Texas Solar Panels

Under Texas Tax Code Section 11.27, the added value that a solar energy system contributes to your home is 100% exempt from property taxes. For example, if your solar installation increases your home’s appraised value by $20,000, you pay zero additional property taxes on that amount. With Texas property tax rates averaging 1.8–2.2%, a typical residential solar system can save homeowners $400–$640 per year in property taxes.

To claim the exemption, you must file Form 50-123 (Exemption Application for Solar or Wind-Powered Energy Devices) with your county appraisal district by April 30 of the year following installation. You do not need to re-file annually — the exemption remains in effect as long as the solar system is operational. Battery storage systems installed as part of a solar energy system and used to store solar-generated electricity generally qualify under the same exemption.

Over the 25-year lifetime of a typical system, this exemption can save Texas homeowners between $10,500 and $14,500 in total property taxes. With the federal residential solar tax credit now expired, this statewide exemption is the single most valuable solar incentive available to Texas homeowners in 2026.

Texas exempts solar energy equipment from the state’s 6.25% sales tax (plus any applicable local sales taxes). This exemption applies at the point of purchase, meaning you pay less upfront when buying solar panels, inverters, mounting hardware, and related components for your installation.

The exemption covers equipment used to produce, store, or distribute solar energy for residential or commercial use. Battery storage systems paired with solar installations are also generally eligible for this exemption. No special application is required — the exemption is applied automatically by the retailer or installer at the time of sale.

For a typical Texas residential solar system costing around $20,000–$25,000, the sales tax exemption can represent an immediate savings of $1,250–$1,560 or more, depending on local tax rates. This is an automatic, hassle-free benefit available to all Texas solar buyers statewide.

Austin Energy’s Residential Solar Rebate provides $2,500 to homeowners within the Austin Energy service territory who install a new solar photovoltaic (PV) system. The system must be at least 3 kW (DC) in size, installed by a qualified contractor, and owned by the homeowner (leased systems are not eligible). Completing a solar education course may also be required as part of the application process.

The rebate is available on a first-come, first-served basis while program funds last. Eligibility requires that the solar system be primarily used for producing and distributing energy on-site. Homeowners in the City of Sunset Valley who also qualify for the Austin Energy rebate may be able to stack an additional rebate through the Sunset Valley PV Rebate Program (up to $1/watt, capped at $3,000).

To apply, contact Austin Energy or a qualified solar installer in the Austin area. Given that funds are limited and available while supplies last, it is advisable to apply as early as possible. This rebate can be combined with the statewide property tax exemption for maximum savings.

The City of Sunset Valley, an Austin-area municipality served by Austin Energy, offers its own solar PV rebate program providing up to $1.00 per watt installed, with a maximum rebate of $3,000 per system (for systems up to 3,000 watts/3 kW). This rebate is designed to complement — and can be stacked on top of — the Austin Energy $2,500 residential solar rebate, potentially providing up to $5,500 in combined rebates for eligible Sunset Valley residents.

To qualify, the system cost must generally not exceed $6 per watt, and the installation must meet Austin Energy’s standard solar program requirements. The homeowner must reside within the City of Sunset Valley limits and use a qualified solar contractor.

This stacking opportunity makes Sunset Valley one of the most financially attractive locations in Texas for residential solar installations. Homeowners should confirm current program availability and funding status with the City of Sunset Valley or their solar installer before proceeding.

Oncor Electric Delivery, which serves the Dallas–Fort Worth metroplex and surrounding North Texas areas, offers an upfront rebate incentive for residential customers who install a new solar PV system paired with battery storage. Qualifying solar systems must be between 3 kW and 15 kW in size. The rebate amount varies based on system size, panel azimuth (orientation), shading, and other factors, but can reach up to $9,000 for eligible solar-plus-storage installations. For battery storage specifically, Oncor offers approximately $300 per kWh of installed storage capacity, meaning a standard home battery can qualify for over $3,000 in incentives on its own.

The program is designed to reduce peak grid demand and improve grid resilience across the Oncor service territory. Battery storage is essentially required to unlock the full rebate value. The program typically runs annually from February through November 30, or until funding is exhausted — whichever comes first. The 2026 program is scheduled to close November 30, 2026.

To apply, contact Oncor directly or work with a qualified solar installer familiar with the Oncor rebate process. Because rebate amounts are not publicly fixed and depend on system-specific factors, getting a detailed quote from an Oncor-approved installer is the best first step. This rebate can be combined with the Texas property tax exemption for significant overall savings.

American Electric Power (AEP) Texas serves approximately 97,000 square miles across west and south Texas and offers a solar PV rebate program for residential customers. For systems smaller than 3 kW, the rebate is $0.50 per watt DC. For larger systems (up to 30 kW), the maximum rebate is $2,500 per system. Both AEP Texas North and AEP Texas Central customers are eligible.

To qualify, the solar system must be installed by an approved contractor and meet AEP Texas’ technical requirements. The rebate is paid after installation and inspection. Homeowners should confirm current funding availability and specific eligibility requirements directly with AEP Texas or a qualified installer, as program details and funding levels can change.

