Amid continued strong momentum in Texas for the embrace (despite political and supply-chain headwinds) of solar and renewable energy, Austin Energy (AE) is in the middle of its own solar buildout. The city is currently in the process of installing solar energy harvesting capability on more than 90 City of Austin buildings -and 30+ MW-AC of new capacity. At the same time, incentive programs for solar capacity for commercial customers are filling up -Austin Energy’s own program data from June 2026 shows several incentive tiers already 44–50% subscribed. Austin Energy also raised its commercial and nonprofit incentive levels effective July 1, 2026, so I wanted to post a rundown of what’s currently available -and what the capacity numbers mean for timing.

Two incentive paths: businesses choose one

Austin Energy offers commercial and nonprofit customers a choice between two solar incentives -you can’t take both. A Performance-Based Incentive (PBI) pays out over time as production occurs; a Capacity-Based Incentive (CBI) pays out once, based on system size. Program eligibility is determined by kW-AC, which Austin Energy calculates as 83% of the DC system rating.

Third-party Power Purchase Agreements (PPAs) are not eligible anywhere in Austin Energy’s service territory, for either program.

Capacity-Based Incentive (CBI): a one-time payment

CBI pays a flat rate per watt of installed capacity, issued as a single check after the system passes final inspection and is energized. Rates below reflect Austin Energy’s published levels as of July 1, 2026:

• Nonprofits, systems above 2.5 kW-AC: eligible projects may receive up to $1.00 per Watt, with the total incentive capped at $240,964 per project.
• Businesses with systems 100 kW-AC or smaller: eligible projects may receive up to 70¢ per Watt-DC, capped at $84,337 per project.

One detail worth flagging to whoever runs your numbers: Austin Energy publishes the nonprofit CBI rate per Watt-AC and the business CBI rate per Watt-DC. Because AC capacity is calculated at 83% of the DC rating, that unit difference materially changes the arithmetic. Confirm which basis applies to your project before modeling a payout.

For a nonprofit running a system in the 200–250 kW range, the per-project cap rather than the per-watt rate is typically the binding constraint -meaning the incentive tops out well before the system does. That can still represent a meaningful one-time recovery of capital for a 501(c)(3), and it makes the cap, not the rate, the number to design around. Actual eligibility and payment amounts are determined by Austin Energy at application.

Performance-Based Incentive (PBI): a five-year bill credit

The other option is to take the PBI incentive. PBI pays out monthly, as a bill credit (or a check, if requested), calculated by multiplying that month’s production by the applicable rate. The rebate runs for five years and requires one application per interconnection point. Following Austin Energy’s July 1, 2026 increase, the nonprofit and commercial tiers are now set at the same levels:

• Under 400 kW: 10¢ per kWh
• 400–999 kW: 8¢ per kWh
• 1 MW and above: 6¢ per kWh

Larger commercial projects (over 1 MW-AC) also need to comply with Section D of Austin Energy’s Distribution Interconnection Guide, linked from the eligibility section of Austin Energy’s commercial solar incentives page. Worth flagging early to a facilities or engineering team rather than discovering it mid-application. (We here at NATiVE don’t gloss over the small details. We design and build strictly to code -from the beginning!)

Good so far? Ok now stay with me folks.

Value of Solar (VoS): the credit every system earns, regardless of which incentive you pick

On top of whichever incentive a business selects, all commercial solar production earns a separate monthly bill credit under Austin Energy’s Value of Solar (VoS) rate: 9.91 cents/kWh before the September 2026 increase noted below for systems under 1 MW-AC, and 7.24 cents/kWh for systems 1 MW-AC and larger as of July ’26. Solar energy production and site consumption are metered at the site separately. A business is billed for everything it draws from the grid, then credited for 100% of what its system produces. Unused credit rolls forward month to month, though it isn’t transferable between accounts. (*This is the same basic math that happens for residential solar subscribers on their monthly bill, BTW)  Update: in September 2026 the Austin City Council voted to raise the VoS rate from 9.91 cents per kWh, and Austin Energy now lists it at 12.89 cents per kWh for systems under 1 MW-AC, about a 30% increase in the bill credit a solar array can earn. Confirm the current rate for your system size with Austin Energy.

A real project, for scale: Austin Energy’s own published case study on the Mothers’ Milk Bank at Austin describes a 269 kW system (656 panels) that received a CBI payment of $268,960 at the $1.00-per-watt rate in effect at the time of that installation -the same nonprofit rate Austin Energy has now returned to following the July 2026 increase. The facility also reported average monthly VoS credits of roughly $2,900, covering close to 98% of its electricity costs. It’s a useful illustration of how the incentive stack works in practice, and a good reminder that rates move over time -in both directions.

An option that requires no capital outlay: the Solar Standard Offer Program

For commercial property owners with a large roof or parking lot who don’t want to own or finance a system themselves, Austin Energy’s Solar Standard Offer Program offers a different structure: host a Community Solar project -either self-owned or leased to a third-party System Owner- and the system owner gets paid for some of the electricity generated on their land.

Eligible system sizes run from 50 kW-AC to 10 MW-AC. In this plan, the system owners are paid a cash rate (not a bill credit) currently set at 11.24 cents/kWh for systems under 1 MW, and 8.41 cents/kWh for larger systems (*this rate was set in January 2025 and is next scheduled to update in November 2026). As of April 2, 2026, qualifying projects can also receive a Guaranteed Minimum Price incentive setting a floor of $0.11/kWh (under 1 MW-AC) or $0.08/kWh (1 MW-AC and up), applied as needed over the first 10 years of production. There’s no utility bill impact to the property owner hosting the system -they receive a monthly payment for the energy produced by the system hosted at their site, which can offset ops spend. It’s a structure most commercial property owners haven’t encountered before, and worth a closer look if capital outlay is the main obstacle to going solar.

Why timing matters right now

Austin Energy’s incentive programs draw from a limited, first-come-first-served pool of funding, and the utility notes that offerings, program guidelines, and rebate levels are subject to change without prior notice. Per the utility’s own June 2026 contractor update, subscription levels stood at roughly 50% for PBI Tier 2, 44% for CBI Tier 4, and 50% for the Standard Offer Program. There’s still time, but the mechanics of the process matter more than usual at this stage: Austin Energy won’t approve a project without a signed contract and an approved Distributed Generation Planning Application (DGPA), installation can’t legally begin before the customer and contractor receive a Letter of Intent or Letter of Approval, and if a project’s scope grows after that letter is issued, the incentive amount does not increase. Austin Energy also makes no financial commitment before the Letter of Intent is issued, and a project that isn’t completed before the LOI expires has to reapply at whatever rate prevails then. Accurate system sizing before submitting the paperwork is the difference between capturing the intended incentive tier and leaving money on the table. Reputable commercial solar firms like NATiVE will work with you and your leadership team to navigate the administrative red tape, as well as handle all permitting, inspections, etc. with the city.

Whew. OK. We know it’s a lot to consider. Take a breather….

So here’s how the process actually works in a nutshell:

1. Decide between PBI, CBI, or the Standard Offer Program. Your Ops and Controller’s office will need to run the numbers. We (NATiVE) can help validate the analysis.
2. Work with an Austin Energy participating contractor and get multiple bids.
3. The contractor submits the application and a Customer Agreement Form on your behalf.
4. Austin Energy issues an Encumbrance Letter if the project is eligible, then requests supporting documentation (DGPA, interconnection agreement).
5. Once fully approved, Austin Energy issues a Letter of Intent or Letter of Approval -installation cannot begin before this step.
6. The contractor handles permitting, installation, and coordinates Austin Energy’s final inspection.
7. Once energized, PBI credits begin appearing on the monthly bill; CBI payments are mailed as a check.

