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Is Solar Worth it in Texas?

is solar worth it in Texas

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Have you considered getting solar panels installed on your Texas home? It’s not an easy decision, especially considering that solar installation can be pretty expensive. This has likely led to many Texas residents asking: is solar worth the investment in Texas?

Texas is a breeding ground for technical innovation. While many people may be unaware, Texas has some pretty incredible programs in place to help people make the switch to solar and renewable energy. According to the state government, there are currently 210,000 homes in Texas with solar panel systems installed. Do you want to be among the thousands of Texas residents who made the leap to renewable energy?

To answer that question, we’re going to do a deep dive into the many facets of solar energy and the process of solar panel installation in Texas. We’ll cover the cost of installation, the different incentive and rebate programs available in Texas, and then we’ll break it down to dollars and cents. Let’s get started.

What’s the Cost of Solar Installation in Texas?

When considering the cost of solar installation in Texas, we have to remember that solar panel systems are entirely customizable. In fact, most installers design the system specifically for your roof. They have to consider how much sun hits your roof (and adversely, how much shade you get), the size of the system you want, the relative roof space available, the brand you choose, and more.

The average solar panel in Texas costs about $2.74 per watt. We break it down like that because that allows you to simply multiply by the number of watts you need for your system. For instance, if you would like to purchase a 5-kilowatt (kW) solar panel system, you’ll be looking at a cost around $13,700. Of course, that’s just an average. According to experts, the average price of a complete solar panel installation in Texas is between $11,645 and $15,755. This is before we even consider incentives.

Other experts report slightly different numbers. According to them, in the five largest metropolitan areas in Texas (Dallas, Austin, Houston, Ft. Worth, and San Antonio), you can expect to pay between $13,000 and $15,000 for a 6-kW solar panel system after incentives

“After incentives” is an important distinction to make. Residents in Texas have a few different programs they can use to help them purchase a solar panel system. What are those programs?

Solar Incentive and Rebate Programs in Texas

There are many programs available in Texas that enable residents to pursue solar and renewable energy. We’re going to focus on the solar programs today. All of these are in place to help people financially cover the cost of solar panel installation. Keep in mind that a lot of these programs don’t work like simple price reductions. They’re all a little complicated in their own way but well worth the work.

Federal Investment Tax Credit

The Federal Investment Tax Credit is a program that isn’t specific to Texas, though Texas residents can still take advantage of it. It allows residents to get a credit on their annual federal taxes equal to 26% of the cost of their solar installation. For instance, if you paid $15,000 for your solar panels, then you’d get a $3,900 credit on your annual taxes. It’s sort of like a massive income tax deduction.

City-Based Incentives

Some cities in Texas offer specific programs to incentivize renewable energy. So, depending on your location and what your city offers, you may be able to take advantage of those programs and shave a few bucks off the cost of your solar panel installation.

Austin, Texas

Austin, Texas has a rebate program called the “residential solar rebate program” that offers a rebate worth up to $2,500 for any Austin city resident who gets solar panels installed on their home. The program requires you to take a solar education course to qualify for the rebate. 

They also have something called Austin Energy’s Value of Solar Tariff, which pays Texas homeowners 9.7 cents for every kWh (kilowatt-hour) their solar panels generate. The incentive caps at a certain point and decreases the higher you go.

Houston, Texas

Houston residents can take advantage of the utility company net metering programs from ITC, TXU, Amigo Energy, Green Mountain Energy, and Reliant. On top of that, Green Mountain and Reliant also offer up to $4,500 in a rebate for any eligible solar panel system installation.

Dallas, Texas

If you’re a farmer in Dallas and a Farmers Electric Cooperative member, you can take advantage of their rebate of up to $1,000. Oncor (the utility provider) also offers solar incentives to Dallas residents who qualify. 

San Antonio, Texas

If you’re a CPS Energy customer in San Antonio, you can take advantage of their amazing incentive program. It has helped countless Texas residents get solar panels installed on their homes.

CPS Energy

We just briefly discussed CPS Energy’s incentive program, but we want to take a minute to break that down. The program started in April of 2018. 

