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Clear info on home solar power rebates, tax credits, and other benefits

Welcome to the Austin Solar Power Information Page

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Austin is the weird, wild, beating heart of Texas. But it’s not all parties and BBQ and ear-destroying rock shows— the city is also home to many large companies, which means there are lots of young families who own homes and want to do right by their kids.

Well, Austinites, we’re here to tell you that you can do right by your kids both financially and environmentally by going solar. Yes, you can save money and save the planet at the same time. In fact, how does an extra $200 to $1,000 dollars sound this year? That’s the money you’ll be saving on your electric bill with solar. And the best news is: you can probably do it for $0 down! Yes, you read that right.

The reason solar can save you so much money in Austin is because electricity is expensive. Austin Energy has tiered usage rates, meaning the more you use, the more electricity costs—and the more you save with solar! If we owned a home in Austin, here’s how we’d go solar:

Our Solar Strategy for a Home in Austin

As you can see above, paying a whole bunch of money up front to get solar installed on your house makes you the most money over the long term. Those green bars start to rise quickly after 2024, when your system has paid back your initial investment and the profits start piling up!

That said, not everyone has $20,000 lying around, ready to spend. If that’s you, don’t wait; get solar today! If you’re like us and your couch cushions hold about the same amount of money as your bank account, read on!

If we were interested in going solar in Austin, the first thing we’d do would be to get quotes from trusted local installers (obviously). Then, we’d shop around for loans. We’d look at Home-Equity Lines of Credit (HELOCs) and others to find the best rates and terms. These days, you can even get an unsecured loan for solar (meaning you don’t have to put up collateral). Any loan with around 6.5% interest and a 20-year term is good. If you can get one with lower interest, do it!

Here’s the important part: By the end of the first year, we’d put all the money from our federal solar tax credit ($4,350) into the loan, which would shorten our payback time by 8 years and 7 months. This is represented in the chart above by the orange bars.

With the low interest rate on our loan, our payments would be just a little bit more than our energy bill savings—at least for the first several years—but then we’d start making money, and that would continue for the next two decades, ultimately leaving us with thousands and of thousands in profit.

What a beautiful world.

If you don’t plan to stay in your home until the loan is paid off in 10 or 15 years? You can lease solar panels, and still save money!

How the Numbers Work for a 5-kW Solar Loan in Austin

What do all these numbers mean for your finances? Let’s take a look:

  • Installing a typical 5-kW solar system in Austin should start at about $20,000. Don’t worry – that’s going to drop quite a bit.
  • Austin Energy offers rebates of $1,100 per kilowatt. Your 5-kW installation will get you $5,500 back in a quickness, reducing your first-year cost to just 14,500.
  • Your loan from the bank should be for this amount. The payments on a $14,500 loan with 6.5% interest over 20 years will be a little more than $108 per month, but you’ll be saving $71 per month on electricity. Essentially, you’ll pay $37 per month for the privilege of one day owning those panels.
  • Here’s that important part again: The Feds will give you a 30% tax credit on the $14,500 cost of your system. Pay the loan down by that amount! You can take the credit over two years if you don’t owe $4,350 in taxes this year.
  • With a conservative estimate of 3.5% per year for the future rise of electricity prices, you’ll start making an annual profit on your solar panels in year 12. And every year after for the 25-year life of your system.
  • Your total profit in 25 years will be over $18,000! The rate of return on your investment will be 10.73% That’s better than investing in an S&P 500 index fund.
  • And don’t forget .. your home’s value just increased by more than $17,000 (your expected annual electricity savings over 20 years) and you won’t pay taxes on any of it!
  • What’s that? Money green isn’t enough for you? Us either! The fossil-fuel produced electricity you’re not buying from Austin Energy is the same as planting 113 trees this year (and every year for the next 25 or so)!

Remember: these figures are estimates. Your home is unique, and how much money solar will save you depends on that uniqueness. Thankfully, we know some experts in Austin. Just sign up for personalized savings estimates and one of them will be more than happy to go over all those details and help you craft a plan to get the maximum savings from a solar power system in your home. Your quote is 100% free, so go ahead and shop around… grab two or three, or five, and compare all your possible options.

