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Texas solar incentives for 2023 and beyond

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Texas is one of the most deregulated electricity markets in the country, with individual utilities and municipalities that offer their own solar incentives at the local level. Pair these with the Federal Investment Tax Credit (ITC), and homeowners and businesses across the state can get significant savings for solar.

Below is an overview of a few key solar incentives in Texas.

Want to learn more? Check out our Beginner’s Guide to Solar Financial Incentives.

Photo by Yuhan Du

Utility and local government solar incentives

Although Texas doesn’t have state-wide solar incentives or programs, many utilities and local municipalities do offer incentives to help residents and businesses go solar. The Database of State Incentives for Renewables lists over 25 local rebate programs across the state; be sure to check with your utility and local government to see if there are any solar incentives you can take advantage of. Your solar installer will also know the incentives available in your area. Here are just a few examples:

  • Austin Energy: Residential solar customers are eligible for a $2,500 rebate after completing an education course and installing PV panels. And commercial solar installations qualify for one-time checks or monthly credits, with the exact amount based on the energy generation potential of the installation.
  • AEP Texas: Depending on the size of the PV system, residential customers qualify for up to $3,000 in rebates, and commercial customers are eligible for $0.25/W to $0.50/W in post-installation rebates.
  • City of Sunset Valley: Residential customers can get a rebate of $1.00 per watt, with a maximum of $3,000 (3 kW) per household, as long as the system costs $6 per watt or less to install.

Texas net energy metering programs

Net energy metering (NEM) isn’t technically an incentive, but it can increase the value of rooftop solar significantly. NEM allows utility customers to get compensated for the extra solar energy they produce and give to their utility — usually in the form of bill credits. Several utilities and municipalities offer NEM, including:

Tax-Based Solar Incentives

Solar Tax Exemption

Under Texas’s Renewable Energy Systems Property Tax Exemption law, homeowners who go solar are “exempt” from paying higher property taxes as a result of their PV installations. Adding solar panels can increase the value of your home (sometimes by a lot), and by taking advantage of this property exemption rule, you can save even more money.

Property Assessed Clean Energy (PACE)

PACE is a loan option that allows property owners to finance the up-front cost of their solar installation (or other eligible improvements) through their property taxes. Several cities and counties in Texas offer PACE, learn more about them here.

The Federal Investment Tax Credit (ITC)

While it is not a Texas-only solar incentive, the federal investment tax credit (ITC) is one of the most important initiatives supporting residential renewable energy growth in the United States today. Recently extended by the Inflation Reduction Act of 2022, the solar ITC allows system owners to deduct up to 30% of the total installation costs from their federal income tax liability. 

Residentially, the 30% tax credit for solar panels is active through the end of 2033. For commercial installations, system owners applying for the 30% tax credit after 2025 will only be eligible to receive the full amount if certain sustainability initiatives are met and verified by the Department of Treasury. 

To illustrate a simple example for homeowners, let’s say that you install a system with a total project cost of $13,500. As 30% of $13,500 is equal to $4,050, the system owner would then be eligible to deduct $4,050 from their federal income tax liability. 

If your customer’s federal income liability is less than 30% of their total system costs, it is helpful to know that the solar tax credit can be applied both during the year of the installation as well as the following. For instance in the example above with a $4,050 tax credit, the system owner could elect to apply a $3,000 credit in 2023, with the remaining $1,000 against their federal income liability in 2024. 

Notes: You can only roll over a tax credit for solar panels once. After the decade-long extension, the residential solar ITC is now planned for reduction to 26% in 2034, 22% in 2035, and total elimination in 2036.     

If you’re thinking about installing energy storage at the same time, it’s also eligible for the ITC. Here’s one good ITC primer.

Download The 5 Solar Buyers Guide to get insight on what Texan solar buyers gravitate toward which of these Texas solar incentives most in 2023.

Click the image to learn what each type of solar buyer is looking for in their installation.

PSA: Over half of the states have a solar access law that protects a homeowner’s right to go solar, including Texas, California, and Florida. Texas’ Solar Rights Law forbids homeowners’ associations (HOAs) from preventing or enacting unreasonable restrictions on residents from installing solar. There are instances where Texas law does allow HOAs to restrict solar, e.g., if they’re installed without prior approval or in a manner that voids the warranty, if the ground mount extends above the homeowner’s fence, and if the system has an element that isn’t silver, bronze, or black in tone.

If you are part of a HOA and are looking to go solar, check out our guide on how to expedite the application process

Want to learn more about how to model incentives in your pitch? Schedule a personalized, no-pressure demo. 

Featured image by Daniel Lloyd Blunk-Fernández.

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