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If Chicago is the City of Big Shoulders, then Dallas is the City of Big Everything Else. Big hats, big belt buckles, big steaks, and tall buildings are the rule in Dallas. That bigness extends to places we’d like it not to, as well, like energy bills. From April to October, you need a lot of air conditioning to stay sane in D-Town, and that means lots of hard-earned money spent on electricity.
But there’s another thing Dallas has in abundance: sunshine. Lots and lots of it. We’d all like it to go away sometimes, when the temperature is over 100 and not even a double scoop from Carnival Barkers eaten in the shade will cool a person off. But the fact is, that sunlight is actually energy—energy you can harness with solar panels on your roof, which will help to eliminate all those hefty electricity bills and have you feeling like a smart consumer.
Important numbers for solar on the average Dallas home
Average System Size
Cost after incentives
Years to payback
Savings after 25 years
The system outlined above can eliminate your power bill for years to come, and provide you with 25 or 30 years of clean power and energy bill savings. You’ll save $26,500 over the lifespan of the panels.
Those numbers look pretty good, and they can get even better depending on your installer and increases in the cost of electricity. Keep in mind, those numbers are for an average home in Dallas, and many factors determine how much you could save. If you’re looking for a custom estimate for your home, connect with our solar experts in Dallas today.
If you’d like to learn more about how we got those numbers, read on! Here’s our guide to the ins and outs of going solar in Dallas, Texas:
The cost of solar panels in Dallas in 2018
Let’s get right to it: to offset its entire energy bill, the average home in Dallas needs a solar system of about 7.7 kilowatts (kW), which will cost somewhere between $17,000 and $19,000 in cash, after a $6,950 incentive payment from Oncor Energy. Even reduced, that might sound like a lot, but keep in mind that price is before the federal solar tax credit, which earns you another 30% of the net cost back as a tax credit. Now let’s look at where we got those numbers:
The average Dallas home uses about 11,500 kilowatt-hours (kWh) of electricity per year, and spends about $1,250 on electricity annually. A 7.7-kW solar system that will offset all that usage and save you around $1,100 a year (with the remaining $150 going to the fixed monthly charges from your electric provider. That’s about 22 350-watt solar panels which take up about 480 square feet of roof space.
Solar panels are priced based on cost per watt, and in Dallas in 2018, you can expect to spend a gross cost (before incentives) between $3.15 and $3.40 per watt, depending on the age and geometry of your roof, as well as other factors. That’s the price before a potential Oncor solar rebate and the federal solar tax credit. If you can get it, Oncor’s rebate takes $.90 per watt off the cost of your system, instantly reducing your cost to between $2.25 and $2.50 per watt. More on those rebates below.
Solar Incentives for Dallas homeowners
Solar panels make a lot of sense, but up until recently, their cost was too high compared to just paying for electricity. That’s why federal and state governments developed solar incentives to take some of that cost burden off of homeowner who choose to go solar. And as more people take advantage of the incentives, the cost of solar panels gets lower for everyone else.
Right now, we’ve benefited from earlier incentives, and the cost of home solar has fallen by over 60% since 2010, but that rate of decline has slowed, and prices are stabilizing. The good news is that some of those same incentives that caused the decline are still available! Solar incentives in Dallas, TX can bring the cost of installation down by thousands of dollars.
Here’s a quick guide to what’s out there:
Oncor solar incentives
While you end up buying your energy from one of Texas’ retail electric providers, every home in the Dallas area has its energy delivered by Oncor. And the venerable electric distribution company has some excellent incentives that save you a bunch of money up front.
The incentive, or what Oncor calls the “solar standard offer” (don’t call it a rebate, apparently) is actually two incentives rolled into one. The incentive is calculated based on both system size and expected production, and is paid directly to installers, who then pass along the savings to you.
Here’s how the Oncor rebate is calculated: First, you get $538.53 per kilowatt of your solar system, which for our 7.7-kW example system would equal, $4,150. The second part of the standard offer is a credit of $.2519 for every kWh of electricity your system is expected to generate in the first year of operation. Our calculation puts the 1st-year production for that system at 1,111 kWh (make a wish!). That’s another $2,800 off the cost, making the total Oncor incentive $6,950 for an average Dallas home.
Now for the somewhat bad news: The Oncor rebate program opens availability in January, and funds are limited. By the time summer comes, the whole shebang is already reserved and a waitlist opens up. The bigger bummer here is if you’re on the waitlist, you can’t begin constructing your solar system until you get approved for funds that might not every be available.
But that’s not so bad, actually, because solar installers in the area account for that, and reduce the up-front cost a bit for anyone looking for solar after the Oncor incentives expire. Your best bet is to reach out to a local solar expert and see what they’re offering!
The federal solar tax credit
All solar systems installed on homes in the United States and paid for using cash or a solar loan qualify for a federal tax credit equal to 30% of the cost to install the system. Now, this is a tax credit, not a rebate, so you have to owe taxes in order to qualify, but even if you don’t pay a ton of taxes, you can roll over your credit to future years.
The 30% federal solar tax credit for our example 7.7-kW system would equal about $5,400 (30% of the $18,000 cost after Oncor incentive). With the federal tax rate at about 12% for most folks, a married couple making more than about $56,000 per year can expect to owe that much in taxes, and collect their full tax credit by the end of the year.
The reductions from the tax credit bring the cost down to $12,600—just half the gross cost—and that’s before you consider the effect of energy bill savings (which we’ll get to below).
