excited about, from the 30% tax credit to the number of available solar companies that can supply the materials and install them for you.

On average, installing PV systems in Texas will set you back $11,432 to $15,468,5 that is for a 5kW setup. The calculation brings a rough estimate of around $2.69 per watt, and it is not bad in comparison to the national average of $3.03 a watt.

It means that the cost for the system in Texas is more friendly, unlike in other places, and who wouldn’t want to take advantage of that?

However, note that the total cost can go up depending on your energy needs and the size of the installed system. In other words, if you need more panels to help you meet your daily power needs, you will have to dig deeper into your pockets.

But still, when you account for the ever-increasing costs of non-renewable energy sources, the cost is relatively lower.

Is the Cost of Solar Panels in Texas Worth It?

After realizing how much do solar panels cost, your next question must now be, is it worth it? The upfront cost of solar panels in Texas may seem a bit steep, but think about how much money you will save in the process, in comparison to paying utility bills every month.

As a homeowner, you can expect to save as much as $100 every month, money that you would have paid your utility provider; think about the thousands you will have saved every year.

Texans can save more than $15,000 over around 20 years, and since the system boasts of breaking even in about 12 years, you can imagine how much that means.

Money aside, installing solar panels also has a lot of benefits for the planet, especially since the carbon footprint solar panels produce is lower than that of other non-renewable energy systems. It doesn’t harm the environment at all and is quite convenient since the sun is readily available.

If you are asking does solar increase home value, you are right because buyers are more than willing to pay extra for solar-powered homes which makes it a win-win for you as a homeowner.

How Does Solar Panel Cost Calculator Texas Work?

If you want to estimate how much solar panels should cost in your area, you can use cost calculators online that provide you with detailed information.

All you need to do is to disclose details about your home and its total energy usage, which should give you an estimate of how much the panels will cost.

Apart from that, it is also easier to bring in professionals to assess your home and tell you how much you need for the entire process, from the buying of the materials to their installation.

Factors Influencing the Average Cost of Solar Panels in Texas

What you pay for your solar panels may not necessarily be the same amount paid by your neighbor or any other homeowner in a different state. There are several factors that come to play.11

For starters, the cost relies heavily on the number of panels you need.

Basically, how much energy will be enough for you, because the more power you need, of course, the more panels you will have to buy.

A solar panel technician doing a solar panel installation on the rooftop of a building.

(Image: Chris Chesneau20)

Perhaps the most important consideration when installing a solar system is how much you get to save based on your state’s rebates program and federal tax credits.

These Texas solar incentives definitely go a long way to help you reduce the cost of your installation, and many Texans jump at the opportunity, and so should you.

What Are the Best Texas Solar Incentives and How Do They Work?

The high energy needs of Texans have led to the increase in demand for renewable energy, and that is exactly why adopting solar power is important. The state understands this, which explains why there are several Texas solar incentives 2023 from both private and public entities.

Here is a breakdown of each and how they help significantly lower the cost of solar panels in Texas.

Federal Solar Investment Tax Credit (ITC)

Thanks to this incentive, which is now called the Residential Clean Energy Credit, you can now lower the cost of solar installation by up to 30%, which is a pretty big number given the total cost.7 But before you get too excited, remember that this has a few restrictions.

First, you must pay the upfront cost of the entire setup, and you can only receive the incentive if you have enough tax credit to cater for the 30%. In addition to that, note that this program will not be available after 2032, so if you are planning to get it, the right time to do it is now.

Property Tax Exemption

Texas offers one of the highest rates in terms of property tax exemption, and getting on it means that you will save a lot of bucks in the long run. It may mean thousands of dollars saved all through the lifespan of your PV system.

Net Metering or Solar Buyback Plans in Texas

This is another way that helps you save a lot of money on your actual electricity cost. Utility providers tend to connect solar-powered homes to the electric grid, which effectively allows you to offset the cost of the electricity you use.

American Electric Power (AEP)

If you live in Texas, you are lucky that AEP offers a $2,500- $8,500 cash incentive as long as you have installed solar power on your property.

Austin Energy Solar Rebate

This rebate program has a lot in common with AEP because it gives you, as a Texan, a cash incentive of the same amount. The cash varies based on factors like how big your solar system actually is, your exact location, who is your electric provider and how much your income is.

Oncor Solar Rebate

This rebate program also offers residents the same payment range, provided that they have installed solar panels. It has the same working principle as Austin Energy Solar Rebate because the amount also varies based on the same factors.

Besides the above, there are also several local Texas solar incentives that have cashback rewards. Namely, CPS Energy Solar PV, DME Residential GreenSense Energy Efficient program,12 City of Sunset Valley PV, and CPS Residential Energy Efficient Program, just to name a few.

What Are the Best Commercial Texas Solar Incentives?

It is rather unfortunate that there are very few incentives to apply for if you are a business or non-profit in Texas. The focus seems to be more on the residential sector, which would further explain why the commercial part has been left out in terms of solar technology.

Luckily, there are two entities that have proven to care for renewable energy in commercial spaces.

USDA REAP Grant

The United States Department of Agriculture boasts of the Rural Energy for America Program (REAP), which basically boosts small businesses in the rural agricultural sector and helps them reduce their energy expenditure.

In an effort to improve rural electrification through solar power, they offer loans and grants for the residents to buy PV systems. You should not be left behind on this program if you are in agriculture or are a growing business in a rural area.

Property Assessed Clean Energy (PACE)

PACE is a game changer when it comes to financing homeowners who have had issues with accessing regular loan facilities. If you are a property owner, you can receive funding to buy a PV system and, in exchange, pay it back through property tax assessment, which is still a great way to finance your energy conversion.

Is Texas a Good State for Solar Incentives?

Texas is undoubtedly one of the best places where you can install solar panels. The state has a high utility cost than the national average, and what better way to save money than to reduce your high energy bills?

It also has bragging rights as one of the states with the highest sunlight hours, meaning that the panels will work efficiently all through the year.

A residential neighborhood showing some homes with solar panel installations and some homes without.

(Image: Kevin Martin Jose21)

Maybe what could hold you back is the initial cost of the installation because you have to buy the materials and pay for professionals to set it up. But regardless, Texas has friendly PV costs that have dropped over the last decade or so.

The good news in this case is that you don’t have to bear the total installation cost, thanks to federal and local solar incentives like those offered by Colorado solar tax credit.

You can take full advantage of the state’s ITC at 30% then apply for other local rebate programs for rebates and other incentives.4 Putting all these together will dramatically lower the installation costs, and you will end up paying way less than the initial amount, which also implies that you will save a fortune in the long run.

How Do Federal Solar Tax Credits Work?

Tax credits and solar rebates from the government are clever ways to get more people on board with the idea of renewable energy. As you can tell by now, the future is going solar and more homes are installing solar panels, but this is somewhat fueled by the favorable government policies.

The federal solar tax credit can be quite complicated,13 and you should carefully read the fine print to understand what this means for you and the tax credit. If you installed solar panels in your home in 2022, you are entitled to receive a 30% credit off the tax that you owe the government.

However, note that not everyone can qualify for the program; there are a few items on the checklist before the IRS can approve your application.

First, and literally, the most important rule is that you must have a tax credit; if you don’t, it means that you don’t owe the government taxes, and there is no way to get the credit.

Top shot of documents and forms on the floor showing tax withholding and estimated tax forms and related files.

(Image: Kelly Sikkema22)

Number 2, and almost as equally important, is that the property should be under your name. In other words, you are out of the program if you are a renter or are living in someone else’s house.

Some people also fail to understand that the tax credit is not a loan; you cannot get direct financing because you must first cater for all the PV installation costs before applying for the program.

Therefore, it requires that you foot all the initial purchase costs, and there are also chances that you may miss out on it after all the trouble. But still, conversion in itself is an excellent way to save on your utility costs.

It is also obvious that the PV system should be brand new for you to get the funding, so no second-hand equipment and everything else should be in use for the first time.

What Are the Most Popular Solar Companies in Texas?

For a big state like Texas, it doesn’t come as a surprise that there are hundreds of available solar installation companies to choose from.

There are more than 500 of them operating all through the state, and to top it off, there are so many large-scale solar power farms that distribute electricity to thousands of people.3

Related Reading: Solar Shingles vs Solar Panels & Tiles: How to Pick & Cost per Square Foot

How To Choose the Best Solar Company in Texas

You don’t just go for any solar company you find when browsing the web; it must be a careful decision because you don’t want to end up with a faulty system.

Before picking the company you want to go with, you first want to make sure that it will guarantee a high return on your investment.

A solar panel technician checking wiring on the solar panel installation on the roof.

(Image: Trinh Trần23)

Here is what you should look out for during your assessment.

Product Quality

When you are looking for a solar company in Texas, you should always go for reputable brands that have been in the market for a while. The material should be built to last, and one way to confirm that is by checking the warranty against the industry’s average of 10-25 years.

Since solar installation can cost a fortune, you are safer going with systems that can withstand virtually anything.

Equipment

No two solar panels are the same; each company makes sure of that in an effort to stand out from the rest in a competitive market. What you want to do is carefully evaluate how efficient the panels are because the fact is, the panels are some of the most important parts of the entire system, and being ineffective interferes with the entire system.