Solar Leases in Austin

So you don’t have a lot of money for solar, and you might not be living in the same home in five or ten years. Sounds like you lead a pretty exciting life! Leases can be a great way to get solar now, and not worry about loan payments and debt. Keep in mind, you don’t really have any skin in the game, which means no tax credit and no rebates. Still, you’ll save thousands on your electric bill over the life of the lease. Check it out:

When you choose an installer in Austin, you’ll probably have the option of leasing your solar panels. It’s a great way to put $0 down and save money with solar starting right away. All you have to do is put your John Hancock on a lease agreement, make a monthly payment for the panels on your house, and your electricity bill is reduced by more than the cost of the lease. It sounds almost too good to be true, and you may be wondering if a solar lease is a good deal…

If you can sign a long-term agreement with a low monthly payment, it is! As an example, a 25-year lease of a 5-kW system with a starting monthly payment of $60 ($720/year) will save you $831 on electricity this year, a net savings of $111, just for saying “yes” to solar! And as the price of electricity goes up, you’ll save more and more every year until the end, because your costs stay low! By the end of the 25-year lease, you’ll have saved almost $7,800, all without putting down a dime!

Austin Energy’s Tiered Rates Mean Big Savings

Electricity from Austin Energy starts at “average” and goes up to “insane” depending on how much you use. Austin’s tiered rates are designed to penalize the highest home energy users by charging much more for usage above a certain amount. Good news though: your rooftop solar system will be feeding energy back onto the grid, and bringing your bill down into the lower tier. The more they charge, the more you’ll save.

Each tier represents 500 kilowatt-hours (kWh) of monthly usage. Tier 1 is actually pretty cheap. All in, electricity in Tier 1 costs about 8 cents/kWh. One you get to Tier 2, though, it goes way up to 12 cents/kWh. Tiers 3, 4, and 5 are 14, 15, and 16 cents/kWh, respectively. An average home in Austin uses about 1,500 kWh in a month, pushing the boundaries of tier 4 pricing. Let’s take a look at an example of how solar saves money for an average homeowner with a leased 5-kW system:

Average Electricity Use Case for Austin

As you can see, the lease cost is just a little bit lower than the cost of the electricity produced by the system. That means you can get panels on your house for $0 down, and save money on your electric bill every month. Who wouldn’t want that?

But what if you use more electricity? Some larger homes require lots of electricity to run air conditioning, heat (during the winter), TVs, computers, and everything else. Austin Energy charges more for that high-tier usage, which means the same 5-kW system will save you more money on a larger house, but the payments stay the same. Here’s how that looks:

High Electricity Use Case for Austin

That Tier 5 electricity is really expensive, but the solar system kicks out about 520 kWh per month—kWh you would have bought from the utility company. Your lease payment is small in comparison, and you walk away with enough money for a couple extra dates with your spouse. Including money for the cab ride home.

Maybe it’s time for you to get free quotes from installers in your area to get the solar party started!

Additional Information about solar in Austin

Austin Energy Rebates

Austin Energy is a bit of an anomaly in Texas in that it offers a really sweet rebate of $1,100/kW for your solar panels! For our example 5-kW system, you’ll be getting a cool $5,500 back in rebates. That’s more than 25% off the cost of a new system. Wow!

Property Tax Exemptions for Solar in Austin

The state of Texas exempts solar installations from property tax. That’s great news, since the value of your home will go up by several thousand dollars when you add solar panels—if you reduce your electricity bill by about $1,000 per year, you can estimate that you’ve increased the value of your home by $20,000. All of that new value won’t be taxed.

Solar Loans in Austin

Many banks and credit unions now offer loans for installing solar. It can be a great way to get solar with very little money down, but make sure you’re getting a good interest rate! The thing about a loan for the whole cost of your system is that the initial payments are probably going to be higher than the electricity savings, for a few years. Utility companies raise rates by about 3.5% per year, but your loan payment stays the same, meaning you’ve got a built-in protection against cost increases.

Let’s say you agree to pay your system off over 20 years at 6.5%—you’ll end up paying more than your current energy bill for about 9 years, but you’ll still end up saving about $7,200 over the 25-year life of your system.

But! If you pay the loan down early with your big federal tax credit at the end of year one, you’ll actually come out ahead of the lease and do pretty well compared to the cash purchase option. You’ll still pay slightly more than your current energy bill for 9 years, and after that, it’s all profit, baby! More than 18,000 smackeroos!

If you can get a lower interest rate, it becomes an even better deal. Anything under 4% will get you close to making the same profit as the people who buy outright, all without spending a cent up front. Take another look at how the different payment options stack up visually in the chart again:

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2 thoughts on “Welcome to the Austin Solar Power Information Page

  1. Randy says:

    Does that mean that regardless of your tier usage you will only receive .80/kW?

  2. Matt says:

    Austin Energy incentive is currently at .80/watt. They have a goal of 55% renewable energy on the grid by 2025. Leases are not allowed in AE territory

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