- Texas has no statewide net metering. In deregulated areas your retail electric provider sets the solar buyback rate, and city utilities like Austin Energy and CPS Energy run their own credit programs (DSIRE Texas).
- Texas residential power runs about 16.4 cents per kWh, near the national average, but very high summer air-conditioning use makes annual bills large (EIA Electric Power Monthly, Table 5.6.A, as of May 2026).
- A solar system’s added home value is 100% exempt from property tax under Tax Code Section 11.27, and Texas has no state income tax (Texas Comptroller).
- The 30% federal homeowner credit (Section 25D) ended for expenditures made after December 31, 2025 (IRS).
Texas is the second-largest solar market in the country, and rooftop solar here works differently than in most states. There is no statewide net metering, so what you get paid for the power you send back to the grid depends entirely on your utility or your retail electric provider. This page is straight about what solar costs in Texas in 2026, how the buyback actually works in a deregulated market, the incentives that are real, and how to tell if your home is a good fit.
What solar costs in Texas in 2026
Texas rates are near the national average, but Texas bills are not, because the air conditioner runs half the year. Residential power runs about 16.4 cents per kWh (EIA Electric Power Monthly, Table 5.6.A, as of May 2026), a bit below the national average of about 18.4 cents. What makes solar pay here is volume: long, hot summers push central-Texas and Gulf-Coast homes to some of the highest annual kilowatt-hour use in the country, and every kWh your roof makes offsets a grid kWh you would otherwise buy. Texas also has abundant sun, which lifts production. For how residential rates have moved and what to watch in the year ahead, see our Texas electricity rates in 2026 guide.
According to MySolarFY’s analysis (August 2026), a typical 8 kW rooftop system in Houston produces about 11,300 kWh a year, enough to offset roughly $1,860 of grid power at the state’s average residential rate. That figure blends NREL’s PVWatts production model with the current EIA rate; your own output depends on your roof’s pitch, orientation, and shading, and how much of that power you use on-site versus export. See how we calculate these figures.
For the full cost-per-watt and payback breakdown by system size, see our Texas solar cost and payback guide. For the full data set behind these figures, see our Texas solar data and statistics.
| The number | What it is | Source |
|---|---|---|
| About 16.4 cents per kWh | Texas residential electricity rate | EIA, May 2026 |
| About 11,300 kWh per year | Estimated output of an 8 kW Houston system | NREL PVWatts |
| 100% property-tax exempt | Added home value from solar, under Tax Code 11.27 | Texas Comptroller |
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How solar buyback works in deregulated Texas
Most of Texas is deregulated, so the company that sets your solar buyback is your retail electric provider, not the state and not the wires company. In the deregulated ERCOT market, three roles are split apart. A transmission and distribution utility (a TDU) owns the poles and wires and delivers power, but does not sell it. A retail electric provider (a REP) sells you the electricity plan and decides whether, and how much, it pays for the solar you export. There is no statewide 1-to-1 net metering rule requiring any of them to credit exports at retail (DSIRE Texas).
The practical result is that a Texas solar buyback plan is a contract feature you shop for, like a rate. Some REPs offer plans that credit exported kWh at or near the retail rate, others credit at a lower wholesale-style rate, and the terms can change when you renew. Because the buyback is not guaranteed at retail, the smart design in Texas leans on using your own solar as you make it rather than banking on generous export credits. For the mechanics of how export crediting works in general, see our guide on how net metering credits your solar exports. Your delivery utility also shapes interconnection timelines and fees, so it helps to read the guide for your wires company: see our CenterPoint solar guide for the Houston area and our AEP Texas solar guide for the Gulf Coast and South Texas.
| Who | Role | Sets your solar buyback? |
|---|---|---|
| TDU (Oncor, CenterPoint, AEP Texas, TNMP) | Owns the poles and wires; delivers power and interconnects your system | No |
| Retail electric provider (REP) | Sells your electricity plan; you can switch providers | Yes, through a solar buyback plan you choose |
| Municipal utility or co-op | Serves non-deregulated cities (Austin, San Antonio, El Paso and others) | Yes, under its own local net-metering or value-of-solar rules |
Texas solar incentives in 2026
Texas does not run a statewide solar rebate or a state tax credit, so the incentives here are mostly about what you do not pay. Here is what is real in 2026.