How NATiVE Solar approaches commercial projects

NATiVE Solar treats commercial solar projects as systems engineering and balance sheet challenges delivered as long-term energy infrastructure, not incentive-chasing exercises. That means sizing a system against a facility’s actual (and projected) load profile and demand charge structure first, then layering Austin Energy’s PBI, CBI, or Standard Offer incentives on top of a design that already makes sense for the building and business needs. For facilities managing high or volatile demand charges, pairing solar with battery energy storage can support a demand charge mitigation strategy -though outcomes depend on load patterns, utility rate structure, and system design -it’s not a fixed formula or one-size-fits-all process. NATiVE has been designing, building, and maintaining commercial-scale systems in Texas since 2007, which means navigating ERCOT interconnection requirements, AHJ permitting, and Austin Energy’s DGPA process is a known quantity and our permitting team is razor-sharp at getting paper and approvals pushed through the system. See recent local work on our Austin commercial solar and battery storage page. For more on where the Texas commercial market is headed, see NATiVE’s 2025 commercial solar and storage overview.

If your facility is evaluating solar or battery storage under Austin Energy’s current incentive structure, get started with a conversation about your specific site and load profile.

Incentive levels, caps, and eligibility are set by Austin Energy and are subject to change without notice. Figures above reflect Austin Energy’s published rates as of July 1, 2026. Confirm current levels with Austin Energy or your solar provider before building them into a project budget or pro forma.

---

Sources:

1. Solar Incentives for Your Business — austinenergy.com
2. Austin Energy increases solar incentives for residential and commercial customers, July 1, 2026 — austinenergy.com
3. Value of Solar (VoS) Rate — austinenergy.com
4. Solar Standard Offer Program — austinenergy.com
5. Austin Energy Solar Contractor Administrative Meeting slide deck, June 18, 2026 (Customer Renewable Solutions)
6. Mothers’ Milk Bank at Austin case study, published on austinenergy.com’s commercial solar page

Rates last verified against Austin Energy published sources: September 14, 2026.

The July 4, 2026 construction-start deadline for the Section 48E Investment Tax Credit (ITC) has come and gone. For Texas commercial property owners, that doesn’t mean the federal credit is off the table. It means the rules for any new commercial solar project now come down to one date: December 31, 2027. Here’s where things stand as of September 2026, and what we’d suggest thinking through with your team and tax advisor.

Where Commercial Solar Tax Credits Stand Now (September 2026)

• Projects that began construction on or before July 4, 2026 generally have a four-year runway under the continuity safe harbor, meaning a placed-in-service target of December 31, 2030.
• Projects that did not begin construction by July 4, 2026 can still qualify for the Section 48E credit, but only if the solar system is placed in service by December 31, 2027.
• Solar projects placed in service after December 31, 2027 that missed the construction-start deadline are not eligible for the Section 48E credit.
• Battery energy storage is treated differently. Storage is carved out of the accelerated solar and wind termination and keeps a longer credit runway.
• New sourcing rules apply. Projects beginning construction in 2026 or later must also meet “prohibited foreign entity” (often called FEOC) material assistance requirements to claim the credit.

Eligibility varies by project, ownership structure, and tax situation. Nothing here is tax advice. Please confirm your specific situation with a qualified tax professional.

Quick Background: How We Got Here

The Inflation Reduction Act (2022) originally extended clean energy tax credits into the 2030s. The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, accelerated the end of those credits for solar and wind. Under the new law, the Section 48E credit does not apply to solar facilities placed in service after December 31, 2027, unless construction began on or before July 4, 2026.

That created the two-path structure we covered when this article was first published in May 2026: start construction by July 4, 2026 and get a longer runway, or skip the construction-start deadline and finish the project by the end of 2027.

What Changed in June 2026: The 5% Safe Harbor Was Restored (For Now)

When we first published this article, the IRS had eliminated the 5% Safe Harbor for solar projects larger than 1.5 MW (AC) through Notice 2025-42, leaving the Physical Work Test as the only way for larger projects to establish that construction had begun.