Installation

Texas is a massive state, and it is no news to find hundreds of solar power providers. How do you sift them to find the best?

The obvious place to start is to check for licenses and certifications. Reviews and referrals work wonders if you are a first-time buyer because it is best to work with a company whose services speak for themselves.

Incentives From Local Companies

Of course, you will gravitate towards already established companies, who wouldn’t when they have been in business for decades and have built their reputation off the ground. However, sometimes going for local companies can help you save by as much as 10% of the total cost.

It is perfect if you are on a budget, but still, it doesn’t mean going for low quality. While still shopping for cheaper services, you don’t want to compromise on quality.

Solar Panels Dallas Cost: Is It Worth It?

There are multiple reasons to support solar energy in Texas.14 The cost of solar panels in Dallas is almost the same as that of other cities in Texas at $11,432 to $15,468.

A 5-kilowatt system size will probably set you back by $2.69 per watt roughly, which is the rough estimate for all parts of Texas.6

Luckily, you don’t have to fret because ITC and other local incentives can help you save a lot of money in the long run, and the system won’t be as expensive. Before you start wondering whether it is even worth the trouble, remember that Texas is one of the largest producers and consumers of solar power.

And it is easy to spot panels on rooftops in Dallas, which wouldn’t be the case if it all wasn’t worth it. You are sure to break even in no time, considering Dallas has plenty of sunny days.

Why Solar Incentives in Texas Are Important?

Texas has discovered its potential as a powerhouse in matters of solar energy, and it cannot hesitate to bring all its residents on board.

A step in the right direction is evident in how the state has deregulated electricity thanks to the numerous number of local incentives from municipalities and utility companies.

Cityscape showing a part of El Paso, Texas showing buildings, homes, and a portion of road network in the city.

(Image: David Mark24)

That, together with the federal ITC, makes solar installation way cheaper than you would expect. Although Texas doesn’t currently brag about a state-wide program, the local incentives surely step up to the plate to make solar power much more affordable for the residents.

Besides fast-tracking the states’ plans of going solar, the incentives make solar power very accessible, even in rural areas. It helps you save a fortune on electricity bills and improves your business.

And taking a look at the bigger picture, more people adopting cleaner energy is vital for sustainability going forward.

What Are Solar Buyback Plans Texas?

Texas is number 2 in terms of the adoption of solar power in the whole country and is undoubtedly one of the best places to invest when it comes to solar infrastructure and off-grid plans. This is credited to the state’s solar buyback programs, but what are they, and how do they work?

Graphic representation of the things to consider in choosing the best solar company such as product quality, installation, equipment, and incentives from local companies.

The buyback program checks how much solar power you use and gives you credits on top of the excess that you don’t use. Simply put, when your panels produce electricity, you use what you need, and the surplus goes to the grid, and it helps earn you buyback credits, otherwise famously known as net metering.8

You are well-compensated in credits on your electricity that come in your utility bill at the end of the month. Solar buybacks or net metering are an excellent idea because the excess energy from your solar system doesn’t have to go to waste.15

Besides, it is also of advantage to other commercial and residential buildings in Texas that use the power from the grid, basically, a win-win for everyone.

How Much Do Solar Panels Cost in Texas? Can You Get Free Solar Panels Texas?

Texas is growing into a hub of solar power production, and as any keen consumer, you may ask about how to get solar panels for free in the state. But first, are solar panels free in Texas?

Sadly, no. There are no free solar panels in the state, or anywhere else in the country for that matter.

The only exception is in the case of grants for solar panels, where bodies promote renewable energy in schools, NGOs, rural villages, and special groups in Texas.

These don’t require any form of payment, and you can call them free panels, but it doesn’t apply in residential setups.

Eye-level shot of Lake Tawakoni State Park Headquarters showing solar panel installation on the roof.

(Image: Larry D. Moore25)

If you have heard about “free” solar panels in your area, they must be talking about solar leases or PPAs (Power Purchase Agreements).16 These are financing for solar power that are pretty enticing until you do your due diligence.

What they promise is installation at virtually no cost whatsoever, and everything else is free, including the maintenance.

Too good to be true? Because it is.

These programs are basically rented solar panel services; at the end of the month, you are expected to pay for the energy, in other words buying your power from a solar provider instead of your local utility. Rather misleading because the panels are not actually free.

Why Are Solar Panels in Texas Expensive?

One of the main reasons why you shouldn’t stall when it comes to solar power installation is because the cost tends to go up. One time you are afraid to commit, and when you are ready months later, come back to find that the price has actually gone up, leading to the question, why are solar panels so expensive?