| Incentive | What it does | 2026 status | Source |
|---|---|---|---|
| Property-tax exemption | Excludes the solar system’s added value from your appraisal, under Tax Code 11.27 | Active; apply with your appraisal district (Form 50-123) | Texas Comptroller |
| No state income tax | Texas levies no personal income tax, so no state return interacts with solar | Ongoing | Texas Comptroller |
| Local utility buyback | A credit for exported solar set by your REP or municipal utility | Varies by provider; verify the current plan before you sign | DSIRE Texas |
| Federal residential (Section 25D) | A 30% homeowner credit | Ended for expenditures made after December 31, 2025 | IRS |
Heads up on the federal credit. The 30% federal Residential Clean Energy Credit (Section 25D) ended for expenditures made after December 31, 2025, so a Texas homeowner buying solar in 2026 with cash or a loan cannot claim it (IRS). A separate business credit (Section 48E) can apply to third-party-owned lease and PPA systems, but the company that owns the system claims it, not you. Ignore any 2026 Texas quote that still promises you a personal 30% federal check, and ask a tax professional about your own situation. See our guide to what the federal solar tax credit change means in 2026.
Municipal utilities versus retail providers: the Texas split
Not all of Texas is deregulated, and the cities that are not run their own solar rules. If you are served by a municipal utility or an electric co-op, you cannot shop retail providers, but your utility usually publishes a set solar policy. Three of the big municipal utilities show how different these can be.
- Austin Energy uses a Value of Solar tariff instead of classic net metering. It meters all of your solar production and credits it at the Value of Solar rate, currently 9.91 cents per kWh, while you buy back grid power at the regular retail rate (Austin Energy). See our full Austin solar guide for the rebate, permitting, and payback.
- CPS Energy in San Antonio credits residential solar customers under its own local rules rather than a statewide mandate, and its rebate funding has shifted toward small business, schools, and non-profits, so confirm the current residential terms before you count on a rebate (CPS Energy).
- El Paso Electric offers a solar export arrangement for residential customers, but the exact credit and eligibility are utility-specific, so verify the current tariff on the utility’s rate sheet before you size a system (El Paso Electric).
The takeaway: your city decides a lot. Before you sign anything, confirm exactly how your specific utility or retail provider credits exported solar in 2026, because the same panels pay back differently in Austin, San Antonio, Dallas, and Houston.
Solar pays back a little differently from one Texas metro to the next, so it helps to read a guide for your own area. See our guides to Plano solar, Garland solar, Irving solar, and Arlington solar in the Dallas-Fort Worth area, Corpus Christi solar on the Gulf Coast, Laredo solar on the South Texas border, and Lubbock solar and Amarillo solar in West Texas and the Panhandle.
ERCOT, grid reliability, and why batteries matter in Texas
Texas runs its own grid, and that is part of the solar-plus-battery case. Most of the state is on the ERCOT grid, which is largely isolated from the rest of the country (ERCOT). Homeowners remember the 2021 winter outages, and hot-summer grid strain is a regular headline. A home battery paired with solar does two things here: it lets you store cheap midday solar to use during expensive evening peaks, and it can keep essential circuits running during an outage. Because Texas buyback plans often pay less than retail for exports, using your own stored solar at night can be worth more than exporting it, which is why battery attachment rates in Texas are high. Batteries add cost, so weigh the backup value and your provider’s plan before adding one. For battery sizing, costs, and how storage changes payback here, see our Texas solar batteries guide.
Is solar worth it in Texas?
For many Texas homes, yes, but it hinges on your utility and how you use the power, not on a state incentive. The case is strongest where summer bills are high, the roof gets good sun, and either your municipal utility credits solar fairly or you can pick a retail provider with a solid buyback plan. It is weaker if your buyback is near-zero and you export a lot of midday power you are not there to use. Sizing the system to your own daytime and battery-stored use, rather than oversizing to chase export credits, is what makes the math work here. If the up-front price is the hurdle, some Texas homeowners qualify for no-up-front-cost solar through lease or PPA financing, though those run 20 to 25 years and carry terms worth reading closely before you sign.
A good Texas installer should carry proper licensing and pull the required local electrical and building permits, put a clear workmanship and equipment warranty in writing, handle your interconnection paperwork with the TDU or municipal utility, and give you a written production estimate and a transparent quote you can compare. For a checklist, see the right questions to ask a solar installer. It also helps to compare Texas against other big sunny markets like California solar, and to browse other states on our solar by state hub.
Check which solar buyback plans and installers serve your Texas address
Frequently asked questions
Does Texas have net metering?
