Texas might be known for its oil wells and refineries, but the state also has a booming market for renewable energy, including solar power. The Energy Information Administration predicts Texas will lead solar energy growth in the US in 2023, according to Reuters.
Along with the federal tax credit for solar panels, Texas provides its own incentives to encourage residents to install solar panels and batteries. Those incentives are strong enough to earn Texas a spot on CNET’s list of most solar-friendly states. These policies to promote solar power can take the form of rebates on solar panels, exemptions from property taxes or money back for excess electricity generated.
Energy is just different in Texas. The state has its own electric grid called ERCOT and it’s deregulated — meaning you can choose from hundreds of electric companies rather than a single, centralized utility like other states.
Can solar panels save you money?
Interested in understanding the impact solar can have on your home? Enter some basic information below, and we’ll instantly provide a free estimate of your energy savings.
Energy in most Texas cities is deregulated, meaning about 85% of Texas residents can choose from different electrical providers. 16 cities with municipal utilities — including Austin and San Antonio — are still regulated; their residents don’t have a choice of energy companies. Getting to choose your provider might provide the option of earning a strong financial incentive for installing solar panels.
Learn more about all of the local and state incentives for solar projects in Texas below.
Note: These Texas solar incentives are for residential electric customers only. Texas has additional solar incentives for organizations, companies, schools and farms. These incentives are also accurate as of June 9, 2023 — programs and laws in Texas change on a regular basis, so be sure to follow up with your local government or energy provider to confirm these incentives are currently active.
Comparing Texas solar incentives
Texas state solar tax credits and incentives
Texas currently does not have a state solar tax credit, rebate program or net metering plan. Most incentives for solar energy in Texas come from local governments or specific energy companies. Texas does offer a statewide property tax exemption for solar panels.
Property tax exemption for solar energy systems
Texas is one of many states that carve out a property tax exemption for solar installations. The value of your solar panels and batteries will not be included at all in your home’s assessment for calculating property taxes.
Texas does not have state property tax — all such taxes are levied locally — but section 11.27 of the state tax code says that “Persons who install or construct on real property a solar or wind-powered energy device that is primarily for the production and distribution of energy for on-site use are entitled to exempt the amount of value the device contributes to the property, regardless of whether the person owns the real property on which the device is installed or constructed.”
The average property tax rate in Texas is 1.68%, according to the independent nonprofit organization Tax Foundation. That means that Texas’ property tax exemption on a $24,000 solar installation (the national average) would be worth about $403 per year.
Watch this: Clean Energy Tech Trends in 2023
04:33
Texas community solar programs
Community solar projects help provide solar energy to electric customers who don’t own their homes or can’t afford to install solar panels. Instead, they join a community with a large-scale industrial solar panel installation and then purchase the renewable energy it provides, getting the environmental and economic benefits of solar energy without installing panels on their property.
Some Texas community solar programs are currently at capacity, but they all suggest joining their waiting lists for when spots become available.
The following Texas electric providers provide community solar projects:
Green Mountain Energy offers a program that’s similar to community solar but with a twist. Instead of purchasing your electricity from one community solar project, Green Mountain’s Go Local Solar plan buys renewable energy certificates that are used to purchase your power from multiple solar installations across the state.
Texas solar panel incentives FAQs
Is it worth going solar in Texas?
Solar tax credits provide monetary relief for taxpayers who install solar panels. When it comes time to file state or federal taxes, taxpayers eligible for credits generally get a percentage of their installation cost back as a reduction in their taxes. Tax credits for solar are usually only available for the tax year in which the solar panels were installed.
How does the federal solar tax credit work?
Solar tax credits can usually only be claimed once, for the tax year in which you installed your solar panels. One exception occurs with the federal residential clean energy tax credit — if the amount of your tax credit is more than the total taxes you owe, you can carry that credit over to subsequent tax years.
How does energy deregulation work in Texas?