One obvious reason is inflation. Even the solar market is not immune to the high cost of living, and it shows in the increased cost of materials and high labor market prices.

The solar market heavily relies on the manufacturing cost of the panels and the related materials, and if they are too expensive to make, obviously, the installation cost will go up.

What Is the Cost of Solar Panels in Texas?

The cost of solar panels in Texas ranges anything between $11,432 to $15,468, or roughly $2.69 per watt. It will cost you more or less but the price will be entirely based on several factors like the size of the installation, your energy needs, and the company you are going for.

Luckily, Texas has local rebates and the federal solar tax credit that helps significantly reduce the total cost.

Are Solar Panels Worth It in Texas? Factors To Consider Before Seeking Texas Solar Incentives

Before you commit to buying solar panels and seeking rebates and tax credits, you first want to make sure that you are making the right call. Know that these programs come with restrictions,17 and failing to meet them sadly means that you cannot receive the incentives you desperately need.

Graphic representation of the factors to consider in seeking Texas solar incentives such as location compatibility, home ownership, owed taxes, and homeowners association rules.

First, do you live in your own home or a rental? Private properties are eligible for federal tax incentives, but the program doesn’t cater for rental properties.

But also, you want to confirm with your local incentives to know how they deal with such cases because some community solar programs don’t mind if the property is rented.

Another and probably the most crucial consideration to make is whether the solar installation will be worth it. Will they efficiently work in your region?

Are there HOA rules that deter you from installing panels? Do you owe taxes before you apply for ITCs?

All these are crucial questions to answer before you take the plunge.

What Is the Short and Long-Term Outlook of Texas Solar Incentives?

As it stands, Texas currently doesn’t have a statewide program for its residents, and by the look of things, this is not likely to change in the near future.

However, there is a ray of hope for Texans because there will likely be more local incentives coming up from utility companies and solar companies that will significantly help lower the cost of solar installation.

Cityscape of Houston, Texas, showing skyscappers and residential neighborhoods in a distance.

(Image: Yinan Chen26)

If you are uncertain of whether to buy or not, remember that the solar market is quite unpredictable. And going by the trends in the previous years, the cost usually goes up, not down.

If you are waiting for a sign to install solar panels, this is it; and the best time to do it is now.

If you live in Texas, you should probably know that the solar market is number 2 in the entire country, only rivaled by California. The sunny days are plenty enough for the panels to work at their optimal best, which probably explains why there are hundreds of solar power providers in the region.

The only logical reason behind not having the panels installed in your home is the high cost.

It is obvious that it can be a costly investment, but did you know that you can reduce the cost significantly? How?

Local rebate programs and federal tax credit programs. Applying for these services gives you an upper hand because you don’t have to bear the full cost of solar installation.

Texas solar incentives go a long way in reducing the cost of solar panels in Texas and you should take advantage of them as soon as now.

Frequently Asked Questions About Texas Solar Incentives

What Are the Best Texas Solar Incentives?

Besides the federal ITC that gives you 30% off the solar installation cost, Texas also boasts of several local incentive programs from solar companies and municipalities. Namely, Property tax exemption, Net metering or Solar buyback plans, Austin Energy Solar Rebate, American Electric Power (AEP), and Oncor solar rebate, just to name a few.

Are Texas Solar Rebates Statewide?

Sadly, there is no statewide Texas solar rebate program, the only available facilities include federal solar tax incentives and other local rebate programs. Even without it, you can still apply for tax credits and local rebates to help offset your solar installation cost.

Learn More About Texas Solar Incentives


References

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20Photo by Chris Chesneau. Pixabay. Retrieved from <https://pixabay.com/photos/solar-photovoltaic-energy-renewable-872591/>

21Photo by Kevin Martin Jose. Unsplash. Retrieved from <https://unsplash.com/photos/CQS7_h2mhXs>

22Photo by Kelly Sikkema. Unsplash. Retrieved from <https://unsplash.com/photos/xoU52jUVUXA>

23Photo by Trinh Trần. Pexels. Retrieved from <https://www.pexels.com/photo/a-male-solar-technician-installing-a-solar-panel-14613940/>

24Photo by David Mark. Pixabay. Retrieved from <https://pixabay.com/photos/el-paso-texas-buildings-landscape-123727/>

25Headquarters Lake Tawakoni State Park Texas 2023 Photo by Larry D. Moore / Attribution 4.0 International (CC BY 4.0). Resized and Changed Format. From Wikimedia Commons <https://commons.wikimedia.org/wiki/File:Headquarters_Lake_Tawakoni_State_Park_Texas_2023.jpg>

26Photo by Yinan Chen. Pixabay. Retrieved from <https://pixabay.com/photos/houston-texas-usa-skyscraper-347406/>