Texas Solar Panel Break Even Analysis (July 2025)

Payback Factors:

• Your electricity usage and rates - Higher electricity bills mean faster payback since you're saving more each month
• System size and cost - Larger, more efficient systems may have better economics
• Available incentives - The 30% federal tax credit significantly reduces your upfront cost, improving payback time
• Local Utility Incentives - Your state grid operator and your local utilities may provide incentives and rebates that can reduce upfront costs.
• Net metering policies - Your utility's buyback rates for excess solar power can impact savings
• Financing method - Cash purchases have the fastest payback, while loans extend the timeline due to interest

Long-term Value:

Even with a 7-10 year payback period, most systems last at least 25 years meaning you'll have 15 to 18 years of free electricity after breaking even. You'll save about $86,978 over 25 years on electricity costs with a 5 kW system in Texas

The relatively short payback period in Texas is due to the state's abundant sunshine, competitive solar pricing, and rising electricity rates - making it one of the better states for solar investment.

How much could I save with solar in Texas?

Monthly and Annual Savings

Most Texas homeowners reduce their electricity costs by 40% to 60%

With Texas residents currently paying an average of 15.40¢ per kWh, with a typical electric bill of around $171.10 per month for 1,111 kWh of consumption, solar can significantly reduce these costs.

Long-term Savings by System Size

5 kW System:

• You'll save about $86,978 over 25 years on electricity costs with a 5 kW system in Texas

Typical Systems (6-9 kW):

• About $29,689 saved over 20 years for appropriately sized systems

How Savings Work

Net Metering Benefits: Many Texas utilities offer net metering or buyback programs. When I first signed up, my contract was a net metering, so I paid a certain cost of kilowatt-hours used, and the utility company purchased back from me at that same price. If I generated 200 and consumed 200, my net usage was zero, and my bill was essentially zero

Immediate Impact: Some companies even offer $0-down loans so you can start saving on day one if your loan payments are less than your current electric bills

Factors That Maximize Your Savings

• High electricity usage - The more you currently spend on electricity, the more you can save
• Good sun exposure - Texas gets plenty of sun??"around 204 days per year
• Rising electricity rates - As utility rates increase over time, your solar savings grow
• System ownership - The best way to save money on energy and get the most out of your solar system is to purchase your solar panels in cash

Additional Benefits

Beyond direct electricity savings, you'll also benefit from:

• Installing solar panels in Texas typically increases your home's value, and this added value does not increase your property taxes
• Protection against future electricity rate increases
• Potential income from selling excess power back to the grid

The exact amount you'll save depends on your current electricity usage, your roof's solar potential, and which financing option you choose. Getting quotes from local installers will give you personalized savings estimates based on your specific situation.

Texas solar panel incentives and rebates

Here are the solar incentives and rebates available in Texas for 2025:

Federal Incentives

Federal Solar Tax Credit (ITC):

• Residential Clean Energy Credit, formerly known as the federal investment tax credit (ITC), can reduce your solar panel system's cost by 30%
• The ITC will decrease to 26% in 2033 and 22% in 2034 before it is set to expire unless extended by new legislation
• Your entire system qualifies for this incentive, including equipment, labor, permitting, and sales tax

Texas State-Level Incentives

Property Tax Exemption:

• Texas will exempt property taxes on the added value to your home that comes with installing a solar energy system
• Texas's property tax exemption means your home's value goes up without higher taxes
• The Texas PUCT offers up to $2025 incentive to Service Providers and Installers ($135 per KW incentive capped at 15KW) which can be passed on to customers.

Utility and Local Rebates

Houston - Centerpoint

• Offers $135 per KW incentives (Through the Texas PUCT)

Austin Energy:

• Austin Energy customers can use the Austin Energy Residential Solar Rebate to get a $2,500 rebate when installing a solar system and completing an online course
• Value of Solar Tariff, which pays $0.097 for each kilowatt-hour (kWh) generated by your solar panels

American Electric Power (AEP):

• AEP Texas residential customers can get up to $2,500 per solar panel system
• For residential customers, systems smaller than 3 kW receive $0.50 per watt DC, while larger systems, such as those between 7.5 kW and 30 kW, can receive up to $3,000 per system

Oncor Electric:

• Oncor Electric, in Dallas and covering much of north and central Texas, has a rebate available for customers who install a new solar system and battery storage

CPS Energy:

• CPS Energy customers may also qualify for a $2,500 to $8,500 rebate for new solar equipment

Other Local Programs:

• City of San Marcos Distributed Generation Rebate Program: This is a rebate for residents of San Marcos, TX. It provides up to $1 back per watt installed up to $2,500 per solar project

Solar Buyback Programs

Net Metering and Buyback:

• Unlike some states, Texas does not have a statewide net metering program
• However, Chariot, Rhythm, Gexa, TXU Energy, Reliant and many other electric companies offer it to their customers
• Some Retail Electric Providers offer solar buyback and "Free nights" plans that maximize solar savings

Battery Incentives

• Federal solar tax credit: The 30% solar tax credit covers batteries installed with solar panels or on their own, as long as they are at least 3 kWh in size
• Virtual Power Plant: Battery owners in certain areas of Oncor and Centerpoint's service territory can use specific REPs and participate in a virtual power plant program that aggregates hundreds of homes' battery power during peak periods and places that power onto the grid.

Total Potential Savings

The average Texas solar shopper will save $3,170 on solar panels with rebates and incentives, though this can vary significantly based on your location, utility company, and system size.

Important Notes:

• Many local rebates require using approved contractors
• Incentives can change quickly, so check with your specific utility company
• You must own your system (not lease) to qualify for most incentives
• The federal tax credit can be rolled over to future years if it exceeds your tax liability