Property Tax Exemptions for Solar in Dallas
The state of Texas exempts solar installations from property tax. That’s wonderful news for you, since the value of your home will go up by several thousand dollars when you add solar panels. A very solid study of home value increases from solar panels showed an average increase of about 70% of the gross (pre-incentive) cost to install the system, so the average system of 7.7-kW at $25,000 might add $17,500 in value to your home.
And thanks to the bright and beautiful Texas legislature, all of that new value won’t be taxed. Ya-hoo!
Electricity bill savings from solar in Dallas
This is where things get a little complicated, on account of Texas’s deregulated energy market. The majority of the Dallas area is served by Oncor Energy, which is the Transmission and Distribution utility company (TDU) your installer will work with to get your panels connected to the grid and pumping out power for your home.
CenterPoint But you buy electricity from a Retail Electric Provider (REP), like TXU, Green Mountain Energy, or Southwest Power & Light. Your REP is who bills you for your electricity every month.
When you have solar panels, some of the electricity goes to power your home, keeping your lights, appliances, and air conditioning running through the day. But those panels are often pumping out more juice than your home needs. That’s called oversupply, and only certain REPs will buy it back from you. Of the many choices you have on the deregulated energy market, four will pay you for your excess solar power.
REPs that offer buyback
If you want to go solar in Dallas (or any part of Texas that has a deregulated energy market), you can choose from one of these 4 providers:
Green Mountain Energy
Green Mountain offers the closest to full-retail net metering that Texas has. The company offers full credit for every kWh your system produces, with rollover of additional credits until you can use them. That means if your system makes more than you use in a month, 6 months, or 12 months, you’ll still have that extra credit banked in case you need to use a ton of electricity some month down the line.
Green Mountain offers contract terms of 24 months with a current rate of $.119/kWh (pdf) in Dallas.
MP2 offers a solar buy-back program that gives you full retail rate credit for every kWh your system generates, and a contract term of 24 or 60 months. At the time of this writing, their contract offered a fixed rate of $.117/kWh with no monthly base charge.
The only drawback with MP2 is if/when you produce more solar than you use. If you have a credit balance after your October bill, it is reset to zero kWh, and you lose any additional credit you have.
Reliant offers two renewable buyback programs. The first is called the “Simple Solar Sell Back 12 plan,” and it’s similar to Green Mountain Energy’s plan, but has a contract term of only 12 months. The second is simply called the “Solar Sell Back plan,” and offers market-based rates, based on the cost of natural gas, that change on the 15th of every month.
From our perspective, Reliant’s rate plans don’t offer enough protection from changes in the price of energy.
TXU does things a little differently, offering a flat buyback rate of around $.07/kWh for any excess solar generation, as long as you don’t exceed the total amount generated in a year. You can pair this rate with any of TXU’s existing plans. From our perspective, this would only make sense if you could find a TXU plan that offers rates as low as $.07/kWh for the energy you weren’t getting from solar. Anything else and you won’t be getting the appropriate amount of credit, compared to the other options out there.
Payback estimate for an average Dallas home with solar panels
Now let’s put it all together. We’ll use the Green Mountain Energy Solar Buyback plan to look at savings over time. The plan is a 24-month contract for electricity at a fixed rate per kWh. Usually, we’d compare going solar to the cheapest alternative, and in Texas, with its deregulated energy market, there are REPs promising super-low rates, but the restrictions and the busywork con be onerous. For example, some plans offer a flat fee like “$29 for usage between 500 and 1,000 kWh,” but if you go over $1,000, the bill becomes $129 plus $.149/kWh over 1,001. It just makes life hard, and you should skip that.
We like the Green Mountain Energy plan because it’s simple, and because its rates don’t fluctuate wildly like some other companies out there. Here’s a look at the current savings estimate for the first year operation of a 7.7-kW solar array in Dallas:
Estimated 1st-year savings for a 7.7-kW system in Dallas
|Month||Usage (kWh)||Rate||Solar kWh||Bill before solar||Bill after solar||Credit balance|
*Any amount of kWh over usage is credited to the customer's account and used to reduce future months' bills.
Estimated lifetime savings for an average Dallas home with solar panels
That 1st-year estimate looks good! You’ll save almost $1,400 a year, and have a few bucks left over at the end. That $16.30 credit would roll over to the next year, by the way, so next January, you’d probably end up using some of it up.
So we know solar can save us some money in year 1, but how about after? Solar panels last for 25 years, but lose a tiny sliver of their energy-generating mojo each year. The top panel manufacturers have gotten this number down to 0.5% per year, or so, which means they’ll still be kicking out 88% of their rated capacity (7.7-kW becomes 6.8-kW) at the end of year 25.
Electric rates in Texas have fluctuated since deregulation, but we estimate you’ll still see increases after each 24-month contract period, based on inflation and other factors. Our estimates call for 5% increases in the Green Mountain Energy rates every 2 years. That’s a little bit below the national average of 3.5% per year, but it’s close to what Texas has experienced overall.
As we mentioned above, it’ll take about 9 years to pay back the initial cost of your system, at which time you’ll essentially be generating “free” electricity. After 25 years, you’ll have saved $26,500 after paying back the cost of your system. Here’s how that looks as a bar graph:
What about going solar for $0-down?
If you’ve been looking for solar panels for your home, you’ve probably seen ads that promise “free solar panels!” and “$0-down solar.” While the latter is the more correct term, it is technically possible to get solar panels installed for free, and then pay over time, either buying the system with a loan or buying the electricity only with a power purchase agreement (PPA).
The offerings, prices, and financing terms for loans and PPAs vary widely by installer. If you’d like to see what’s available near you now, your best bet is to connect with one of our solar installer partners to find out more!