Switching to solar energy is a little easier this month after Austin Energy increased its financial incentives for homeowners and commercial customers.
Under the new policy, which took effect July 1, eligible homeowners installing solar panels will see their rebate increase from $2,500 to $4,000. Richard Genese, Austin Energy’s vice president of customer energy solutions, said the increase is meant to soften the impact of federal cuts to solar incentives.
“It’s a little less of a burden,” Genese said. “We are making up for (federal changes) and trying to make it easier for those who are maybe on the (edge) to move forward with a residential system, to go ahead and take the plunge … to start generating their own power and lower their energy burden.”
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Austin Energy’s rebate increase comes after the One Big Beautiful Bill, signed into law last year, ended a 30% tax credit for homeowners installing solar energy systems. The federal tax credit, which was expanded in 2022, was meant to offset the steep upfront costs of residential solar installations. Federal commercial tax credits were not eliminated.
“We did start to see a significant drop in volume, and so we think that it made a big difference in customers’ decision on whether or not they were going to pursue solar to not have the 30% federal tax incentive on the residential side,” Genese said. “We thought, ‘What can we do to make up for that,’ … this incentive increase helps both the consumers, the community, but it also helps the industry, which helps the economy.”
Commercial and nonprofit customers can also benefit from local tax rebates through performance- and capacity-based programs. The new rates are:
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Capacity-Based Incentives
Nonprofit projects under 200 kilowatts: $1 per watt, up from 60 cents
For-profit projects under 100 kilowatts: 70 cents per watt, up from 50 cents
Performance-based Incentives (paid per kilowatt-hour of energy produced over five years)
Projects under 400 kilowatts: 10 cents per kilowatt-hour, up from 8 cents
Projects between 400 and 999 kilowatts: 8 cents per kilowatt-hour, up from 6 cents
Projects 1,000 kilowatts and larger: 6 cents per kilowatt-hour, up from 4 cents
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The rebates and incentives are available only to Austin Energy customers who install new solar systems and do not apply to existing systems.
Solar advocates say the increases could help homeowners and commercial customers overcome upfront costs, which Austin Energy estimates at $25,000 to $30,000 for a residential system. .
“A huge benefit of solar is that it will reduce your bill, and over time you will pay less money, even with that upfront investment,” said Kaiba White, a local activist and board member of Solar Austin. “Yes, you pay for it upfront, but so many things that we pay for up front, like a car, don’t have any payback. You drive that car off the lot and immediately it’s worth less than it was, whereas your solar array is going to keep making you money every year.”
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White said the higher local rebate doesn’t fully offset the loss of federal support, but could further encourage investment in renewable energy, particularly in Central Texas, where other renewable-energy options are limited.
“We have pretty expensive land here, so you’re not going to really have solar farms. We don’t really have great wind resources. Water is scarce, so we don’t really have hydroelectricity,” White said. “But what we definitely have is a lot of sunshine, and a lot of suitable rooftops that don’t yet have solar, so I think it makes good sense to be constantly looking to improve policies and programs that will help people make that choice to use that available resource for local energy production.”