Is Solar Worth It in Texas? The Real Math for 2026

Texas gets excellent sun. The state also has relatively cheap electricity at $0.13/kWh (EIA, 2025), no state solar tax credit, and no statewide net metering mandate. That combination means solar can work well in Texas, but the math is more nuanced than in high-rate states like California.

Here’s what the numbers actually look like.

What Texans pay for electricity

The statewide average residential rate is $0.13/kWh (EIA State Electricity Profiles, 2025). That’s below the national average of about $0.16/kWh.

But Texas has a deregulated electricity market for most of the state. If you’re in the ERCOT service area (roughly 85% of Texas), you choose your retail electricity provider and plan. Rates vary widely: some fixed-rate plans run $0.10–$0.11/kWh, while variable plans can spike to $0.20+/kWh during summer demand peaks. Oncor, CenterPoint, and AEP Texas are the major transmission and distribution utilities, but your retail provider sets your actual rate.

Areas outside ERCOT (parts of East Texas served by Entergy, and El Paso served by El Paso Electric) have regulated rates and less consumer choice.

The average Texas household uses about 1,100 kWh per month, nearly double the national average, driven by air conditioning during the state’s long, hot summers. At $0.13/kWh, that’s roughly $1,716 per year in electricity costs.

Texas solar resource

Texas averages 1,825 peak sun hours per year (NREL PVWatts). That puts it in the top tier nationally, comparable to Colorado and Kansas.

Western Texas (El Paso, Midland, Lubbock) gets the most sun, often exceeding 2,000 peak hours. Central Texas (Austin, San Antonio) averages around 1,800. The Dallas–Fort Worth area sees slightly less, around 1,700. Houston and the Gulf Coast get the least, dropping closer to 1,600 peak hours due to humidity and cloud cover.

A typical 8 kW system in Central Texas produces roughly 11,700 kWh per year. In Houston, that drops to around 10,200 kWh.

Available incentives

Federal Investment Tax Credit (ITC): 30% of total system cost. On a $22,000 system, that’s $6,600 off your federal tax bill. Dollar-for-dollar credit, not a deduction. You need sufficient federal tax liability to claim it.

State incentives: Texas has no state solar tax credit, rebate, or performance-based incentive (DSIRE, 2025). The federal credit is the only major incentive available statewide.

Property tax exemption: Texas Property Tax Code Section 11.27 exempts 100% of the appraised value added by a solar energy device from property taxes. This is significant in Texas, where property tax rates average 1.6–1.8% of assessed value.

Sales tax exemption: Solar energy devices are exempt from Texas state and local sales tax.

Local utility rebates: Some municipal utilities and co-ops offer their own incentive programs. Austin Energy, CPS Energy (San Antonio), and a handful of co-ops have offered rebates historically, but programs change frequently. Check your specific utility.

The net metering gap

This is where Texas solar economics get complicated. Texas has no statewide net metering law. There is no state mandate requiring utilities or retail providers to credit you for excess solar generation at any specific rate.

What happens to your excess solar depends entirely on your electricity provider and plan:

Municipal utilities like Austin Energy and CPS Energy offer their own buyback programs. Austin Energy’s Value of Solar rate was approximately $0.097/kWh in recent years, below the retail rate but higher than wholesale.

REPs (Retail Electricity Providers) in the deregulated market handle it differently. Some offer solar buyback plans that credit excess generation at close to retail. Others credit at wholesale or avoided-cost rates ($0.02–$0.05/kWh), which are dramatically below what you pay to buy electricity. A few offer no buyback at all.

The practical impact: If your provider credits exported solar at $0.03/kWh and you’re buying at $0.13/kWh, every kilowatt-hour you export is worth 77% less than one you use yourself. This makes self-consumption the priority. Size your system to match your daytime usage rather than your total usage. A battery helps but adds significant cost.

