Texas Photo voltaic Panel Incentives: Tax Credit, Rebates and Buyback Applications


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

Together with the federal tax credit score for photo voltaic panels, Texas supplies its personal incentives to encourage residents to set up photo voltaic panels and batteries. These incentives are robust sufficient to earn Texas a spot on CNET’s listing 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.  

Power is simply completely different in Texas. The state has its personal electrical grid known as ERCOT and it is deregulated — that means you may select from lots of of electrical firms fairly than a single, centralized utility like different states. 

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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 alternative of vitality firms. Getting to decide on your supplier would possibly present the choice of incomes a robust monetary incentive for putting in photo voltaic panels.

Study extra about the entire native and state incentives for photo voltaic initiatives in Texas under.

Observe: These Texas photo voltaic incentives are for residential electrical prospects solely. Texas has extra photo voltaic incentives for organizations, firms, faculties and farms. These incentives are additionally correct as of June 9, 2023 — packages and legal guidelines in Texas change frequently, so make sure to observe up together with your native authorities or vitality supplier to verify these incentives are at the moment energetic.

Evaluating Texas photo voltaic incentives

Texas incentive Description Eligibility Estimated worth*
Photo voltaic property tax exemption Worth of photo voltaic installations are exempt from dwelling assessments for property taxes All Texans $403 per 12 months, although will fluctuate significantly primarily based on dwelling worth, 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 Power residential vitality rebate Rebate for photo voltaic panel installations Austin Power prospects $2,500
CPS Power photo voltaic water heater rebate Rebate for photo voltaic water heaters CPS Power 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 vitality residential rebate Rebate for photo voltaic panel installations with battery storage Oncor prospects Variable
SMTX Utilities Distributed Technology 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 Power service $1 per watt of capability as much as $3,000
Web metering Cash or invoice credit for surplus photo voltaic vitality Clients of collaborating 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 the moment doesn’t have a state photo voltaic tax credit score, rebate program or internet metering plan. Most incentives for photo voltaic vitality in Texas come from native governments or particular vitality firms. Texas does provide a statewide property tax exemption for photo voltaic panels.

Property tax exemption for photo voltaic vitality techniques

Texas is certainly one 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 part 11.27 of the state tax code says that “Individuals who set up or assemble on actual property a photo voltaic or wind-powered vitality system that’s primarily for the manufacturing and distribution of vitality for on-site use are entitled to exempt the quantity of worth the system contributes to the property, no matter whether or not the individual owns the actual property on which the system is put in or constructed.”

The common property tax charge in Texas is 1.68%, in response to the impartial nonprofit group Tax Basis. That signifies that Texas’ property tax exemption on a $24,000 photo voltaic set up (the nationwide common) can be value about $403 per 12 months.


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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 spend money on photo voltaic panels.

American Electrical Energy photo voltaic set up rebate

Serving south and west Texas, American Electrical Energy runs a SMART Supply Photo voltaic PV Program that provides prospects who set up photo voltaic panels a reimbursement to offset the preliminary funding in renewable vitality. 

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 12 months’s funding. The SMART Supply Photo voltaic PV Program Guidebook supplies all the small print and necessities for the photo voltaic rebate.

Austin Power residential vitality rebate

Austin Power supplies a hefty $2,500 rebate for brand spanking new photo voltaic panel installations. Photo voltaic vitality techniques should be owned (not leased) and supply at the least 3kW of energy with a view to qualify. Owners should additionally full a photo voltaic vitality training 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 offers a reimbursement to prospects who swap to photo voltaic water heaters. The rebate is set by calculating the annual vitality financial savings in kilowatt-hours after which multiplying these financial savings by $0.60. Qualifying photo voltaic water heaters should be new and licensed 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 resulted in December 2022 (PDF).

Denton Municipal Electrical photo voltaic photovoltaic incentive

The municipal electrical firm of Denton supplies a beneficiant incentive for owners who set up photo voltaic panels. The quantity of Denton’s rebate for photo voltaic 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 will need to have at the least 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 powerful $6,000 rebate.

Denton Municipal Electrical photo voltaic water heater rebate

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

So as to qualify for the rebate, the photo voltaic heater should be at the least giant sufficient to accommodate a household of 4 and have a completely put in electrical backup.

Oncor photo voltaic vitality residential rebate

The most important electrical utility in Texas affords a rebate on photo voltaic photovoltaic techniques with a view to “offset the preliminary funding” of putting in photo voltaic panels. The rebate is just for owners and is not out there for brand spanking new building. 

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

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

SMTX Utilities Distributed Technology Rebate Program

The municipal utility of San Marcos supplies a rebate for renewable vitality techniques, 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 at the least 1kW of energy and might 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 vitality additionally applies to wind techniques.

Sundown Valley Photo voltaic Rebate Program

The tiny enclave of Sundown Valley (situated to the southwest of Austin) offers its residents who’re electrical prospects of Austin Power a further rebate on prime of the $2,500 talked about above.

Residents who qualify for the Austin Power 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 restricted — the US Census Bureau estimates the inhabitants of Sundown Valley to be 643 individuals.

Web metering and photo voltaic buyback packages in Texas

Web metering and photo voltaic buyback packages give a reimbursement to households with photo voltaic panels that generate extra electrical energy than they eat. 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 vitality again to the grid.

