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  • Writer's pictureSarah Lozanova

Solar Incentives In Texas That Homeowners Can Qualify For

Updated: Oct 18, 2022

The solar energy market in Texas is booming. In 2021 in the United States, 23.6 gigawatts of solar energy capacity were installed. Of that, solar companies installed 6 gigawatts in Texas alone. Texas became the top market for solar energy in 2021, surpassing even California for the first time.

Texas receives so much sunlight throughout the year and leads the country in wind power. However, despite the Lone Star State’s ideal climate for renewable energy production, Texas burns more coal and emits more carbon dioxide than any other state.

The Texas solar market creates excellent opportunities for installers for numerous reasons. There are a variety of financial incentives, both state-wide and from local governments, that encourage solar panel installations. Understanding these programs is critical for explaining how these programs work to Texans.

For example, the Investment Tax Credit (ITC) has and will continue to fuel solar energy growth throughout the state. The federal solar tax credit is 30% for solar installations in 2022 through 2032. It’s recommended customers speak with a tax expert to ensure they can utilize the tax credit and beware of offering tax advice.

State-Level Incentives

In addition to federal tax incentives, there are local incentives throughout Texas. Let’s explore these programs so you can discuss them with potential customers.

TXU Energy Renewable Buyback Plan

TXU, an energy retailer, is based in Irving and has a buyback program for homes with solar panels or wind turbines. When homes with renewable energy systems produce more power than the home consumes, they feed the excess to the power grid, and customers receive credits on their energy bills.

To participate, renewable energy system owners need to sign up for the TXU Energy Renewable Buyback plan and enter an interconnection agreement with their local Transmission & Distribution Utility (TDU). An interconnection agreement gives your customer permission to connect the solar PV system to the utility grid in their service area.

The TDU will need to inspect the solar panel system. They will then use a smart meter to track how much energy goes from the grid to the home and vice versa. Once your customer has received the required approval, they can start receiving clean energy credits on their electricity bill.

Solar Energy System Property Tax Exemption

Because a solar energy system costs thousands and significantly reduces electricity bills, it can increase your customer’s property value. However, there is a property tax exemption from charging additional property taxes due to an increase in home value from installing a solar power system. In other words, going solar won’t cause your customer’s property taxes to increase.

Fannie Mae Green Initiative Loan Program For Multifamily Properties

This program provides free water and energy efficiency audits and technical solar assessments. In addition, it finances green property improvements for multi-unit housing. The eligible green upgrades include:

  • A photovoltaic solar system.

  • LED lighting.

  • Energy-saving HVAC equipment.

  • ENERGY STAR appliances.

To qualify, the property owner must commit to upgrades projected to decrease the entire property’s annual energy and/or water consumption by at least 30% combined. At least 15% must be projected energy savings.

Net metering

Although there isn’t a state-wide policy requiring net metering (also known as net energy metering), some utility companies offer it. In fact, CPS Energy, El Paso Electric and Green Mountain Energy provide bill credits to solar system owners for excess power they supply to the electricity grid. When the property needs more power than the solar system provides, the utility company will first use the credits from surplus solar energy before charging customers for the electricity.

These programs allow homeowners to accrue credits for each kilowatt-hour of power that the utility company tracks. Depending on the climate and energy use in the home, there might be certain months where the solar homeowner banks more solar credits and other periods where they consume more. Net metering programs are beneficial to solar system owners because they can utilize excess energy without relying on battery storage systems.

Local Solar Rebates

There are also some photovoltaic incentives available through local governments and utility companies.

American Electric Power (AEP) Solar Rebates

The Smart Source Solar PV Program offers rebates for residential and commercial AEP Texas customers. Systems that are 3 kW > 5 kW can qualify for $1,500 in rebates. For systems that are 5 kW > 7.5 kW, they are eligible for $2,250. Projects that are 7.5 kW to 30 kW can qualify for $3,000. In addition, there are tiered incentives for commercial solar systems by system capacity. Solar companies need to be enrolled in the program for projects to qualify.

Austin Energy

Residential customers of Austin Energy can qualify for $2,500 in rebates by completing Austin Energy’s solar education course and installing a home solar system with a Participating Contractor. The solar installer submits the rebate paperwork on the customer’s behalf.

CPS Energy Solar Rebates

This utility company serves the city of San Antonio and offers rebates for residential and commercial solar energy projects. Residential customers can qualify for $2,500 in rebates and a $500 premium for using local solar panels. In addition, it offers a tiered incentive for commercial solar projects based on their capacity.

Oncor Solar Photovoltaic (PV) Program

Oncor offers solar rebates for residential and commercial solar installations. Residential projects between 1 kW and 15 kW can qualify for $8,500. In addition, commercial projects between 5 kW and 300 kW of capacity are eligible for up to $120,000 in rebates.

To qualify, applicants must be a customer of Oncor, which has a service area that includes Dallas, Fort Worth, and Arlington. Also, the system must be installed by an approved service provider.

Solar Incentives Could Convince Texas Homeowners To Switch To Solar

Numerous solar incentives throughout the state are making solar energy more appealing and a smart financial investment. Combined with Texas being one of the sunniest states in the country, these factors make the solar energy market poised for further growth. As a solar professional, there are many opportunities in serving this booming market.

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