On June 6, 2026, a federal district court in Washington, D.C. vacated Notice 2025-42 in full, finding the IRS had not adequately justified the change. The practical effect: both the Physical Work Test and the 5% Safe Harbor became available again for establishing beginning of construction, regardless of project size, with roughly four weeks remaining before the deadline.

Two caveats matter here:

• An appeal or revised IRS guidance was widely expected. Tax practitioners cautioned that the ruling might not be the final word. If your project relied on the restored 5% Safe Harbor to meet the July 4 deadline, make sure your tax counsel is tracking the current status of the case and any new guidance.
• Documentation is still everything. Whichever method your project relied on, contemporaneous records (contracts, invoices, payment records, delivery receipts, photos of physical work) are what support your position if the IRS asks.

If Your Project Began Construction Before July 4, 2026

If you established beginning of construction on or before July 4, 2026, your project generally needs to maintain continuous construction and be placed in service within four calendar years to rely on the continuity safe harbor, which works out to December 31, 2030. If a project runs past that window, continuity is evaluated on facts and circumstances, and certain disruptions outside the owner’s control (severe weather, permitting delays, interconnection queues, supply chain problems) have historically been treated as excusable.

For most Texas commercial projects, a four-year window is ample. The practical focus now is keeping the project moving and keeping the paperwork clean.

If Your Project Missed July 4: The December 31, 2027 Path

For new projects, the question is no longer “when does construction start?” It’s “can this system be placed in service by December 31, 2027?” As of late September 2026, that’s roughly 15 months away.

“Placed in service” generally means the system is complete and available for its intended use, which in practice ties closely to utility permission to operate. For Texas commercial solar, the timeline drivers are usually:

• Interconnection and utility approvals, which vary widely by utility and system size
• Permitting and AHJ review
• Equipment lead times, now complicated by FEOC sourcing requirements (see below)
• Structural and electrical upgrades (roof work, switchgear, service upgrades)
• Construction scheduling across a market where many owners are chasing the same deadline

Smaller rooftop commercial systems with straightforward interconnection may be able to meet a late-2027 in-service date if they move soon. Larger or more complex projects (ground mounts, multi-building sites, projects needing significant electrical upgrades) face a tighter path. The honest answer depends on your site, your utility, and when you start.

New for 2026: FEOC / Prohibited Foreign Entity Rules

The OBBBA also added “material assistance from a prohibited foreign entity” restrictions to the Section 48E credit. These apply to projects that begin construction after December 31, 2025, so they affect essentially every new project pursuing the 2027 path.

In short, a project must show that a minimum share of its manufactured-product costs is not attributable to prohibited foreign entities. That threshold starts at 40% for solar facilities and 55% for energy storage beginning construction in 2026, and it increases in later years. Treasury and the IRS issued interim guidance (Notice 2026-15) in February 2026, with further guidance expected.

What this means in practice: equipment selection and supplier documentation are now part of tax-credit eligibility, not just engineering and price decisions. Ask any installer you’re evaluating how they source and document FEOC compliance.

Battery Storage Still Has a Longer Runway

Energy storage technology is expressly excepted from the accelerated solar and wind termination. Storage remains eligible for the Section 48E credit on a longer phase-down schedule, and storage placed in service at a solar facility can retain its own eligibility even if the solar portion does not qualify. FEOC material assistance rules still apply to storage projects beginning construction in 2026 or later.

For many commercial sites, that makes battery energy storage a stronger part of the conversation than it was a year ago, particularly for demand charge mitigation, backup power, and energy resilience.

What Still Works Without the Solar ITC

If your project can’t realistically be placed in service by the end of 2027, commercial solar may still make sense. The financial case is different, not necessarily gone. Factors that remain in play include:

• 100% bonus depreciation, which the OBBBA permanently restored for qualified property acquired after January 19, 2025. Depreciation class-life rules for solar also changed under the OBBBA, so confirm how depreciation applies to your project with your tax advisor.
• Texas property tax exemption for solar and storage under Tax Code §11.27, which requires a filing many owners miss. See our guide: the one-page form many Texas solar owners forget to file.
• Utility and local incentives, which vary by territory. Austin Energy customers, for example, should review Austin Energy’s 2026 commercial solar incentives.
• Rising Texas commercial electricity costs and demand charges, which solar + storage may help reduce exposure to over the life of the system.