No, Texas has no statewide net metering. In the deregulated ERCOT market, each retail electric provider decides its own solar buyback plan, so credits for exported power range from near wholesale value to near retail depending on the plan you choose (DSIRE Texas). Some municipal utilities, like Austin Energy with its Value of Solar tariff and CPS Energy in San Antonio, run their own local crediting programs instead. So whether you get anything close to 1-to-1 credit depends entirely on your utility or provider, not on a state rule.
How does solar buyback work in deregulated Texas?
In deregulated areas, your transmission and distribution utility, such as Oncor or CenterPoint, delivers power but does not set your solar credit. For a Houston-specific look at CenterPoint delivery, City of Houston permitting, and how buyback replaces net metering, see our Houston solar guide. For a Dallas-specific look at Oncor delivery, City of Dallas permitting, and retail-provider buyback, see our Dallas solar guide. For a Fort Worth look at Oncor delivery, Accela city permitting, and the electric-cooperative pockets on the city edges, see our Fort Worth solar guide. El Paso is the exception in Texas: it sits outside ERCOT on the regulated El Paso Electric grid, which still offers real utility net metering, so see our El Paso solar guide. Your retail electric provider does, through a solar buyback plan you sign up for. Some plans credit exported kWh at or near the retail rate, others at a lower wholesale-style rate, and terms can change at renewal. Because the buyback is not a guaranteed 1-to-1 credit, the best strategy in Texas is to use as much of your own solar as you make it, often with a battery, rather than relying on generous export payments.
What solar incentives does Texas offer in 2026?
Texas has no statewide solar rebate or state tax credit, but it does exempt the added home value from a solar system from property tax under Tax Code Section 11.27, and it has no state income tax (Texas Comptroller). You apply for the property-tax exemption with your local appraisal district using Form 50-123. Some cities and utilities offer their own solar buyback or rebate programs. For the full 2026 breakdown of the property-tax exemption, municipal utility programs in Austin and San Antonio, and how solar buyback works in the deregulated market, see our Texas solar incentives 2026 guide. The 30% federal homeowner credit ended for expenditures made after December 31, 2025, so most 2026 Texas homeowners cannot claim it.
What happened to the federal solar tax credit?
The 30% federal Residential Clean Energy Credit (Section 25D) ended for expenditures made after December 31, 2025, under the One Big Beautiful Bill Act (IRS). A Texas homeowner who buys solar in 2026 with cash or a loan cannot claim it. A separate business credit, Section 48E, can apply to leased and PPA systems, but the company that owns the system claims it, not the homeowner. Texas incentives like the property-tax exemption were not affected.
Is solar worth it in Texas?
For many Texas homes it is, because long, hot summers drive high electricity use that solar offsets, and Texas has strong sun. Whether it pays well for you depends on your utility or retail provider’s buyback plan, your roof, and how much solar you use on-site versus export. It works best when you size the system to your own use, often paired with a battery to shift cheap midday solar into expensive evening peaks. Get a written production estimate and compare local quotes before deciding.
Do I need a battery with solar in Texas?
You do not need one, but many Texas homeowners add a battery, and the reasons are specific to this state. Texas buyback plans often pay less than retail for exported power, so storing your own solar to use at night can be worth more than exporting it. A battery also provides backup during ERCOT grid outages, which Texans remember from 2021. Batteries add real cost, so weigh the backup value and your provider’s plan before adding one, and ask installers to quote solar with and without storage.
Reviewed by the MySolarFY team. Figures were verified against the linked Texas (Texas Comptroller, Austin Energy, CPS Energy, El Paso Electric, ERCOT, DSIRE), EIA, NREL, and IRS sources as of August 2026. Utility buyback plans, tariffs, and program terms change, so confirm current terms with each source before you decide. MySolarFY does not provide tax or financial advice; consult a licensed professional about your own situation. Learn more about the MySolarFY team and how we work.
MySolarFY is a free service that matches homeowners with licensed solar installers. We are not an installer, financing company, or government program. “No up-front cost” refers to qualifying lease or PPA financing, where eligible homeowners may have no out-of-pocket cost at installation. Lease and PPA terms typically run 20 to 25 years, may include an annual price escalator, and total payments may exceed the cost of a cash purchase. Homeowners do not get the federal residential credit that ended after December 31, 2025. Solar panels are not free and monthly payments apply. Eligibility, savings, incentives, and rates vary and are not guaranteed. See our full disclaimer.
