The average cost of a 5kW solar panel system in Texas is $11,982, or $8,387 after tax incentives. according to May 2024 data from EnergySage, a solar and home energy product comparison marketplace. Texas weather typically requires air conditioning, which is why the state has relatively high electricity needs and why solar panel systems also tend to be larger on average.
Texas contains regulated and deregulated energy-provider zones. In deregulated zones, many companies compete for customers. In regulated zones, the municipality has only one electricity provider. This combination can make it a little more challenging to determine the financial benefits of installing solar if you live in Texas, but here’s an overview of how it works and what to think about.
Solar costs in Texas at a glance
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Average cost per watt of a solar system |
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Average cost of 5kW system before incentives |
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Average cost of 5kW system after incentives |
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Source: EnergySage, a solar and home energy product comparison marketplace founded in 2012. Data is current as of May 8, 2024. |
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Solar panel systems in Texas are some of the least expensive in the nation — only Arizona has a lower average cost before tax incentives.
Although not everything is bigger in Texas, the solar panel systems often are: The average was 13.7kW in the second half of 2023, according to data from EnergySage. This increased from 12.9kW in the first half of 2023. By comparison, Kentucky had the largest average system size among states surveyed in the second half of 2023 at 14.5kWs.
Texans use 824kWh of energy per month on average, and the average system offsets about 97% of that, meaning that solar can typically offset most of the electricity needs of a home in Texas.
Installation costs are falling
The median cost per watt of solar electricity has fallen in Texas, like most other states where solar panels are popular. The price went from $2.55 per watt in early 2023 to $2.35 per watt in the second half of the year.
Prices for solar panels in Texas have also fallen, partially because many solar customers finance their solar panels and higher interest rates reduce the return on their investments, according to Chris Christal, Director of Sales at Atma Energy, a solar energy company headquartered in the San Antonio area. Other cost-related factors are also at play.
“Tariffs on Chinese solar panels sent prices through the roof since they were 80% of the U.S. market. When Biden put a moratorium on that tariff, it flooded the market, so prices have been settling much lower now,” Christal says.
In Texas, Enphase Energy is the most frequently quoted brand of solar inverter, and REC panels are the most frequently quoted panel brand, according to EnergySage.
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Enphase has been expanding U.S.-based production of microinverters and other products.
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REC is from Norway but has expanded globally with an operational headquarters in Singapore, meaning that changes in tariffs could affect REC’s prices.
There are two ways to sell solar panels in Texas: the dealer model and the engineer, procure, construct (EPC) model.
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With the dealer model, the company contracts out many parts of the manufacturing and installation processes.
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With the EPC model, the company designs the solar panel system in-house and supervises all the purchasing and construction.
Christal recommends researching solar panel providers carefully because one of the most valuable parts of the project is the guarantees on the work.
“These systems are custom designed to your unique roofspace and shading, including your unique interconnection, and if it doesn’t perform, you need to know what the company can guarantee,” Christal says.
When does it make sense to get a solar battery in Texas?
Solar batteries allow people to store solar energy for later use, particularly at night, when solar panels aren’t generating power. Solar batteries can also help people avoid peak-time energy surcharges.
The regulatory environment in Texas may also affect interest in battery storage because it may change the rules on whether and how utilities purchase your excess solar power.
“The co-ops and utilities can make any change they want, whenever they want, but it takes a decision by the board and members,” Christal says. “In deregulated areas, you negotiate a new deal every two years or so, either with a new rep or your current rep. That can make figuring out what an ROI [return on investment] looks like difficult.”
“A battery system can make you feel independent, whether you’re climate-minded, ROI-minded or technical-minded. Independence is the common underlying factor,” Christal says.
Tax incentives, rebates and net metering laws in Texas
Property tax exemption
The Texas property tax exemption began in 1978 and has been amended in various ways. It excludes solar panels and solar batteries from home-value assessments for property taxes.
Of course, the value of a solar panel system goes down over time. However, this home improvement may avoid hundreds of dollars in additional property taxes.
Texas Solar Rights
The Texas Solar Rights Act, passed in 2011, made it illegal for homeowners associations (HOAs) to prohibit solar panels. There are a few exceptions (you can’t put solar panels on communal HOA property or risk health and safety, for instance), but generally an HOA in Texas can’t forbid solar panels.
Tax rebates
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If you are in a deregulated area, investigate incentives from the utilities that do business in your area before you install panels. Most only offer a rebate or grant if you are a current customer, so you may find that you get more savings if you wait until your next electricity contract renewal period. Each company’s rebate options will be different and can change over time. For instance, Oncor, the biggest electric utility in Texas, offers a rebate if you also get a solar battery and if the system is more than 3kW but less than 15kW. Each rebate is calculated based on the details of your system, so there isn’t a guaranteed amount.
The DSIRE database from the North Carolina Clean Energy Technology Center features details on dozens of Texas-based solar panel incentives.
There aren’t statewide guidelines for net metering in Texas, though many municipal providers and energy companies offer solar buyback programs. In a net metering zone, you effectively run your electric meter backwards when you’re producing more solar energy than you can use; this generates a credit on your electricity bill. You can still use grid energy at night or when you aren’t producing as much electricity as you consume.
Net metering rules vary. For instance, some companies may only allow you to roll over your credits for a certain number of months; some any not allow this at all.
If you’re in a regulated zone and your local utility offers net metering or some form of solar buyback, you’ll most likely have a fairly stable arrangement. If you’re in a deregulated area, however, you’ll have to figure out which providers offer strong solar buyback incentives.
For instance, the Green Mountain Energy Renewable Rewards Buyback Program will credit your grid energy bill for the excess energy you generate, but only up to the amount of your energy bill that month. Another provider, TXU Energy, offers a Home Solar Buyback Program that locks in a lower energy rate if you know you don’t produce enough solar power to meet your electricity needs or rollover credits that allow you to keep using your bill credits as long as you are a customer.
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