When the ITC and bonus depreciation both apply, federal tax benefits can offset a substantial share of project cost for qualifying commercial taxpayers. The exact figure depends heavily on your tax position, so model it with your controller or tax advisor rather than relying on a rule of thumb.

What Texas Commercial Property Owners Should Do Now

1. If you began construction before July 4, 2026: Keep construction continuous, keep your documentation organized, and confirm with tax counsel whether anything in the June court ruling or later guidance affects your position.
2. If you’re evaluating a new project: Get a realistic, site-specific timeline to placed-in-service before assuming the 2027 credit. Interconnection and equipment lead times are usually the deciding factors.
3. Ask about FEOC compliance early: Equipment sourcing now affects credit eligibility. Make sure documentation is part of the procurement plan from day one.
4. Consider storage on its own merits: Battery storage keeps a longer credit runway and can support demand charge mitigation and resilience whether or not the solar portion qualifies.
5. Model the project both ways: Build one financial case with the ITC and one without, so a schedule slip doesn’t upend the decision.

At NATiVE Solar, we’ve been engineering and building commercial solar and storage projects in Texas since 2007. We’re not in the business of manufacturing urgency, but we can help you figure out quickly whether a December 2027 in-service date is realistic for your site. If you’re weighing a commercial solar or solar + storage project, start a conversation with our team about your goals, timeline, and site conditions.

Frequently Asked Questions

Did the commercial solar tax credit end on July 4, 2026?

No. July 4, 2026 was the deadline to begin construction and secure a longer placed-in-service window. Solar projects that missed it can still qualify for the Section 48E credit if they are placed in service by December 31, 2027. Eligibility depends on the project and taxpayer.

Is the 5% Safe Harbor available for projects over 1.5 MW?

A federal court vacated IRS Notice 2025-42 on June 6, 2026, which restored the 5% Safe Harbor as a method for establishing beginning of construction regardless of project size. The ruling could be affected by an appeal or new IRS guidance, so check current status with your tax counsel. For new projects, the July 4, 2026 construction-start deadline has already passed.

What happens to solar projects placed in service after 2027?

Solar projects that did not begin construction by July 4, 2026 and are placed in service after December 31, 2027 are not eligible for the Section 48E credit. Other benefits, such as bonus depreciation and the Texas property tax exemption, may still apply.

Does the 2027 deadline apply to battery storage?

No. Energy storage is excepted from the accelerated solar and wind termination and keeps a longer credit runway, though FEOC material assistance rules apply to storage projects beginning construction in 2026 or later.

What are the FEOC rules for commercial solar?

Projects beginning construction in 2026 or later must show that a minimum percentage of manufactured-product costs is not attributable to prohibited foreign entities in order to claim the Section 48E credit. Treasury issued interim guidance in Notice 2026-15 (February 2026). Equipment sourcing and documentation now directly affect credit eligibility.

Related NATiVE Solar Resources

• Solar Property Tax Exemptions in Texas: The One-Page Form Many Owners Forget to File
• Texas Solar and Battery Storage Legislation: 2025, 2026, and 2027
• The Near-Term Future of Solar Energy in Texas (Summer 2026 Update)
• How Texas School Districts Are Turning Sunshine Into Planned Budgetary Savings
• Austin Energy’s 2026 Commercial Solar Incentives (PBI, CBI & Standard Offer)
• Texas Solar News for September 2026
• Commercial Solar and Battery Energy Solutions
• Texas Battery Energy Storage

This article is for general information only and is not tax, legal, or financial advice. Tax credit eligibility depends on project specifics, ownership structure, and current IRS guidance, which continues to evolve. Consult a qualified tax professional before making decisions. Originally published May 6, 2026; updated September 2026.

