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HomeTechTexas Solar Panel Incentives: Tax Credits, Rebates and Buyback Programs

Texas Solar Panel Incentives: Tax Credits, Rebates and Buyback Programs

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Texas may be identified for its oil wells and refineries, however the state additionally has a booming marketplace for renewable power, together with solar energy. The Power Info Administration predicts Texas will lead photo voltaic power development within the US in 2023, according to Reuters.

Together with the federal tax credit score for photo voltaic panels, Texas offers its personal incentives to encourage residents to set up photo voltaic panels and batteries. These incentives are sturdy sufficient to earn Texas a spot on CNET’s checklist 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 refund for extra electrical energy generated.  

Power is simply completely different in Texas. The state has its personal electrical grid referred to as ERCOT and it is deregulated — that means you possibly can select from tons of of electrical firms moderately than a single, centralized utility like different states. 


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Fascinated about understanding the affect photo voltaic can have on your house? Enter some fundamental info under, and we’ll immediately present a free estimate of your power financial savings.


Power in most Texas cities is deregulated, that means about 85% of Texas residents can select from completely different electrical suppliers. 16 cities with municipal utilities — together with Austin and San Antonio — are nonetheless regulated; their residents haven’t got a selection of power firms. Getting to decide on your supplier may present the choice of incomes a robust monetary incentive for putting in photo voltaic panels.

Be taught extra about all the native and state incentives for photo voltaic tasks in Texas under.

Word: These Texas photo voltaic incentives are for residential electrical prospects solely. Texas has extra photo voltaic incentives for organizations, firms, colleges and farms. These incentives are additionally correct as of June 9, 2023 — packages and legal guidelines in Texas change frequently, so be sure you comply with up together with your native authorities or power supplier to verify these incentives are at present lively.

Evaluating Texas photo voltaic incentives

Texas incentiveDescriptionEligibilityEstimated worth*
Photo voltaic property tax exemptionWorth of photo voltaic installations are exempt from house assessments for property taxesAll Texans$403 per yr, although will fluctuate significantly primarily based on house value, photo voltaic set up and native taxes
American Electrical Energy photo voltaic set up rebateRebate for photo voltaic panel installationsAEP prospects$500 (1kW system) to $3,000 (techniques over 7.5 kW)
Austin Power residential power rebateRebate for photo voltaic panel installationsAustin Power prospects$2,500
CPS Power photo voltaic water heater rebateRebate for photo voltaic water heatersCPS Power prospects60 cents per kilowatt-hour of annual financial savings as much as $2,000
Denton Municipal Electrical photo voltaic photovoltaic incentiveRebate for photo voltaic panel installationsDME prospects$2,400 to $30,000
Denton Municipal Electrical photo voltaic water heater rebateRebate for photo voltaic water heatersDME prospects30% of set up value capped at $300
Oncor photo voltaic power residential rebateRebate for photo voltaic panel installations with battery storageOncor prospectsVariable
SMTX Utilities Distributed Era Rebate ProgramRebate for photo voltaic panel installationsSMTX prospects$1 per watt of capability as much as $2,500
Sundown Valley Photo voltaic Rebate ProgramRebate for photo voltaic panel installationsResidents of Sundown Valley who’ve Austin Power service$1 per watt of capability as much as $3,000
Internet meteringCash or invoice credit for surplus photo voltaic powerClients of taking part utilitiesVariable
Federal photo voltaic tax credit score30% tax credit score for photo voltaic panel installations and batteriesAll Individuals$7,200

Texas state photo voltaic tax credit and incentives

Texas at present doesn’t have a state photo voltaic tax credit score, rebate program or internet metering plan. Most incentives for photo voltaic power in Texas come from native governments or particular power firms. Texas does provide a statewide property tax exemption for photo voltaic panels.

Property tax exemption for photo voltaic power techniques

Texas is one in every of many states that carve out a property tax exemption for photo voltaic 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 regionally — 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 power gadget that’s primarily for the manufacturing and distribution of power for on-site use are entitled to exempt the quantity of worth the gadget contributes to the property, no matter whether or not the particular person owns the actual property on which the gadget is put in or constructed.”

The common property tax charge in Texas is 1.68%, in accordance with the unbiased nonprofit group Tax Foundation. That signifies that Texas’ property tax exemption on a $24,000 photo voltaic set up (the nationwide common) can be value about $403 per yr.

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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 provide extra 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 prospects who set up photo voltaic panels a refund to offset the preliminary funding in renewable power. 

AEP pays 50 cents per watt for photo voltaic techniques 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 techniques with greater than 7.5kW capability. Photo voltaic panels should be put in earlier than Nov. 30, 2023, to be eligible for this yr’s funding. The SMART Source Solar PV Program Guidebook offers all the main points and necessities for the photo voltaic rebate.