Before signing with a solar installer, know exactly what your electricity provider pays for exported power. This single number changes the payback calculation by years.

Realistic payback period

Let’s run two scenarios for Texas: one with a favorable buyback plan, one with wholesale-rate exports.

Base assumptions: 8 kW system, $22,000 gross cost, $15,400 net after 30% ITC, 1,825 peak sun hours, $0.13/kWh retail rate, 11,700 kWh annual production.

That 2.8-year gap comes entirely from the net metering terms. The difference compounds over the system’s lifetime: roughly $7,200 in total value over 25 years.

With electricity rates rising at 2–3% annually, both scenarios improve over time. But even in the best case, Texas payback periods are longer than high-rate states like California or Massachusetts.

Financing options

Cash purchase: Best total ROI. Avoids interest entirely. With an 11–13 year payback on a 25–30 year system, the lifetime return is still strong.

Solar loan: Available at 4–7% APR over 10–25 years. At Texas rates, monthly loan payments on a $15,400 loan will typically exceed your electricity savings for the first several years. This is important to understand: you won’t see positive monthly cash flow until rates rise enough or the loan balance drops enough. A 10-year loan at 5% runs about $163/month against $90–$115/month in average savings.

HELOC: Usually lower rates than dedicated solar loans. Can make sense if you have significant home equity and want a shorter payoff period.

Lease/PPA: Available in Texas but less common than in California. The savings margin is thinner because electricity rates are lower to begin with. Make sure the PPA rate is meaningfully below your current retail rate, and escalator clauses don’t push it above retail within a few years.

The honest verdict

Solar in Texas is a longer-term play than in high-rate states. The math works, but it takes patience. You’re looking at 11–14 year payback periods in most cases, compared to 7–9 in California. The system still produces for 25–30 years, so the lifetime return is positive. But the upfront investment takes longer to recoup.

The two biggest variables that determine whether Texas solar is a good deal for you: your actual electricity rate (not the state average, your specific plan rate) and what your provider pays for exported solar.

The property tax exemption is an underappreciated benefit. In a state with 1.6–1.8% property tax rates and no state income tax, avoiding property tax on $15,000–$20,000 of added home value saves $240–$360/year indefinitely. That alone shaves roughly a year off the payback period.

FAQ

How much does solar cost in Texas in 2026?

A typical residential system (7–9 kW) costs $19,000–$25,000 before the 30% federal tax credit. After the credit, expect $13,300–$17,500 net. Texas installation costs are near or slightly below the national average, with competitive installer pricing driven by the state’s large market.

Does Texas have a state solar tax credit?

No. Texas has no state-level solar tax credit, rebate, or performance-based incentive (DSIRE, 2025). The federal 30% ITC is the only major financial incentive. However, Texas does offer property tax and sales tax exemptions for solar systems, which provide real ongoing value.

Does Texas have net metering?

There is no statewide net metering mandate. What your utility or retail provider pays for excess solar varies enormously, from near-retail buyback rates to wholesale rates as low as $0.02–$0.03/kWh. Some providers offer no buyback at all. This is the single most important variable to research before going solar in Texas.

Is solar worth it with cheap Texas electricity?

It depends on how cheap. At the state average of $0.13/kWh, solar typically pays back in 11–14 years on a system that lasts 25–30. If your actual rate is $0.10/kWh or below, the payback stretches past 15 years and the financial case weakens. If you’re paying $0.15+/kWh (common on variable or renewable plans), the math tightens to 9–12 years.

Should I add a battery with solar in Texas?

A battery makes the most sense if your provider offers poor export rates. Storing solar production for evening use avoids the loss of exporting at $0.03/kWh and buying back at $0.13/kWh. But batteries add $8,000–$14,000 to system cost (no Texas state battery incentive exists). At current prices, a battery improves total savings only if the export/retail rate gap is large. Batteries also provide backup power during grid outages, which has real value in Texas given ERCOT reliability concerns.