Sources: IRS Notice 2025-42 · Holland & Knight on the June 2026 ruling · Troutman Pepper Locke on Notice 2026-15 (FEOC) · Olson Partners on the 2027 termination

If you’re evaluating Texas commercial solar and battery storage as a commercial property owner or landowner here in Texas, there are a few questions that matter early—well before RFPs or proposals start flying around.

Here we wanted to give a quick heads-up and some high-level pointers around the short- and long-term tax implications of commercial solar and battery storage projects in Texas. These are questions you’ll likely want to raise with your principals, board, and finance team before going too far down the solar path. By the time we (here at NATiVE) get involved, most of these items have usually already been evaluated -but not always. Looking at tax and regulatory implications early is one of the first avenues of investigation that should be traveled early.

Property & tax basics for Texas commercial solar and battery storage

Is the system likely to be treated as a taxable improvement by the local appraisal district?

Are local abatements (Texas Tax Code Chapter 312) available in this jurisdiction, and has the county or city used them recently?
https://comptroller.texas.gov/economy/local/ch312/

If an abatement is possible, what’s the realistic timeline and approval process?

Ownership structure for commercial solar projects in Texas

Will the system be owned by you, or by a third party (PPA / energy services agreement)?

How does that ownership choice affect:

• Property tax treatment

• Control over the asset

• End-of-term options (buyout, removal, extension)?

Ownership structure plays a meaningful role in how Texas commercial solar and battery storage systems are designed, built, taxed and operated over time. Your controller or tax attorneys should dive into this early!!

Interconnection reality check

What utility territory are you in, and what’s their interconnection posture right now?

Is the project size likely to trigger:

• Detailed studies

• System upgrades

• Longer review timelines?

ERCOT interconnection guidance (process overview):
https://www.ercot.com/services/rq

Resource Interconnection Handbook (procedural):
https://www.ercot.com/services/rq/integration

Interconnection is often the quiet constraint that determines whether a Texas commercial solar or battery storage project stays theoretical or becomes real once feasibility and economics are fully modeled.

Battery storage–specific questions (Texas BESS projects)

If batteries are involved:

Is the system behind the meter, grid-connected, or hybrid?

Does the agreement address decommissioning and financial assurance, as now required under Texas Utilities Code Chapter 303?
https://statutes.capitol.texas.gov/Docs/UT/htm/UT.303.htm

Who is responsible at end of life, and how is that obligation secured?

Legal background (plain-English analysis):
https://www.bakerbotts.com/thought-leadership/publications/2025/july/texas-adopts-new-decommissioning-law-for-battery-energy-storage-systems

Time horizon alignment for Texas commercial solar and storage

Is the project being evaluated on a 5–7 year financial lens, or a 20–30 year operational lens?

Does that match how long you expect to own or operate the facility?

Are assumptions about utility rates, demand charges, and operating costs realistically modeled and clearly stated?

The recent economic impact report by Dr. Joshua Rhodes (UT-Austin) assumes 30-year lives for solar and wind and 15 years for battery energy storage—an important reality check when reviewing Texas commercial solar and battery storage proposals:
https://kbhenergycenter.utexas.edu/media/the-economic-impact-of-renewable-energy-and-energy-storage-investments-across-texas/

Digging in to the short, medium, and long-term economics is crucial among first steps in assessing feasibility.

Incentives and tax credits for commercial solar in Texas

Are state or local incentives statutory and available, or merely “possible”?

Are they time-limited, compliance-driven, or discretionary?

Does the project still make sense if incentives change or expire?

Texas incentive programs to be aware of:

• Chapter 312 abatements (local):
  https://comptroller.texas.gov/economy/local/ch312/

• JETI (school district M&O limitation):
  https://comptroller.texas.gov/economy/local/jeti/

Texas also offers a property tax exemption for qualifying solar and storage under Tax Code §11.27, which requires a filing. See our guide to the one-page form many owners forget to file.

