As an experienced data analyst and Texas resident, I get asked often by neighbors, "can you actually save money installing solar panels here in the Lone Star State?"
The answer I‘ve found after extensive research is a resounding yes! Texas now ranks 5th nationally for solar installations, largely driven by our abundant sunshine and homeowners like you seeking to take control over electricity bills.
This guide serves as your playbook for assessing whether solar panels make financial sense and maximizing savings through every incentive opportunity in Texas. Let‘s dive into the numbers together!
Why Texas Is Primed for a Solar Surge
First, let‘s level-set on a few key facts about the solar landscape across Texas:
- Over 7,100 MW of solar power capacity currently installed, including both rooftop and utility-scale projects
- That‘s enough to power nearly 750,000 single-family homes each year
- Texas solar grew by 2,352 MW in 2022 alone – the 3rd biggest capacity addition nationwide
- By 2028, over 40,000 MW of cumulative solar power will be online in TX per projections
What‘s fueling the rapid growth? For starters, West Texas has some of the strongest solar resources in the entire country, with certain areas averaging 7 peak sunlight hours per day. This makes the economics strongly favor large-scale solar farms.
But residential solar adoption is booming as well, driven by homeowners like you wanting to curb frustrating electricity expenses. When designed properly, rooftop solar arrays can offset 60-80% of the average home‘s electricity consumption based on usage patterns.
And as you‘ll see below, between federal tax credits, local utility rebates, net metering bill credits and more, installing solar panels in Texas can pay for itself in electricity savings relatively quickly compared to other big purchases.
Let‘s break down those program incentives in more detail…
Federal Solar Tax Credits Cut Costs by 26%
Without a doubt, the most valuable solar incentive available nationwide comes from federal solar tax credits.
The current 26% tax credit applies fully to all purchase and installation costs for any new solar array connected to your home in Texas. There are no household income limits or maximum caps on the amount qualifying for this 26% credit.
For example, if you were to install a $16,620 system like the one referenced later in this article, you would receive a $4,321 tax credit – nearly 1/4 off your final costs!
The 26% credit will start phasing down year-by-year from here, but remains at 22% permanently beginning in 2033. Either way, Uncle Sam is going to subsidize 20-25% of your solar panel investment, making the out-of-pocket costs you pay upfront much more reasonable.
The catch is that you must own your solar array rather than leasing from a 3rd party provider to qualify for federal tax credits. But as you‘ll see below, owning your system almost always results in better financial returns over the long run anyway.
Local Texas Incentives Also Help Slash Solar Costs
In addition to federal tax credits, many municipal electric utilities and rural electric co-ops across Texas offer local rebates, performance incentives, and other solar programs:
- For example, Austin Energy provides a rebate of $1.50 per watt of solar capacity you install, up to $15,000 or 50% of total system costs
- They also reimburse 100% of your solar permitting fees up to $1,250
- San Antonio‘s CPS Energy offers a $2,500 rebate plus net metering bill credits
- El Paso Electric runs a performance-based incentive where extra solar energy sent back to the grid earns you $0.09 – $0.11 per kWh
Check out the full DSIRE database of Texas solar incentives to dig into available offers by utility territory and locale across the state.
Pro Tip: Contact your electric utility directly to ask about the latest rebates, net metering, and payment programs in your area to maximize savings!
Texas Solar Panel Costs and Electricity Savings
Now that you‘ve got the big picture on Texas rapidly expanding solar energy footprint and financial incentives available, let‘s analyze the household cost savings potential.
Based on average 2023 installation figures, a 6 kilowatt (6,000 Watt) rooftop solar system runs about $16,620 before any rebates or tax credits:
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$2.77 per Watt cost x 6,000 Watts = $16,620
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This would cover roofs with ample space to hold about 18-22 panels
Over the 25+ year lifespan of a solar array, a system this size can save TX homeowners over $40,000 in avoided electricity purchases from the utility company:
- 25 years x $1,100 average annual savings = $27,500
We base these electricity savings estimates off a solar panel system in central Texas generating about 12,000 kWh per year. Valued at the ~$.12 / kWh retail electric rate charged by many utilities in the state, that‘s $1,440 in annual savings.
Let‘s see how the costs balance out using Austin Energy again as an example:
| Initial System Cost | $16,620 |
|---|---|
| Federal Tax Credit (26%) | -$4,321 |
| Austin Rebates (50% of cost) | -$8,310 |
| Net Out-of-Pocket Cost | $3,989 |
| 25 Year Electricity Savings | $27,500 |
| Total Net Savings | $23,511 |
Using all available incentives, you would earn back your initial solar investment in electricity savings within just 3-4 years! And stack up over $23,000 in cumulative positive cashflow compared to no solar installation.
The financial case only improves going forward long term as retail electricity rates charged by Texas utilities inevitably rise each year. With a solar array, over 60% of your home‘s electricity needs are locked-in at nearly free rates for 25+ years since the sun provides fuel at no cost!
And if you decide to move within 10 years or so, solar panels have proven to increase property resale values by nearly 4% on average [citation]. That on-site power generation is a major selling point for most home buyers.
Recommendations for Maximizing Texas Solar Savings
If you‘ve run through the numbers and are itching to start your solar power journey like many Texans, be sure to:
Accurately Size Your System: Avoid over- or under-sizing. Analyze your historical electric bills to determine an optimal capacity that balances robust savings against the space available on your roof. As a rule of thumb, every 1 kW of solar offsets 1,000 kWh / year of grid power needs.
Shop Around: Get quotes from at least 2-3 top-rated local installers to compare pricing and financing terms. Any reputable Texas solar company will offer free solar assessments and system designs.
Purchase vs. Lease: Own your panels to maximize financial incentives and long-term control over this grid asset. Quick home resales can be more complex with solar leases.
Apply for Incentives: Stay on top of your installer to ensure all paperwork for federal tax credits and utility/local rebates is completed. Missing incentives leads to lost savings!
And as always, reach out directly with any other questions on running the solar cost-benefit analysis for your home here in the Lone Star State! I‘m happy to help explain the options.
