A major factor in deciding whether or not to install a solar system is the cost. While solar panels generate “free electricity,” you'll only start seeing a recoup in your initial installation costs within 10 to 15 years after the installation.

Consumer Affairs estimates that it costs around $3 per watt to install solar panels in your home in Texas. This includes hardware and soft costs, such as labor and other overhead costs. How many solar panels you install will depend on your current and projected future energy needs.

The Solar Energy Industries Association expects that residential solar energy prices will continue to decline as the Department of Energy continues to work on reducing soft costs and barriers to switching to solar.

The cost of installing a solar system will depend largely on your location and energy needs. The main factors affecting the cost of solar panels include:
 

• Incentives: Texas offers a number of incentives to reduce the total cost of installing a solar power supply. These include rebates from various utilities as well as federal tax incentives, which can give you back up to 30% of the total installation cost in tax credit.
   
• Solar panels: there are many different types of solar panels on the market and which one you choose will have an impact on the cost of the system. Home solar systems typically use either monocrystalline or polycrystalline solar panels. Monocrystalline panels are more energy-efficient, but they are more expensive and represent a higher up-front cost.
   
• Electricity use: each solar panel generates approximately 1 kWh per day. If your household uses 10 kWh per day, you'll need to install ten panels to power your home fully. How many panels you install with also be limited by the size of your roof.

Most solar system installers will have a calculator on their website to help you estimate what the cost of a solar power system in your home will be. These calculators use a variety of methods to estimate how much power a solar system will generate, from using average solar irradiation data to finding your house on Google Maps and using the satellite image of your roof to provide you with an estimate.

Typical prices for a complete solar system installation in Texas, as of 2019, range from approximately $8,000 (after tax credit) for a 4 kW system to $40,000 for a 20 kW system.

So how does Texas compare to the rest of the United States in terms of solar prices? The current national average for solar panels is $2.99 per watt, and the average price for a typical 6 kW installation is $12,558 after tax credit.

There is, however, also a large variety of costs between the various states. One of the main factors for this variation is the cost of electricity. Typically, higher electricity costs correspond to higher solar costs as well. That's why solar prices in the northeastern parts of the United States are, on average, higher than in states such as Florida, Arizona, and Texas.

Despite the variation between states, most solar panel prices across the country fall within 50 cents of the $2.99 average. This suggests that while you may save a thousand or so dollars if you live in a “cheap” state, the costs overall are very similar, regardless of where you live.

It's important to note that these prices are calculated after receiving the Federal tax credit, but don't take any other rebates into account. Many Texas utility companies will offer rebates on solar system installations that can further reduce the costs involved.

You may be convinced about the idea of solar power, but finding the money for the up-front installation costs can be very intimidating. Luckily, as solar power becomes more widespread, there is an expanding range of options available to homeowners to finance their solar installation.

In general, there are three main options: you can purchase the system outright, apply for a solar loan, or apply for a solar lease. By working within a loan or lease, you're able to avoid the massive up-front cost of a solar installation while still reaping the cost savings of going solar.

Purchase A Solar System

The best option is always going to be to purchase your solar system outright if you can afford it. This option means that you don't have to worry about finding the money for a monthly bill and can enjoy the benefits of your solar system for years to come.

Get A Solar Loan

A solar loan is similar to many other loans in that it gives you the money to buy your solar system outright and then you pay off the loan in monthly instalments. Solar loans often offer competitive interest rates and flexible payment options ranging from five to 25 years. Typically, most solar loans are unsecured, which means that you'll need a good credit score to qualify.

An additional benefit of solar loans over leases is that you own the solar system: therefore you can apply for relevant federal tax credits and other incentives, which can significantly lower the cost of the installation. If you sell your home, you can either pay off the solar loan or transfer it onto the new buyer.

Lease A Solar System

Leasing a solar system is similar to leasing a home or vehicle: you pay a monthly fee to use the product but you don't actually own it. Solar power leases can run for very long periods of time, up to 20 years. Some leases allow you to purchase the solar system at the end of the lease, while others just allow you to renew your lease for an additional term.

While leases are significantly cheaper than loans or buying the system outright, they do come with several drawbacks. As you don't own the system, you can't qualify for any tax incentives or rebates. Several leases will have a price escalator to account for inflation, which means that your payments will increase on an annual basis.

However, leases do offer several advantages as well. They tend to include a performance guarantee that pays you back if the system doesn't produce a specified range of electricity per month, and maintenance is paid for by the leasing company.