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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, but that’s not all the city has going for it. Dallas has a bustling arts district, an amazing food scene, and plenty of culture to go around.
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. And you can save money on your electric bills, too.
Now, Dallas is a little different on account of Texas’s deregulated energy marketplace. As you know, you can choose to buy energy from dozens of different companies, and the competition has actually done a pretty good job of keeping prices low. We wanted to compare solar to the kids of prices you would expect to pay if you shopped around, so we looked at Power to Choose, the online energy marketplace, for the price for 100% renewable energy in the heart of the city.
As of June 2015, we found an average cost of about 8.1 cents per kilowatt-hour (kWh) for average electricity users, and about 9.1 cents/kWh for high energy users. That’s pretty cheap—about 25% cheaper than the national average—and it means solar won’t save you quite as much money in Dallas as it is in other parts of the state (or the country).
BUT – Solar can still save you a bunch of money in Dallas, because Oncor offers great rebates for people who buy their systems with cash or a loan. We’re talking thousands off the cost. Combined with the national 30% tax credit, a solar panel system in Dallas comes in at only about half the sticker price after just 1 year. That kind of discount makes solar worth it in Dallas, and it can save you nearly $12,000 in electricity costs over the life of the panels.
Here’s what we’d do if we were deciding to go solar in Dallas:
Our Solar Strategy for a Home in Dallas
As you can see in the chart 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 2028, when your system has paid back your initial investment and the profits start piling up!
That said, not everyone is ready to spend $20,000 on a long-term investment, no matter how much it’s going to make them. If you do have that kind of money, get solar installed ASAP, and it will save you buckets of money in the next 25 years. But 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 Dallas, the first thing we’d do is get quotes from trusted local installers. Then we’d price out their lease options. You make less money over 25 years in a solar lease, but you don’t have to put any money down, and your starting lease payments are just about equal to the energy bill savings you’ll see.
That basically means you get solar panels on your roof for free, and as electricity rates rise over time, you’ll save more and more money each year, ultimately coming out over $3,000 ahead at the end of the lease. Thing is, these numbers we’re looking at are conservative estimates.
The solar market in Texas is getting competitive, considering the rebates and tax credits that are available to leasing companies. They’re going to fight for your business. So sign up for free quotes from our trusted Dallas-area partners, and you’ll get customized estimates for how much you can save with solar!
If you can sign a long-term agreement with a low monthly payment, a lease can be an amazing deal! As an example, a 25-year lease of a 5-kW system with a starting monthly payment of $50 ($600/year) will save you $608 on electricity this year, a net savings of $8, just for saying “yes” to solar! As the price of electricity goes up, you’ll save more and more every year. By the end, your lease payments will be hundreds of dollars cheaper than your neighbors’ electric bill! At the end of the 25-year lease, you’ll have saved over $3,000, all without putting down a dime!
Solar Loans in Dallas
There’s another option in the chart above that we haven’t discussed yet. That would be getting a bank to lend you the money for an outright purchase of a solar system. That doesn’t sound like such a bad idea, except for one thing: your loan payments in Dallas would be higher than your electric bill savings, meaning you’d actually be paying little by little for your system, and not saving nearly the kind of money if you had just bought it outright.
Our example assumes you’d need a loan for the cost of the system minus the rebates. Then comes the important part: at the end of year one when you get a fat federal tax credit, you’d apply it all to the principal of the loan. At that point, you’d still be making the same payments for 11 more years. That would put you about $6,800 into the system by year 11.
You’d start to make money at that point, and end up with over $8,000 in profit in the long term. That profit represents a rate of return on your investment of 6%. It’s not an unrespectable number, but you might be better off investing in the stock market. All these figures assume you’ll end up with a 20-year fixed loan at about 6.5%. If you can find a lower interest rate, this can become a big financial deal. Anything under 5% interest and you’ll be making as much or more of a return as a good mutual fund would get you.
If you’re curious about solar loans, here’s how the numbers work:
How the Numbers Work for a 5-kW Solar Loan in Dallas
What do all these numbers mean for your finances? Let’s take a look:
- Installing a typical 5-kW solar system in Dallas should start at about $20,000. Don’t worry – that’s going to drop quite a bit.
- Oncor Energy offers rebates of $1,001 per kilowatt. Your 5-kW installation will get you $5,005 back in a quickness, reducing your first-year cost to just 14,995.
- Your loan from the bank should be for this amount. The payments on a $14,995 loan with 6.5% interest over 20 years will be a little more than $103 per month, but you’ll be saving $51 per month on electricity. Essentially, you’ll start out paying $52 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 $14,995 cost of your system. Pay the loan down by that amount! You can take the credit over two years if you don’t owe $4,499 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 $8,000! 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!
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 Dallas. 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.
Additional Information about solar in Dallas
Dallas Solar Rebates
Even if you don’t buy your power from Oncor Energy, you can still get a rebate from them. The way the Texas energy marketplace works is you buy from one of the suppliers, and the energy gets delivered by your local utility. In the case of most of the Dallas area, that’s Oncor Energy.
That’s good news! Oncor is currently giving rebates of $1,001 per installed kilowatt (kW) of solar panels. For a typical 5-kW system like we’re talking about, you’ll save more than 25% of the cost in up-front rebates. That is sweeter than a rack of brown-sugar barbecue ribs!
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. Basically, for each $1,000/year reduction in energy bills, you can estimate that you’ve increased the value of your home by $20,000.
And thanks to the bright and beautiful Texas legislature, all of that new value won’t be taxed. Ya-hoo!
Solar Loans in Dallas
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, 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 8,000 big ones!
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: