Financial Benefit of Going Solar in Texas

During storms and other times of high energy demand, the Texas power grid has occasionally left residents to deal with rolling blackouts or extended power outages. Pretty much why more Texans are investing in solar power with Sunfuse Solar to become less reliant on the grid. Let’s look at the financial benefit of going solar in Texas.

The state has one of the country’s highest average residential electricity rates, ranking in the top 10 at $150.56 per month. However, according to the most recent data from the US Energy Information Administration. Solar panels are one option to help you save some costs. 

Given the state’s favorable climatic conditions, Texas is an excellent location for installing solar panels. Much reason why the state (Texas) currently has the second-highest solar generating capacity in the United States, trailing only California.

In this article, we will consider the financial benefit of going solar. Okay so, let’s dive in!

What is the cost of Solar Installation?

Installing solar panels in your Texas home is interest-free if you pay with cash. The initial cash outlay may be higher, but there are ways to finance the purchase. Installers, solar banks, and credit unions all offer solar loans. 

The alternative is a Power Purchase Agreement or solar lease, where the homeowner pays a monthly rate. One disadvantage of these choices is that you cannot claim tax deductions once you own the system. The typical payback period for a financed purchase by a Texan is between six and ten years.

Financial Benefit of Solar Installation in Texas

Federal Tax

The Residential Clean Energy Credit is a federal tax credit worth 30%. It is available to Texans who purchase solar panels between 2022 and 2032.

 The average solar power system cost is $28,888. However, with this tax credit (previously known as the Investment Tax Credit), you could save more than $8,500. To get this tax credit, you need to file IRS Form 5695.

The most beneficial in Texas is this federal tax credit. The federal government offers this, and it ensures that you will receive a tax credit equal to 30% of the value of your solar system. The tax credit is to be deducted from your taxable income.

Note that you can only claim the full credit if your income tax liability exceeds the credit amount. Still, you can carry over any remaining credit for up to another five years. You can still benefit from the total amount if your income tax liability is low in the year you install the system.

Compared to the average pre-incentive cost of over $30,000 in Texas, the typical credit amount is $9,281. Installing an 11.5 kW system at the local average cost per watt of $2.69 would yield these results.

Property Tax Exemption

Due to the property tax exemption, your taxes will not go up after you put in your solar panels.

Improvements to your home that increase its value will typically result in a higher assessed value. Taxes are based on your assessed value, which will increase as your property value increases. A solar energy system can increase your home’s value in Texas by more than 4%. 

However, the value of your solar system is not factored into your property’s assessed value. So, you shouldn’t see any change in your tax burden when you switch to solar energy.

 Note that the actual savings over time are difficult to predict. This is because they are proportional to the size/ alue of the solar system, as well as the market value of the home.

Net Metering

Some of the most persuasive arguments for installing solar panels in the United States center around net metering– which changes how your electricity bill is calculated if you’re a homeowner.  This is a huge benefit of going solar in Texas!

Simply put, if your solar panels produce more energy than you use, you get paid for the excess. Credits can be applied to subsequent utility bills. The surplus will be applied to your account if your energy consumption exceeds your generation. With net metering, you can save money on utilities, maximize your savings, and shorten the time it takes for your solar panels to pay for themselves.

As the practice of “net metering” is not required by Texas law, not all Texans will have access to it. Instead, state law makes net metering possible, but it is up to individual retail electricity providers (REPs) to implement the policy.

Conclusion

All over the country, incentives on solar can quickly change, even without notice. Similarly, no data suggests that Texas’ solar incentives will remain the same overtime. So, it’s advisable to take advantage of these incentives and benefit of going solar in Texas as quickly as possible.