They created a fund that put $9 million towards the installation of residential solar panel systems and $6 million towards the installation of commercial solar panel systems. The program gave rebates of up to 50% of the total cost of the solar panel installation, limited to $25,000 for residential solar panel systems and $80,000 for commercial solar panel systems. That’s just a brief history.

Now, the program is still active and gives rebates to residential customers up to $2,500 per solar panel installation project. They also offer a $500 premium for any customers who use local modules. On the commercial side, they offer 60 cents per watt installed for the first 25 kWh and 40 cents per watt for everything over that. They also offer a 10 cent per watt premium for any commercial customers that use local modules.

Solar Rights Law

This is an incredible law in Texas that disallows a homeowner’s association (HOA) from barring the installation of solar panels in their neighborhood. You may think that’s not a problem, but that probably just means you haven’t been in the crosshairs of a homeowner’s association. This is an incredible law that reduces interference and allows you to get solar panels installed on your Texas home with ease.

Net Metering

While Texas doesn’t offer a net metering program like other states, there are quite a few utility companies in Texas with net metering programs. If you’re a customer of CPS Energy, Green Mountain Energy, El Paso Electric, and the City of Brenham, you might’ve heard about this. But before we get into what they offer, we should ask a pretty important question. What is net metering?

What is Net Metering?

To fully understand net metering, we have to know how the grid system works in Texas. Texas has its own grid system separate from the rest of the country, called ERCOT, run by a company by the same name. It provides electricity to 90% of the state. Parts of the state (El Paso, bits of the Panhandle, and bits of East Texas) are on different grids, but they all work relatively the same way.

Texas residents pull electricity from the grid. It powers everything in your home, city, and state (if you don’t have renewable energy, of course). When you do have solar panels on your home, it works a little differently.

If your solar panels generate more electricity than you need, and you don’t have a solar battery to store all that extra electricity, it gets sent back to the grid. This allows you to supply electricity to your neighbors, your city, and so on.

Net metering programs give homeowners with solar panels credit for all the extra energy they create. So, the utility companies we mentioned above have policies in place that award Texas residents for all the extra power they send back to the grid. This comes in the form of credits on their electricity bill. 

So, if you ever need to pull electricity from the grid, you don’t have to pay for it directly. You can just tap into those credits and provide electricity to your home for free.

Other Financing Options

Whether you want to get a solar loan or refinance a property you already own, there are always other options available to help you pay for a solar panel installation in Texas. In fact, many installers offer payment plans, so talk to your installer and see if there are any other options to help alleviate the financial burden of solar panel installation.

How Much Can You Save by Switching to Solar in Texas?

There are a few things we have to consider before we get down to the actual savings. It’s not as simple as subtracting the incentives from the cost and comparing that to your monthly electricity bill. That’s now how it works. To understand the true savings of getting solar panels installed on your Texas home, we must first examine the payback period.

The Payback Period

The payback period refers to the time it takes to earn back the cost of your solar installation. Considering the financial incentives, rebates, and credits we already discussed, we then compare that to the cost of your electricity. How long will it be before the amount of money you saved outweighs the initial cost?

In Texas, the average payback period is 12.59 years. That can seem like a long time, but not when you’re considering the life of a solar panel system. Let’s break it down.

How Much Can You Save?

Let’s say you install enough solar panels to completely cover your energy usage. Let’s also assume your initial cost is $18,000. With the federal tax credit, that price will be reduced by $3,900. If you qualify for no other incentive or rebate programs, that puts your total at $14,100. Since solar panel systems generally have a lifespan of up to 30 years, that’s how much you’ll pay for electricity for the next 30 years if you get solar panels installed on your Texas home.

Next, you need to ask yourself a question. How much is your electricity bill? The average electric bill in Texas is $140.88. If you pay that same amount every month for the next 30 years, you’ll end up paying around $50,716.80 for electricity.

That’s right. If you buy a solar panel system for $14,100, you will save upwards of $36,616.80 over the next 30 years. That’s a ton of savings!

Final Thoughts

So, is solar worth it in Texas? Definitely! You can potentially save over $35,000 by switching to solar energy. There are programs available through the great state of Texas to incentivize the switch. Not only that, but you’ll also be doing your part to preserve our planet. Make the switch to solar energy today.