An In-Depth Guide to Texas Solar Incentives

olar incentives in Texas go beyond being a mere add-on for homeowners considering the shift to renewable energy; they serve as a substantial financial boost that transforms solar power from an intriguing concept into a smart investment. With its abundant sunshine, the Lone Star State provides an ideal environment for solar panel operation. However, it is the combination of ample sunlight and enticing rewards that truly sets the state apart for homeowners seeking to embrace solar energy.

Why solar incentives in Texas are worth exploring

By exploring these benefits, Texans can significantly reduce the initial costs of installing solar systems, potentially saving thousands of dollars in the process. These perks not only help offset installation expenses but also expedite the financial benefits of solar power, enabling homeowners to achieve a faster return on their investment. Given these factors, Texas programs present a compelling case for homeowners to dive into the realm of solar energy.

Federal Solar Tax Credit (ITC)    

While there is no Texas solar tax credit, residents can benefit from the Federal Solar Investment Tax Credit (ITC). Originally introduced in the Energy Policy Act of 2005 with a planned expiration in 2007, the ITC has proven to be successful in driving America's transition towards renewable energy. Thanks to its immense popularity and impact, Congress has extended its expiration date multiple times, with the most recent extension granted through the Inflation Reduction Act of August 2022.

ITC has reclaimed its original 30% rate, valid from 2022 to 2032. This applies to both new residential and commercial solar systems until 2025. Starting in 2033, residential solar owners can anticipate a 26% credit on their bill, gradually decreasing to 22% in 2034. By 2035, the solar ITC will come to an end.

One of the great benefits of the solar ITC is its rollover feature. If you don't use up all your credit in one year, you have the opportunity to roll it forward, benefiting from the credit as long as the ITC program runs. However, this perk is only available to those who own their solar energy systems outright or have financed them. It's also good to know that the ITC is open to all, with no restrictions based on income levels.

Eligibility for the ITC hinges on several factors. Your solar photovoltaic system must have been installed between January 1, 2006, and December 31, 2034, and at your primary or secondary residence within the U.S. If you're part of a community solar project, your credit is tied to the electricity your share of the project produces, which shouldn't exceed your home's consumption. Notably, the ITC only applies to new PV systems or those being used for the first time.

Some Texas solar companies include Sunnova, SunPower, and Freedom Solar. These companies offer a range of solar solutions for residential and commercial customers across the state.

Texas Solar Property Tax Exemption    

In the Lone Star State, homeowners who opt for solar installations enjoy a property tax exemption, making solar power an even more enticing prospect. This exemption essentially means that the value of your solar panels and batteries will not impact the property taxes on your home. While Texas does not implement a state property levy, local governments have the authority to assess and administer property-related dues. However, according to Section 11.27 of the state tax code, those who install solar energy devices intended primarily for on-site use can exempt the device's value from the property's worth.

Considering Texas average property tax rate of 1.66%, this exemption could yield significant annual savings. For instance, a $25,000 solar installation could result in yearly savings of approximately $415.

Net Metering  

Thanks to net metering and solar buyback programs, homeowners have the opportunity to enjoy financial benefits if their solar panels generate more electricity than they consume. While Texas lacks a statewide net metering program, local electricity providers and municipal power companies have taken the initiative to establish their own programs.

Through these programs, you can receive credits towards your electric bill for the excess energy you produce, and in some cases, they may cover your entire bill. Alternatively, solar buyback programs may directly compensate you for the surplus electricity you generate. The exact compensation amount is determined by applying a predetermined rate to the kilowatt-hours you feed back into the grid. It's important to note that each utility company may have different terms and conditions for these programs, so it's advisable to check with your specific provider.

Local Solar Rebate Programs

Austin Energy Solar Photovoltaic (PV) Rebate

The utility company provides a straightforward rebate of $500 for PV systems that meet the criteria, and solar water heating installations receive $15 per square foot of the collector area. These rewards are offered on a first-come, first-served basis. To take advantage of these benefits, customers need to sign a net-metering and interconnection contract, and an energy audit is required before installing the system.

Oncor Electric Delivery Residential Solar Program

If you're in Oncor's service area and contemplating a solar installation, the company also offers an intriguing solar program. To be eligible, your system should have a capacity between 3 and 15 kW and include a battery. Note that north-facing systems are not eligible, and the required tilt angle varies depending on your property's location.

What sets Oncor apart is its flexible structure—it's not a fixed rate for everyone. Instead, it considers factors like your system's tilt, orientation, panel quantity, panel type, and your home's location. Your chosen solar installer can help calculate the incentive value, or you can use Oncor's handy calculator to get a rough idea.

Denton Municipal Electric Solar Photovoltaic Incentive

If you're a Denton resident considering solar panel installation, Denton's municipal electric company offers an attractive program. These rebates are pretty generous and take into account the system's power output, with additional benefits for including battery storage. Residents could receive a rebate of up to $30,000 or half the installation cost (whichever is less). To qualify, you must be a Denton electric customer, own the property, and install a solar system with a capacity of at least 3kW. Rebates vary based on system capacity and battery storage, with rates ranging from $0.80 to $1.20 per watt.

Sources:

https://www.kxan.com/news/texas/where-are-property-taxes-highest-in-texas/#:~:text=Also%2C%20local%20municipalities%20and%20school,tax%20rate%20in%20the%20country