Austin Power residential power rebate

Austin Power offers a hefty $2,500 rebate for new solar panel installations. Photo voltaic power techniques should be owned (not leased) and supply a minimum of 3kW of energy with a purpose to qualify. Householders 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 power financial savings in kilowatt-hours after which multiplying these financial savings by $0.60. Qualifying photo voltaic water heaters should be new and authorized OG-300 by the Photo voltaic Score Certification Company. The utmost potential rebate is $2,000.

CPS Power previously supplied a $2,500 rebate for photo voltaic panel installations, however that program ended in December 2022 (PDF).

Denton Municipal Electrical photo voltaic photovoltaic incentive

The municipal electrical firm of Denton offers 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 extra cash for installations that embody battery storage.

The utmost rebate for photo voltaic panels in Denton is $30,000, or 50% of the whole value 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 a minimum of a 3kW capability. Dentons pays out for photo voltaic panels primarily based 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 techniques 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 will 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 powerful $6,000 rebate.

Denton Municipal Electrical photo voltaic water heater rebate

Together with its sturdy photo voltaic panel rebate, Denton additionally affords a pleasant rebate for customers who install solar water heaters. These prospects can obtain as much as 30% of the whole set up value again, with a most of $300.

In an effort to qualify for the rebate, the photo voltaic heater should be a minimum of massive sufficient to accommodate a household of 4 and have a completely put in electrical backup.

Oncor photo voltaic power residential rebate

The largest electrical utility in Texas affords a rebate on solar photovoltaic systems with a purpose to “offset the preliminary funding” of putting in photo voltaic panels. The rebate is just for owners and is not obtainable for brand spanking new building. 

Most notably, the Oncor rebate is simply obtainable to photo voltaic installations with included battery storage. Qualifying photo voltaic installations should even have a capability of a minimum of 3kW and not more than 15kW. Oncor offers the rebate to photo voltaic service suppliers, who’re then alleged to move on the financial savings to their prospects.

Oncor would not promote the worth of this photo voltaic power rebate, merely stating that it varies primarily based on “dimension, azimuth and different elements of your put in system.”

SMTX Utilities Distributed Era Rebate Program

The municipal utility of San Marcos offers 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 a minimum of 1kW of energy and will not be 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 power additionally applies to wind techniques.

Sundown Valley Photo voltaic Rebate Program

The tiny enclave of Sundown Valley (situated to the southwest of Austin) provides its residents who’re electrical prospects of Austin Power an extra rebate on high 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. The town says that funds can be found on a “first come first serve foundation,” however competitors for that cash is proscribed — the US Census Bureau estimates the inhabitants of Sundown Valley to be 643 folks.

Internet metering and photo voltaic buyback packages in Texas

Internet metering and photo voltaic buyback packages give a refund 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 firms have their very own plans that compensate prospects for giving power again to the grid.

Internet metering plans typically give prospects credit score towards their electrical invoice for any surplus power generated, as much as the quantity of their complete electrical invoice. Photo voltaic buyback packages might as a substitute pay photo voltaic power producers cash instantly for extra electrical energy. Credit for surplus power are calculated by multiplying a hard and fast 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 packages.

The next Texas utilities present internet metering or photo voltaic buyback packages for his or her prospects. This checklist of suppliers shouldn’t be exhaustive. You’ll want to examine together with your electrical firm to see if it affords internet metering for extra photo voltaic power manufacturing.

Austin Power

Austin Power provides a refund to prospects who present extra photo voltaic power to its grid utilizing what the utility calls a Value of Solar rate. That VoS charge depends upon the dimensions of the photo voltaic system. Photo voltaic installations with capacities below 1 megawatt AC at present obtain 9.91 cents per kWh, whereas installations bigger than that get 7.24 cents per kWh.

Brenham distributed era program

The municipal electrical utility operated by the town of Brenham offers a refund for surplus power generated by photo voltaic panels, normally within the type of credit on electrical payments. The surplus power put again into the Brenham electrical grid can be paid primarily based on an “averted value of era” charge equal to the wholesale value Brenham pays its industrial power suppliers.

Brownsville PUB photo voltaic buyback program

The town of Brownsville will purchase again extra electrical energy generated from photo voltaic panels, on the similar value that it pays different photo voltaic power suppliers. The current rate for that electrical energy is about 6 cents per kWh, however the charge was below 3 cents for a number of years.

CPS Power

CPS Power in San Antonio reimburses prospects with surplus photo voltaic power at what it calls the “averted value charge,” in accordance with the Database of State Incentives for Renewables & Efficiency. That signifies that prospects are credited for extra power primarily based on the charges that CPS Power must pay for it elsewhere.

El Paso Electrical

Like CPS Power, El Paso Electric additionally offers a internet metering program that reimburses prospects for extra photo voltaic power 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 offers prospects with invoice credit once they present extra power again to the utility. The surplus power credit are capped at your complete power utilization from the grid. 