Federal tax credits (updated September 2026)

The July 4, 2026 construction-start deadline for the Section 48E Investment Tax Credit has passed. Solar projects that began construction by that date generally have until the end of 2030 to be placed in service. New solar projects can still qualify only if they are placed in service by December 31, 2027. Battery energy storage keeps a longer credit runway, and projects beginning construction in 2026 or later must also meet new prohibited foreign entity (FEOC) sourcing rules. Eligibility varies by project and taxpayer, so confirm with your tax advisor. Full details: where commercial solar tax credits stand now.

So What’s the Takeaway?

This tax stuff comes up often for discussion as site design begins. The implications matter. Understanding these mechanics early makes it much easier to decide whether a project belongs on your capital plan or should stay on the whiteboard.

Get in touch if you’d like to discuss how NATiVE’s commercial smart energy team helps Texas businesses navigate commercial solar and battery storage decisions with fewer surprises.

Related NATiVE Solar Resources

• The July 4, 2026 ITC Deadline Has Passed: What Texas Commercial Property Owners Need to Know Now
• Texas Solar and Battery Storage Legislation: 2025, 2026, and 2027
• How Texas School Districts Are Turning Sunshine Into Planned Budgetary Savings
• Why Most Commercial Buildings Wait on Solar — and What Texas Developers Should Do Instead
• Texas Battery Energy Storage

“When Congress and the president ended the 30 percent federal solar tax credit ahead of schedule, it shook confidence across the industry. But it also created a once-in-a-generation opportunity for solar to stand on its own — powered by technology, transparency, and Texans who believe in energy independence.”
— Pete Parsons, Texas Solar Energy Society (TXSES), The End of the Residential Solar Tax Credit and the Path Forward

A new chapter for Texas solar.
Our friends over at TXSES decided to publish a blog on this topic the sale day (today!) as we did. Very Timely! So here’s the deal : The federal Investment Tax Credit (ITC) has for the past few years been a cornerstone of residential solar adoption, helping drive record-setting growth over the past decade or so. But with the ITC now phasing out in the4 next couple of months, many homeowners are wondering what this means for their return on investment and whether solar still makes sense.

Since 2007 At NATiVE Solar, we’ve been through every policy wave the Texas market has seen. And our feelings and commitment to this space are clear: solar’s future is strong.

Solar value isn’t disappearing. It’s diversifying.
Without the federal credit cushioning initial costs, many buyers understand that solar installation ROI timelines will get pushed out. But while solar still easily pays for itself over the expected lifetime of the system, many prospective solar buyers are focusing more on quality, durability, and design integration. They’re not asking “how fast can I pay it off?” -they’re asking “how long will this system perform?” and “who can I trust to install it right?”

That’s good for Texas homeowners -and for reputable solar providers like NATiVE. A maturing market rewards craftsmanship, honest pricing, and long-term support instead of pricing gimmicks and “zero-down” sales tactics.

Why batteries matter now more than ever.
Energy independence is no longer a slogan -it’s a necessity component for most newly installed smart energy harvesting and storage systems. Texans know that grid failures, price spikes, and storm outages can strike anytime. The combination of solar + battery backup now defines what modern resilience looks like.

Battery storage doesn’t just buffer the grid and protect individual residences against blackouts -it amplifies the financial and functional value of your system, keeping homes powered through peak-rate hours and emergency events.

Early Design Integration is the new differentiator.
In high-end custom homes construction, we’re seeing builders and clients are deciding to integrate solar during the site’s design and architectural phase -not bolt it on afterward as an afterthought. Aesthetic integration, concealed pre-installed conduit and wire runs, and solar-ready control infrastructure are becoming the hallmarks of high-performance homes across the Hill Country, DFW, and the Gulf Coast.

