Solar panels in Texas: cost, incentives, and quotes

A typical residential solar system in Texas costs $16,500 to $22,000 installed in 2026, or about $2.35 to $2.85 per watt, among the lowest costs in the United States, reflecting competitive installer markets, fast permitting, and favorable installation conditions. Texas does have 6.25% state sales tax that applies to solar equipment (no exemption), adding roughly $1,000-$1,400 to system cost compared to states with sales tax exemptions. The Section 25D federal tax credit ended December 31, 2025; post-2025 cash and loan purchases receive no federal credit.

No statewide net metering mandate exists in Texas. In the deregulated ERCOT market (about 85% of the state), Retail Electric Providers set their own buyback rates for excess solar exports. Rates range from $0.03 per kWh (Gexa and similar low-rate plans) to retail-match (TXU Solar Buyback Match). Austin Energy (municipal utility) uses a Value of Solar tariff at approximately $0.0991 per kWh. CPS Energy (San Antonio municipal) uses avoided-cost compensation. El Paso Electric (outside ERCOT) has its own structure. Your REP choice is one of the most consequential decisions in Texas solar economics.

Texas Tax Code Section 11.27 exempts 100% of the added home value from a solar installation from property tax assessment. The exemption is permanent for the life of the system. To claim it, file Form 50-123 with your county appraisal district by April 30 of each tax year. For a typical $20,000 system in a county with 2.5% property tax rate, the exemption saves approximately $500 per year permanently, a meaningful contributor to long-term Texas solar economics.

Buyback availability and rates depend on your delivery utility territory (Oncor, CenterPoint, AEP Texas, or TNMP) and change over time as REPs adjust plans. As of early 2026, commonly-cited high-buyback plans include Chariot Energy Solar Buyback 24 (approximately $0.10 per kWh, 24-month term, rollover credits), TXU Solar Buyback (retail-match in some territories), and Green Mountain Pollution Free Solar Buyback (approximately $0.097 per kWh, 100% renewable). Verify current rates and plan availability on the Power To Choose website or directly with the REP before signing.

Texas has become the fastest-growing solar-plus-storage market in the United States and is projected to surpass California as the number one residential battery market in 2026. The case for batteries in Texas is unusually strong: REP buyback rates are often well below retail (meaning self-consumption captures more value), Texas grid reliability concerns are real (the 2021 Winter Storm Uri event remains in living memory), Oncor offers battery rebates for solar-plus-storage installations, and Tesla Electric runs a virtual power plant program paying Powerwall owners $10 per month for grid services in certain territories.

Yes. Austin Energy is a municipal utility, not part of the deregulated ERCOT retail market. Austin Energy uses a Value of Solar tariff: customers receive a credit of approximately $0.0991 per kWh for all solar production (separate from their consumption charges), rather than offsetting imports kWh-for-kWh. Austin Energy also offers a $2,500 residential solar rebate after completing a mandatory Solar Education Course and using a qualified contractor. The Value of Solar rate is reset annually based on calculated grid value.

Yes for most Texas homeowners with above-average electricity usage. The combination of among-the-lowest installation costs in the country ($2.35-$2.85/W), the 100% property tax exemption, strong sun resource (5.0-6.0 peak sun hours per day, producing roughly 33% more annual kWh per installed kW than New England), the right REP buyback plan, and ERCOT rates that have risen materially since 2021 produces 10-14 year payback for cash purchases in 2026. Payback extended from the IRA-era 7-10 year range; Texas economics held up reasonably well after Section 25D ended because installation costs are low and property tax savings are permanent.

Timeline from signed contract to a running system in Texas typically runs 6 to 10 weeks. Texas generally has faster permitting than coastal states. Steps include structural and electrical design, municipal building and electrical permits (varies widely; Austin and Houston are slower than smaller cities), the physical installation (1-2 days), TDU interconnection through your delivery utility (Oncor, CenterPoint, AEP Texas, or TNMP), and switching your REP to a solar buyback plan. Property tax exemption Form 50-123 should be filed with your county appraisal district by April 30.

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