We weren’t capable of finding present charges for extra photo voltaic power 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 offers internet metering for its prospects with photo voltaic panels. Members obtain limitless invoice credit for the excess photo voltaic power that they generate. The plan is out there to all prospects with photo voltaic installations smaller than 50kW capability who’ve current interconnection agreements with their utilities.

Shell Power photo voltaic buyback program

Serving Texas power prospects throughout the state, Shell Energy Solutions provides credit score for the surplus power that prospects with photo voltaic panels create. The cash again is supplied within the type of renewable energy certificates

Shell would not promote its fee charge for extra photo voltaic power. Its residential terms of service state that credit score worth can be established when a buyer enrolls within the photo voltaic buyback program. 

TXU Power

TXU Power offers internet metering for purchasers throughout the state. Its Home Solar Buyback program reimburses prospects for extra photo voltaic or wind power as much as 100% of their electrical payments. Any extra power 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 photo voltaic tax credit score may be probably the most beneficial incentive for putting in photo voltaic panels in Texas. Technically referred to as the residential clean energy tax credit, the inducement provides eligible taxpayers 30% of the price of their photo voltaic panel set up again as a credit score on their federal taxes.

The tax credit score is nonrefundable, that means it could solely be used to offset the taxes you’d in any other case owe, however further quantities might be carried over to future tax years. There is no restrict to the quantity of the tax credit score for photo voltaic panel installations.

To say the federal photo voltaic tax credit score, taxpayers ought to file IRS Form 5965, which is definitely managed by all the finest tax software program.

Texas solar energy buy agreements

Solar energy buy agreements permit prospects 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 normally pay for electrical energy. 

Whereas solar energy buy agreements let prospects get solar energy with no upfront prices, there are a couple of necessary disadvantages to notice. Since you do not personal the photo voltaic panels and tools, 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 can be tied to your house for the size of the contract, making it probably harder to promote your home.

Solar energy buy agreements are authorized in Texas, though they appear extra widespread at photo voltaic firms, not electrical utilities. Alba EnergySunnova and Wells Solar are three main photo voltaic firms at present offering solar energy buy agreements to Texans.

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Texas neighborhood photo voltaic packages

Neighborhood photo voltaic tasks assist present photo voltaic power to electrical prospects who do not personal their houses or cannot afford to put in photo voltaic panels. As a substitute, they be part of a neighborhood with a large-scale industrial photo voltaic panel set up after which buy the renewable power it offers, getting the environmental and financial advantages of photo voltaic power with out putting in panels on their property.

Some Texas neighborhood photo voltaic packages are at present at capability, however all of them counsel becoming a member of their ready lists for when spots develop into obtainable.

The next Texas electrical suppliers present neighborhood photo voltaic tasks:

Inexperienced Mountain Power affords a program that is much like neighborhood photo voltaic however with a twist. As a substitute of buying your electrical energy from one neighborhood photo voltaic mission, Inexperienced Mountain’s Go Local Solar plan buys renewable power certificates which might 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 can be an excellent monetary funding for you’ll depend upon many elements akin to your power supplier, electrical energy utilization, house dimension, solar publicity and price of photo voltaic panel set up.

The common time throughout the US for photo voltaic panels to pay for themselves typically ranges from six to 12 years. A number of on-line power 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 offers a rebate on photo voltaic panels, that can enhance your monetary equation significantly. 

How do photo voltaic tax credit work?

Photo voltaic tax credit present financial aid for taxpayers who set up photo voltaic panels. When it comes time to file state or federal taxes, taxpayers eligible for credit typically get a proportion of their set up value again as a discount of their taxes. Tax credit for photo voltaic are normally solely obtainable for the tax yr through which the photo voltaic panels have been put in.

How does the federal photo voltaic tax credit score work?

The federal photo voltaic tax credit score, technically referred to as the residential clear power credit score, offers tax aid to Individuals who set up new “clear power” techniques. Together with photo voltaic panels, eligible techniques embody photo voltaic water heaters, wind power, geothermal warmth pumps, biomass fuels and gas cells.

The tax credit score provides 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 power 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 normally solely be claimed as soon as, for the tax yr through which you put in your photo voltaic panels. One exception happens with the federal residential clear power tax credit score — if the quantity of your tax credit score is greater than the whole taxes you owe, you possibly can carry that credit score over to subsequent tax years.

How does power deregulation work in Texas?

For the reason that passage of Senate State Invoice 7 in 2002, the power market in Texas has been “deregulated.” Deregulation signifies that firms must compete in the marketplace for purchasers, who’ve a bigger array of power utility selections. Previous to deregulation, most Texans had no selection of power suppliers.

Not solely can a number of firms now compete for a similar power prospects, however completely different firms can present completely different power providers. As a substitute of 1 utility dealing with all energy-related providers like electrical energy era, supply, billing and power-line upkeep, these providers can all be carried out by completely different firms.

Confusingly, deregulation doesn’t suggest there are not any laws for power firms — they’re nonetheless ruled by the Public Utilities Commission of Texas and there are strict licensing requirements.



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