AEP Texas customers can combine this rebate with the statewide Texas property tax exemption and the sales tax exemption on solar equipment to maximize their overall savings. Contact AEP Texas or visit their official website for the most current program details and application instructions.

CPS Energy, the municipally owned utility serving San Antonio and surrounding areas, offers solar rebates structured on a per-AC-watt basis. For small businesses, schools, and nonprofits, the rebate is $0.60 per AC watt for the first 25 kW of system capacity, $0.40 per AC watt for capacity above 25 kW, and an additional $0.10 per AC watt bonus for projects that utilize locally manufactured solar modules.

Residential customers in the CPS Energy service territory should contact CPS Energy directly for current residential rebate rates and eligibility requirements, as program details and available funding can vary. All installations must be performed by a CPS Energy-approved contractor and meet the utility’s interconnection and technical standards.

CPS Energy customers can also take advantage of the statewide Texas property tax exemption and sales tax exemption on solar equipment. For the most up-to-date program information, rebate amounts, and application materials, visit the CPS Energy official website or call their solar program team directly.

New Braunfels Utilities (NBU) offers a solar rebate program for residential customers who install a qualifying solar PV system. To be eligible, the system must be at least 3 kW in size. The maximum rebate is $3,000, and the actual amount may vary depending on the size and orientation (azimuth angle) of the installed system.

The rebate is designed to encourage local solar adoption and reduce peak demand on the NBU grid. Installations must be performed by a qualified contractor and meet NBU’s interconnection requirements. Homeowners should contact NBU directly to confirm current funding availability, application procedures, and any additional eligibility criteria before proceeding with installation.

NBU customers can stack this rebate with the statewide Texas property tax exemption and sales tax exemption on solar equipment for additional savings. Visit the New Braunfels Utilities official website or call their customer service team for the latest program details.

SMTX Utilities, the municipal utility serving San Marcos, Texas, offers solar PV rebates to both residential and commercial customers. Residential customers can receive up to $2,500, while commercial customers are eligible for up to $5,000 in rebates. The rebate is structured at $1 per watt installed, and the rebate amount cannot exceed 50% of the system’s total installed cost.

To qualify, the solar system must meet SMTX Utilities’ technical and interconnection requirements and be installed by a qualified contractor. Homeowners and business owners should apply through SMTX Utilities before or shortly after installation to ensure eligibility and confirm that program funding is still available.

SMTX customers can combine this rebate with the statewide Texas property tax exemption and sales tax exemption on solar equipment. Contact SMTX Utilities directly for current application forms, program guidelines, and funding status.

Guadalupe Valley Electric Cooperative (GVEC) offers an energy resilience rebate for member-customers who install battery storage systems that meet GVEC’s technical specifications. The rebate is intended to improve grid resilience and support members during outages. Members should confirm which battery brands and models are eligible before purchasing, as GVEC maintains an approved equipment list.

The rebate is typically paid after installation and a formal inspection by GVEC. Because this is a cooperative program, funding availability and rebate amounts can change — members are strongly encouraged to contact GVEC directly before committing to a purchase to verify current incentive levels and application requirements.

GVEC members can combine this battery rebate with the statewide Texas property tax exemption, which also covers battery storage systems installed as part of a solar energy system. Visit the GVEC official website or call member services for the most current program details and approved equipment lists.

The Texas Energy Fund, administered through the Texas Comptroller’s office, allocates $1.8 billion statewide to strengthen backup power infrastructure at critical facilities. Through its Backup Power Package Program, the fund offers competitive grants and low-interest loans for systems that combine battery storage, solar PV, and/or backup generators. This is Texas’ most significant public-sector battery storage incentive program.

Eligible facilities include hospitals, water treatment plants, emergency shelters, fire and police stations, communication centers, and other emergency response hubs that serve critical loads or must maintain operational continuity during grid outages. The program is targeted at public sector entities — private homeowners are not eligible. The State Energy Conservation Office (SECO) also offers complementary competitive grants and loan programs to municipalities, school districts, and other public entities for energy resilience projects.

Public entities interested in applying should contact the Texas Comptroller’s office or SECO for current application cycles, funding availability, and eligibility requirements. Given the competitive nature of the program and the complexity of applications, early engagement with program administrators is strongly recommended.

The USDA Rural Energy for America Program (REAP) is one of the most significant federal incentive programs available for rural Texas solar and battery storage projects. Eligible applicants — including agricultural producers (with at least 50% of gross income from agricultural operations) and rural small businesses (located in communities with fewer than 50,000 residents) — can apply for grants covering up to 50% of total project costs, with a maximum grant of $1 million for renewable energy systems. Guaranteed loans can cover up to 75% of eligible project costs, up to $25 million.

Battery storage systems are eligible under REAP when paired with qualifying renewable generation such as solar PV. This makes REAP a critical option for Texas farms, food processors, rural facilities, and agribusinesses seeking to deploy solar-plus-storage systems. The project must be located in a USDA-defined rural area, and the energy system must be technically feasible and financially viable.

