Cost of Solar Panels in Texas: Is it Worth it?

Texans pay a lot for electricity and are getting all too familiar with power blackouts. Homeowners looking to keep the lights on in the Lonestar State are increasingly turning to solar. The average cost of solar in Texas is around $35,500 for a 9 kW system. Factor in rebates and tax credits and the net cost could be as little as $23,000. For many homeowners, this means a solar payback period of just 8-9 years!

Home solar is very popular in Texas, and for good reason. On average, Texans pay much more for electricity than their fellow Americans and use more electricity too. Texas also gets a good amount of sunshine. Put the two together and you’ve got a great recipe for solar savings!

How much does solar cost in Texas, though? Online quotes can be terribly misleading for a place like Texas. While such quotes often come in at just $13,800 or so, the reality is that most Texans will pay more to go solar at home.

We dig into why the true cost of solar is higher in Texas and how to lower the cost with state and federal incentives. We also look at how much Texas homeowners could save over the warranty period of most solar arrays and the solar payback period for a variety of scenarios.

The cost of home solar in Texas

The State of Texas doesn’t offer data on solar installations itself but does provide this information to the Lawrence Berkeley National Laboratory (LBNL). We use this and other sources* to work out the true cost of solar in Texas.

We also offer a predicted cost of solar in Texas. For 2023, we expect Texans will pay around $3.86 per Watt. For a 9.19 kW system, this amounts to $35,502 to go solar in Texas. As you can see below, this figure is much higher than the $13,800 figure homeowners are likely to see on quote marketplaces.

Aside from a significant difference in average cost per Watt, the other main factor making the true cost of solar higher in Texas than a quick internet search would suggest is the size of the arrays being installed.

How big a solar array do you need in Texas?

Texans use quite a bit more electricity than average in the U.S., amounting to about 1,176 kWh per month per household, according to the Energy Information Administration (EIA). This works out to around 14,112 kWh annually, which is on a par with Florida and higher than the national average of around 11,000 kWh.

To work out how big an array a Texas homeowner would need to produce around 14,112 kWh annually, we used the SunWatts calculator. This tool is based on PV Watts data from the National Renewable Energy Laboratory. After running the numbers, we estimate that the average Texan household will need to install a 9.19 kW array to meet 100 percent of household electricity needs.

The LBNL data from 2021 shows us that the average size of interconnected home solar in Texas was 8.47 kW. This figure is significantly larger than the 5 kW models used by most online solar quote marketplaces. Right away, then, we have a reason why the real cost of solar in Texas seems so much higher than online quotes would suggest.

Which Texas solar installers offer value for money?

The LBNL dataset is a wealth of information. This includes granular information on the busiest solar installation companies in Texas. Digging into the data shows us which brands of solar panels different installers favor and the average cost of these installations.

Popular Texas solar installers

Texas is a popular spot for home solar! There were more than 4,100 home solar energy systems interconnected in 2021, and another 500 or so interconnected in January 2022 alone.

Here’s a quick breakdown of the 20 most popular solar installers in 2021 in Texas:

Note that most of these installers are local outfits working solely in Texas. There are also a few national installers in the top 10, including Freedom Solar Power and Momentum Solar. Unlike in many other states, Tesla and Sunrun (both national installers) don’t make the top 10, though there are still in the top 20, along with one of our recommended installers for Austin, TX, American Sentry Solar.

Top 10 Texas solar installers by cost

Breaking things down by cost, Tesla shoots to the top of the pile for Texas solar. This installer has a much lower cost per Watt by far at just $2.66 per Watt, for an overall average cost of $25,813. The average system size installed by Tesla is also spot on for our estimate of how big an array the average Texas household needs to cover 100 percent of electricity needs.

The cost of solar and panel choice in Texas

Note that while Freedom Solar Power doesn’t make the top 10 for low-cost solar in Texas, this is very likely because of the panels this company installs. Freedom Solar Power is the only company that installed Sunpower panels in Texas in 2021, according to the LBNL data. These panels are the most efficient available, which may be why the cost per Watt for Freedom Solar Power installations was $4.01.

The average size of solar installation with Sunpower panels was just 8.24 kW, however. This is lower than the overall average for the state. That results in an average cost of $33,055 for Freedom Solar Power installations in 2021, which is also lower than the overall average for Texas solar installations.

On the other end of the spectrum, Cam Solar exclusively installed Hanwha Q Cells with its 2021 installations. Tesla also mostly installed Hanwha Q Cells and its own panels. Hanwha Q Cells are less efficient than Sunpower panels but still offer great value for money, with a good warranty and low degradation rate.

A closer look at another low-cost solar provider in Texas, Advanced Solar & Electric, suggests a different story. This company mostly installed Boviet Solar panels in 2021. These panels are much cheaper than Sunpower panels and less efficient (19-20% versus 22.8% for Sunpower). They are, however, made in San Jose, TX, meaning some homeowners will be able to claim bigger rebates with Boviet panels. The biggest drawback with Boviet panels, thouhg, is that they degrade faster than Sunpower, Hanwha Q Cells, and many other panels. This means homeowners can expect Boviet systems to produce less electricity than equivalent systems over their lifespan.