Web metering plans usually give prospects credit score towards their electrical invoice for any surplus vitality generated, as much as the quantity of their complete electrical invoice. Photo voltaic buyback packages might as a substitute pay photo voltaic vitality producers cash instantly for extra electrical energy. Credit for surplus vitality are calculated by multiplying a set 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 listing of suppliers will not be exhaustive. You’ll want to verify together with your electrical firm to see if it affords internet metering for extra photo voltaic vitality manufacturing.

Austin Power

Austin Power offers a reimbursement to prospects who present extra photo voltaic vitality to its grid utilizing what the utility calls a Worth of Photo voltaic charge. That VoS charge will depend on the scale of the photo voltaic system. Photo voltaic installations with capacities beneath 1 megawatt AC at the moment 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 supplies a reimbursement for surplus vitality generated by photo voltaic panels, often within the type of credit on electrical payments. The surplus vitality put again into the Brenham electrical grid might be paid primarily based on an “averted value of era” charge equal to the wholesale value Brenham pays its business vitality suppliers.

Brownsville PUB photo voltaic buyback program

The town of Brownsville will purchase again extra electrical energy generated from photo voltaic panels, on the identical worth that it pays different photo voltaic vitality suppliers. The present charge for that electrical energy is about 6 cents per kWh, however the charge was beneath 3 cents for a number of years.

CPS Power

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

El Paso Electrical

Like CPS Power, El Paso Electrical additionally supplies a internet metering program that reimburses prospects for extra photo voltaic vitality on the identical charge that the utility would pay for that electrical energy if it acquired it from a business supplier.

Inexperienced Mountain Power

The Renewable Rewards photo voltaic buyback program from Inexperienced Mountain Power supplies prospects with invoice credit once they present extra vitality again to the utility. The surplus vitality credit are capped at your complete vitality utilization from the grid. 

We weren’t capable of finding present charges for extra photo voltaic vitality on the Inexperienced Mountain web site, however the instance on the Renewable Rewards web page reveals a charge of 13 cents per kWh.

Reliant Power

Reliant’s Photo voltaic Payback Plan supplies internet metering for its prospects with photo voltaic panels. Individuals obtain limitless invoice credit for the excess photo voltaic vitality that they generate. The plan is obtainable 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 vitality prospects throughout the state, Shell Power Options offers credit score for the surplus vitality that prospects with photo voltaic panels create. The cash again is offered within the type of renewable vitality certificates

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

TXU Power

TXU Power supplies internet metering for patrons throughout the state. Its Residence Photo voltaic Buyback program reimburses prospects for extra photo voltaic or wind vitality as much as 100% of their electrical payments. Any extra vitality 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 useful incentive for putting in photo voltaic panels in Texas. Technically known as the residential clear vitality tax credit score, the inducement offers eligible taxpayers 30% of the value 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 will probably solely be used to offset the taxes you’d in any other case owe, however additional quantities may 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 say the federal photo voltaic tax credit score, taxpayers ought to file IRS Type 5965, which is well managed by the entire greatest tax software program.

Texas solar energy buy agreements

Solar energy buy agreements permit prospects so as to add photo voltaic panels to their properties 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 often pay for electrical energy. 

Whereas solar energy buy agreements let prospects get solar energy with no upfront prices, there are just a few vital disadvantages to notice. Since you do not personal the photo voltaic panels and gear, you may’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 probably tougher 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 PowerSunnova and Wells Photo voltaic are three main photo voltaic firms at the moment offering solar energy buy agreements to Texans.

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Texas group photo voltaic packages

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

Some Texas group photo voltaic packages are at the moment at capability, however all of them recommend becoming a member of their ready lists for when spots change into out there.

The next Texas electrical suppliers present group photo voltaic initiatives:

Inexperienced Mountain Power affords a program that is much like group photo voltaic however with a twist. As an alternative of buying your electrical energy from one group photo voltaic mission, Inexperienced Mountain’s Go Native Photo voltaic plan buys renewable vitality 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 might be a very good monetary funding for you’ll rely upon many components similar to your vitality supplier, electrical energy utilization, dwelling dimension, solar publicity and value of photo voltaic panel set up.

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

How do photo voltaic tax credit work?

Photo voltaic tax credit present financial reduction for taxpayers who set up photo voltaic panels. When it comes time to file state or federal taxes, taxpayers eligible for credit usually get a share of their set up value again as a discount of their taxes. Tax credit for photo voltaic are often solely out there for the tax 12 months 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 known as the residential clear vitality credit score, supplies tax reduction to Individuals who set up new “clear vitality” techniques. Together with photo voltaic panels, eligible techniques embody photo voltaic water heaters, wind vitality, geothermal warmth pumps, biomass fuels and gasoline cells.

The tax credit score offers 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 vitality credit score by submitting IRS Type 5695.

What number of instances are you able to declare photo voltaic tax credit?

Photo voltaic tax credit can often solely be claimed as soon as, for the tax 12 months through which you put in your photo voltaic panels. One exception happens with the federal residential clear vitality tax credit score — if the quantity of your tax credit score is greater than the whole taxes you owe, you may carry that credit score over to subsequent tax years.

How does vitality deregulation work in Texas?

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

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

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


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