Texas Photo voltaic Panel Incentives: Tax Credit, Rebates and Internet Metering Packages

Texas is likely to be 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 accordance 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 sturdy 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 known as ERCOT and it is deregulated — that means you possibly can choose from hundreds of electric companies fairly than a single, centralized utility like different states. 

Vitality in most Texas cities is deregulated, that means about 85% of Texas residents can select from totally different electrical suppliers. Sixteen cities with municipal utilities — together with Austin and San Antonio — are nonetheless regulated; their residents do not have a selection of power firms. Getting to decide on your supplier may present the choice of incomes a robust monetary incentive for putting in solar panels.

Be taught extra about the entire native and state incentives for photo voltaic initiatives in Texas beneath.

Word: These Texas photo voltaic incentives are for residential electrical prospects solely. Texas has further photo voltaic incentives for organizations, firms, colleges and farms. These incentives are additionally correct as of Feb. 7, 2024 — packages and legal guidelines in Texas change frequently, so you’ll want to observe up along with your native authorities or power supplier to verify these incentives are at present lively.

Evaluating Texas photo voltaic incentives

Texas incentive	Description	Eligibility	Estimated worth*
Photo voltaic property tax exemption	Worth of photo voltaic installations are exempt from residence assessments for property taxes	All Texans	$403 per 12 months, although will range significantly primarily based on residence value, photo voltaic set up and native taxes
American Electrical Energy photo voltaic set up rebate	Rebate for photo voltaic panel installations	AEP prospects	$500 (1kW system) to $3,000 (techniques over 7.5 kW)
Austin Vitality residential power rebate	Rebate for photo voltaic panel installations	Austin Vitality prospects	$2,500
CPS Vitality photo voltaic water heater rebate	Rebate for photo voltaic water heaters	CPS Vitality prospects	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 prospects	$2,400 to $30,000
Denton Municipal Electrical photo voltaic water heater rebate	Rebate for photo voltaic water heaters	DME prospects	30% of set up value capped at $300
Oncor photo voltaic power residential rebate	Rebate for photo voltaic panel installations with battery storage	Oncor prospects	Variable
SMTX Utilities Distributed Era Rebate Program	Rebate for photo voltaic panel installations	SMTX prospects	$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 Vitality service	$1 per watt of capability as much as $3,000
Internet metering	Cash or invoice credit for surplus photo voltaic power	Prospects of taking part utilities	Variable
Federal photo voltaic tax credit score	30% tax credit score for photo voltaic panel installations and batteries	All 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 web 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 certainly one of many states that carve out a property tax exemption for solar installations. The worth of your photo voltaic panels and batteries won’t 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 machine that’s primarily for the manufacturing and distribution of power for on-site use are entitled to exempt the quantity of worth the machine contributes to the property, no matter whether or not the particular person owns the true property on which the machine is put in or constructed.”

The typical property tax fee in Texas is 1.68%, in accordance with the unbiased 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.

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 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 offers prospects who set up photo voltaic panels a reimbursement 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, 2024, to be eligible for this 12 months’s funding. The SMART Source Solar PV Program Guidebook supplies all the small print and necessities for the photo voltaic rebate.

Austin Vitality residential power rebate

Austin Vitality supplies 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 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 Vitality 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 decided by calculating the annual power 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 Ranking 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 householders who set up photo voltaic panels. The quantity of Denton’s rebate for solar panels (PDF) is decided by the ability 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 entire 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 may get two-thirds of that payout for a similar capability ranges: 80, 60 and 40 cents per watt, respectively.

Which means a 5kW system with storage will get you a formidable $6,000 rebate.

Denton Municipal Electrical photo voltaic water heater rebate

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

With a purpose 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 most important electrical utility in Texas gives 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 householders and is not out there for brand spanking new development. 

Most notably, the Oncor rebate is simply out there to solar 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 supplies the rebate to photo voltaic service suppliers, who’re then purported to move on the financial savings to their prospects.

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

SMTX Utilities Distributed Era Rebate Program

The municipal utility of San Marcos supplies a rebate for renewable energy systems, together with new photo voltaic panels. Residential householders 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 is probably not sized to supply greater than your annual electrical consumption. 

Eligible photo voltaic panels should even be put in by a licensed 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 (positioned to the southwest of Austin) offers its residents who’re electrical prospects of Austin Vitality a further rebate on high of the $2,500 talked about above.

Residents who qualify for the Austin Vitality photo voltaic rebate can get a further $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

Net metering and photo voltaic buyback packages give a reimbursement to households with photo voltaic panels that generate extra electrical energy than they eat. Texas does 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 an alternative pay photo voltaic power producers cash instantly for extra electrical energy. Credit for surplus power are calculated by multiplying a hard and fast fee by the kilowatt-hours generated again into the system. Some utilities use the phrases interchangeably or have distinctive phrases of their very own for related packages.

The next Texas utilities present web metering or photo voltaic buyback packages for his or her prospects. This record of suppliers is just not exhaustive. Make sure you examine along with your electrical firm to see if it gives web metering for extra photo voltaic power manufacturing.

Austin Vitality

Austin Vitality offers a reimbursement to prospects who present extra photo voltaic power to its grid utilizing what the utility calls a Value of Solar rate. That VoS fee is dependent upon the scale of the photo voltaic system. Photo voltaic installations with capacities underneath 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 town of Brenham supplies a reimbursement for surplus power generated by photo voltaic panels, often within the type of credit on electrical payments. The surplus power put again into the Brenham electrical grid might be paid primarily based on an “averted value of era” fee equal to the wholesale value Brenham pays its business 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 7.8 cents per kWh, however the fee was underneath 3 cents for a number of years.

CPS Vitality

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

El Paso Electrical

Like CPS Vitality, El Paso Electric additionally supplies a web metering program that reimburses prospects for extra photo voltaic power on the similar fee that the utility would pay for that electrical energy if it acquired it from a business supplier.

Inexperienced Mountain Vitality

The Renewable Rewards photo voltaic buyback program from Inexperienced Mountain Vitality supplies 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 fee of 13 cents per kWh.

Reliant Vitality

Reliant’s Solar Payback Plan supplies web metering for its prospects with photo voltaic panels. Contributors 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 Vitality photo voltaic buyback program

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

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

TXU Vitality

TXU Vitality supplies web 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 solar tax credit is likely to be probably the most priceless incentive for putting in photo voltaic panels in Texas. Technically known 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, that means it might probably 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 is not 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 definitely managed by the entire best tax software.

Texas solar energy buy agreements

Solar power purchase agreements enable prospects so as to add photo voltaic panels to their properties with out paying for the set up or upkeep. Prospects then lock in a fee for that solar energy that is decrease than what they often pay for electrical energy. 

Whereas solar energy buy agreements let prospects get solar energy with no upfront prices, there are a number 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 might be tied to your property for the size of the contract, making it doubtlessly tougher to promote your own home.

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

Texas neighborhood photo voltaic packages

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

Some Texas community solar programs are at present at capability, however all of them counsel becoming a member of their ready lists for when spots change into out there.

The next Texas electrical suppliers present neighborhood photo voltaic initiatives:

Inexperienced Mountain Vitality gives 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 challenge, Inexperienced Mountain’s Go Local Solar plan buys renewable power certificates which are used to buy your energy from a number of photo voltaic installations throughout the state.

Texas photo voltaic panel incentives FAQs