Sunpro appears on both of our lists, offering a high volume of low-cost installations. It also offers a good marriage of cost and efficiency, using mainly LG solar panels which are well-regarded and on our recommended list.

The takeaway:

Don’t just pick a solar installer based on cost per Watt. Lower costs may mean less efficient arrays, faster degradation, and lower savings long-term.

Higher costs upfront often provide a greater return on investment for homeowners.

Lowering the cost of solar in Texas – tax credits, incentives, and tax exemptions

Texas utilities are pretty generous about rebates for homeowners going solar. Most major utilities in the state offer $2,000-$3,000 in rebates for systems of around 9 kW in size. Some offer additional incentives for homeowners who install locally made solar panels.

Texas homeowners can also sign up for net metering to help offset some utility costs and enjoy a property tax exemption for home solar. Eligible homeowners can also claim the federal solar tax credit against personal income tax, which offers 30% off the system cost (including batteries).

Even without utility rebates, then, some homeowners who install a system for $35,000 could claim back $10,500 on taxes paid. This would lower the net cost of solar in Texas to less than $25,000.

Find out more about Texas solar incentives.

How much does electricity cost in Texas?

The Energy Information Administration cites an average cost of 14.82 cents per kilowatt hour for residential electricity in Texas in November 2022. This is up about 10 percent from an average of 12.28 cents per kWh earlier in 2022.

Assuming a homeowner uses 14,112 kWh of electricity a year (the state average), they might expect to pay an annual electric utility bill of $2,091.

How much a homeowner actually pays will depend on their individual tariff, when they use electricity (time of day and time of the year), and how much they use. With hot and humid summers, Texans may enjoy lower energy bills if they live in a well-insulated home that doesn’t require a lot of air-conditioning to stay cool.

For homeowners with leakier homes, carrying out energy efficiency upgrades before installing solar is a wise move. This might include adding insulation and switching baseboard heating to a heat pump that uses electricity much more efficiently. That way, a smaller rooftop solar array can more easily meet the household’s energy needs. Several solar installers, including one of our recommended national installers, Elevation Solar, specialize in home energy audits and efficiency upgrades prior to installing solar.

How much could you save by going solar in Texas?

Assuming an annual electricity bill of around $2,000, Texas homeowners who go solar could save around $50,000 in electricity costs over the 25-year warranty period of their solar panels. This is without factoring in inflation, however.

For a homeowner who sizes their array to meet 100% of household electricity needs, assuming a 2.4% rate of inflation (the historic average for the U.S.), savings could look more like:

• $10,971 over 5 years
• $23,324 over 10 years
• $37,231 over 15 years
• $73,398 over 25 years.

As of February 2023, however, the U.S. inflation rate is 6.5%. It’s unlikely this will stick around for the full 25-year warranty of most solar panels, but if it did, homeowners could see savings more in line with the following:

• $11,908 over five years
• $28,222 over 10 years
• $50,575 over 15 years
• $120,522 over 25 years.

For many homeowners, the thought of spending more than $120,500 on electricity in the next 25 years is enough motivation alone to install rooftop solar. And these kinds of numbers also help homeowners realize that the initial cost of going solar can be quickly paid back in savings on utility bills.

Is solar worth it in Texas?

Thanks to high electricity use and costs in Texas, homeowners here can expect a shorter payback period. This is the time in which the utility bill savings provided by a rooftop array balance out the upfront cost of installing the array.

Note that while a smaller array may cost less initially, it may have a similar or even longer payback period to a larger array. This is because a larger array can help offset more of a household’s electricity use and help protect homeowners against rising electricity prices each year. A bigger array typically has a greater return on investment than a smaller array that only partially meets a household’s energy needs.

Here are a few examples of possible solar payback periods for Texas. We look at different array sizes, inflation rates, and eligibility for the federal solar tax credit and other solar incentices in Texas.

Assuming a 2.4% inflation rate, a small array and average energy use and costs

Gross cost of a 5 kW solar array = $3.86/Watt x 5,000 = $19,300

Utility rebate (average): $2,000

Subtotal: $17,300

Federal tax credit of 30% = $5,190

Net cost of solar = $12,110

Cost of electricity = $0.1482 per kWh

Average electricity use= 14,112 kWh per year

Estimated cost of electricity for first 10 years = $23,324

Ten-year savings (assuming array meets 54% of electricity needs) = $12,595

Solar payback period = Just under 10 years.

Assuming a 6.5% increase in electricity costs each year and average electricity use

Gross cost of a 5 kW solar array = $3.86/Watt x 5,000 = $19,300

Utility rebate (average): $2,000

Subtotal: $17,300

Federal tax credit of 30% = $5,190

Net cost of solar = $12,110

Cost of electricity = $0.1482 per kWh

Average electricity use= 14,112 kWh per year

Estimated cost of electricity for first 8 years = $21,075

Eight-year savings (assuming array meets 54% of electricity needs) = $11,380

Solar payback period = Just over 8 years.