Applications are accepted on a rolling basis through the USDA Rural Development Texas State Office. Because funding is competitive and application preparation can be time-intensive, prospective applicants are strongly encouraged to contact their local USDA Rural Development office early in the planning process. Visit the official USDA Rural Development website for current application deadlines, funding levels, and program guidance.

Texas Property Assessed Clean Energy (TX-PACE) financing is available in several Texas jurisdictions and allows commercial and residential property owners to finance solar PV and battery storage installations with long-term, low-interest loans repaid through their property tax bills. Because the financing is secured by the property itself rather than the borrower’s credit, interest rates are often lower than traditional loans, and repayment terms can extend for 10 to 25 years or more.

TX-PACE significantly reduces the upfront cash required to install solar and battery storage systems, making large projects more financially accessible. The financing is tied to the property — not the individual — so if the property is sold, the remaining PACE obligation can transfer to the new owner (subject to lender and buyer agreement). This is particularly valuable for commercial property owners, multifamily building owners, and homeowners who want to go solar without a large upfront investment.

PACE financing is administered through the State Energy Conservation Office (SECO) in coordination with local governments. Eligibility and availability vary by jurisdiction. Property owners interested in TX-PACE should contact SECO or a PACE-approved lender to determine whether their property and project qualify, and to understand the full terms of financing before proceeding.

Texas does not have a statewide mandatory net metering law. Instead, homeowners with solar panels in the deregulated ERCOT market (covering approximately 85% of the state) must select a Retail Electric Provider (REP) that offers a solar buyback plan in order to receive compensation for excess electricity exported to the grid. Buyback rates vary widely by provider, ranging from approximately $0.037/kWh to retail-rate equivalents, depending on the plan and territory. The Power to Choose marketplace (powertochoose.org), operated by the Public Utility Commission of Texas, allows homeowners to search for and compare available solar buyback plans by ZIP code.

Key buyback options vary by utility territory: In the Austin Energy territory, solar exports are credited at the Value of Solar (VoS) rate of approximately 9.91¢/kWh (2026 rate). In the Oncor/DFW territory, some REPs such as TXU offer retail-rate credits (effectively 1:1), while Oncor’s base buyback rate is approximately 3.7¢/kWh — making battery storage pairing highly beneficial. In the CenterPoint/Houston area, Green Mountain Energy pays approximately 8.5¢/kWh. In AEP/TNMP territory, Chariot Solar Buyback pays around 7.0¢/kWh.

In regulated utility territories (such as El Paso Electric and CPS Energy), net metering or buyback programs are offered directly by the utility. Homeowners should carefully evaluate buyback rates when selecting a REP, as the rate significantly impacts the financial return on a solar investment — especially in areas with lower buyback rates where pairing solar with battery storage can maximize self-consumption and reduce reliance on low-rate grid exports.

Tesla Electric offers a Virtual Power Plant (VPP) program for Powerwall battery owners in certain areas of the Oncor (DFW) and CenterPoint (Houston) service territories. Enrolled homeowners receive a $10 per month electric bill credit in exchange for allowing Tesla to occasionally discharge their Powerwall to the grid during periods of peak demand or grid stress. This helps stabilize the Texas grid while providing homeowners with a modest ongoing financial benefit.

To participate, homeowners must use Tesla Electric as their Retail Electric Provider (REP) and have a Powerwall installed and connected to the Tesla app. Tesla manages all dispatch decisions automatically — homeowners do not need to take any action during grid events. The program is designed to be minimally disruptive to the homeowner’s energy usage and battery reserve levels.

The VPP program is an emerging opportunity that adds incremental value to a Powerwall investment beyond energy bill savings. Eligibility is currently limited to specific service territories, so Powerwall owners should check the Tesla website or app to confirm availability at their address and review current program terms before enrolling.

While the federal residential solar tax credit (Section 25D) has expired, the federal commercial Investment Tax Credit (ITC) under Section 48/48E remains available for solar projects where construction begins before July 4, 2026. This credit is claimed by the third-party system owner — typically a solar leasing company or Power Purchase Agreement (PPA) provider — not by the homeowner directly. The financing company claims the 30% ITC and passes the savings through to the homeowner in the form of lower monthly lease payments or a reduced per-kWh PPA rate.

For Texas homeowners who prefer not to purchase a solar system outright, a solar lease or PPA structured before the July 4, 2026 construction deadline can still provide meaningful savings compared to standard utility rates. Under a PPA, you pay only for the electricity the solar system generates, typically at a rate below your current utility rate. Under a lease, you pay a fixed monthly amount for use of the system regardless of output.

Homeowners considering this option should act quickly given the July 4, 2026 construction deadline. It is important to carefully review lease and PPA contract terms — including escalation clauses, system ownership at end of term, and implications for home sale — before signing. This option does not provide the same long-term financial benefits as outright ownership but can reduce or eliminate upfront costs while still lowering electricity bills.