Assuming a 2.4% inflation rate and average energy use and costs but a larger array

Gross cost of a 9.19 kW solar array = $3.68/Watt x 9,190 kW = $35,473

Utility rebate (average): $2,500

Subtotal: $32,973

Federal tax credit of 30% = $9,892

Net cost of solar = $23,081

Cost of electricity = $0.1482 per kWh

Average electricity use= 14,112 kWh per year

Estimated cost of electricity for first 10 years = $23,324

Ten-year savings (assuming array meets 100% of electricity needs) = $23,324

Solar payback period = just under 10 years.

Assuming a 6.5% inflation rate and average energy use and costs but a larger array

Gross cost of a 9.19 kW solar array = $3.68/Watt x 9,190 kW = $35,473

Utility rebate (average): $2,500

Subtotal: $32,973

Federal tax credit of 30% = $9,892

Net cost of solar = $23,081

Cost of electricity = $0.1482 per kWh

Average electricity use= 14,112 kWh per year

Estimated cost of electricity for first 9 years = $24,536

Nine-year savings (assuming array meets 100% of electricity needs) = $24,536

Solar payback period = 8-9 years.

Assuming a 2.4% inflation rate, average energy use and costs, a larger array, but no rebates or tax credits

Gross cost of a 9.19 kW solar array = $3.68/Watt x 9,190 kW = $35,473

Net cost of solar = $35,473

Cost of electricity = $0.1482 per kWh

Average electricity use= 14,112 kWh per year

Estimated cost of electricity for first 14 years = $34,316

Fourteen-year savings (assuming array meets 100% of electricity needs) = $34,316

Solar payback period = 14-15 years.

Assuming a 6.5% inflation rate and average energy use and costs but a larger array

Gross cost of a 9.19 kW solar array = $3.68/Watt x 9,190 kW = $35,473

Net cost of solar = $35,473

Cost of electricity = $0.1482 per kWh

Average electricity use= 14,112 kWh per year

Estimated cost of electricity for first 12 years = $36,329

Twelve-year savings (assuming array meets 100% of electricity needs) = $36,329

Solar payback period = 11-12 years.

The solar payback period for Texas is very similar to that of Florida, with most homeowners looking at balancing the upfront cost of solar with utility bill savings in around 8-10 years. Homeowners who don’t qualify for rebates and the federal tax credit can still expect to pay back the cost of a solar array, big or small, in 11-15 years, depending on inflation.

All in all, Texans who go solar in 2023 are set to enjoy at least a decade of truly free electricity generated right on their rooftop within the warranty period of most solar panels. Remember, too, that solar panels continue to produce electricity at nearly full capacity for many years after the warranty expires, meaning even greater savings and protection against utility price hikes long-term.

Final thoughts on the cost of going solar in Texas

Texas may be the land of big oil, producing more oil than any other state in America, but it’s also a great place to go solar. There’s plenty of sun, a plethora of qualified and experienced solar installers here, and some great state incentives for home solar.

By our calculations the true cost of solar in Texas is quite a bit higher than homeowners might expect based on solar quotes online. Even with a $35,000 price tag for a full-sized array, though, the solar payback period here could be as short as eight years, depending on eligibility for rebates and the federal solar tax credit.

Given the recent price hikes by utilities in Texas, homeowners here stand to save a lot of money by installing solar. The cost of electricity is already high in the Lonestar State and rises year on year. Running the numbers suggests that some homeowners could expect to save well over $120,000 over the warranty period of their solar panels.

Savings are only one benefit of rooftop solar, though. Going solar in Texas could also protect homeowners against blackouts, which are increasingly common in Texas. This depends on the kind of system installed, though, and should be discussed with a properly trained (NABCEP certified) solar installer.

To get started, check out our top picks for solar installers in San Antonio, Austin, and Dallas-Fort Worth.

*A note on data sources:

We use the LBNL’s Tracking the Sun report for 2021 to calculate the likely cost of home solar in Texas, rather than relying on online solar quote marketplaces. As we’ve seen in other parts of the country, these marketplaces tend to vastly underestimate the cost of solar.

For our predicted cost of solar in 2023, we create a weighted average from a variety of data sources. We rely mostly on data from the more than 4,000 recorded installations in 2021, but also factor in the cost of the first few hundred installations in 2022, provided by LBNL, and prices per online marketplaces.

Finally, we also factor in the National Renewable Energy Laboratory (NREL) forecasts for the price of solar in 2023 and. The NREL gives a figure of $2.95 per Watt (DC) as the modeled market price (MMP) for the U.S. as a whole in 2022. This has worked out to be significantly lower than the cost of real-life installations in other states in the U.S., however, despite being higher than most online solar quotes.