It’s a movement NATiVE Solar has championed for years through our Builder Partner Alliances function here at NATiVE. As more homeowners seek seamless design and lasting performance, this approach is quickly becoming the new standard.

Texas homeowners are still leading the charge.
Even as incentives evolve, the Texas solar story remains defined by independence. Every rooftop array, every storage system, and every community partnership moves the state closer to grid stability, lower emissions, and genuine energy freedom.

That’s why NATiVE Solar continues to invest in Texas-made excellence — grounded in trust, local service, and technology built to outlast the credit cycle.

What the Latest Research Shows
According to new findings from Aurora Solar’s 2025 Industry Snapshot, most U.S. homeowners remain bullish on solar even after the ITC’s expiration:

• 68% still view solar as a long-term investment, with growing interest in energy storage.
• Trust and transparency are now the #1 factors in installer selection — eclipsing price alone.
• Design integration and aesthetics matter more than ever for new-construction buyers.
• Battery resilience is now considered “core,” not “optional,” among Texas respondents.

The Texas Solar Energy Society adds that this moment  -while challenging- is a healthy inflection point. As our friend over at TXSES, Pete Parsons puts it, the end of the ITC isn’t the end of residential solar; it’s the start of a market driven by craftsmanship, reliability, and local expertise.

That’s precisely where NATiVE Solar thrives. We’ve never built our reputation on incentives -we’ve built it on integrity, innovation, and a belief that Texas homes deserve high-performance energy systems designed for the long haul.

What Now?
The sun still shines the same -and Texas is still the best solar market in America. If you’re ready to future-proof your home with solar + storage, let’s build your system for the next 25 years, not just the next tax cycle.  Contact NATiVE Solar today to begin your energy independence journey.

Thanks Ya’ll.

The 30% federal residential solar tax credit (Section 25D) is gone. The One Big Beautiful Bill Act, signed in July 2025, ended the credit for homeowner-purchased systems installed after December 31, 2025. If you buy a solar or battery system outright or finance it with a loan in 2026, there is no federal tax credit attached to that purchase.

That changes the math, but it doesn’t end the conversation. Here’s what Texas homeowners should know now.

What Ended, and What Didn’t

• Ended: The Section 25D credit for systems homeowners own. Systems whose installation was completed after December 31, 2025 no longer qualify.
• Still in place: The Texas property tax exemption for qualifying solar and storage, utility incentive programs in some territories, retail buyback plans, and virtual power plant (VPP) programs that may compensate battery owners.
• Different path: Third-party-owned systems (leases and power purchase agreements) fall under the commercial Section 48E credit, which the provider claims, not the homeowner. For solar, that credit generally requires the system to be placed in service by December 31, 2027. Battery storage keeps a longer runway. Whether any of that value shows up in your price depends on the provider.

Eligibility for any incentive depends on your situation. Confirm details with a tax professional.

What Still Helps the Economics

Texas property tax exemption

Texas exempts the added value of qualifying solar and storage systems from property taxes under Tax Code §11.27, but you generally need to file a one-page form with your appraisal district. Our guide walks through it: the one-page form many Texas solar owners forget to file.

Utility incentives

Some Texas utilities still offer rebates or performance incentives for solar and battery storage. Austin Energy, for example, has new residential solar and battery incentives. Programs vary by territory and change often.

Virtual power plant programs

If you own a home battery, VPP programs run by retail electric providers, co-ops, and some utilities may pay you for letting the program draw on your battery during grid events. Terms, hardware eligibility, and compensation vary widely. Learn more in our overview of virtual power plants in Texas.

Resilience and rising electricity costs

Texas electricity demand keeps climbing, and outages are a real concern for many households. For many homeowners we work with, solar + battery storage is now less about the tax credit and more about energy resilience and reducing exposure to volatile energy costs over the long term.

Should You Still Go Solar in Texas?

It depends on your home, your utility, your energy use, and how long you plan to stay. Without the 30% credit, payback periods are generally longer than they were in 2025, so a project-specific estimate matters more than ever. We’d rather give you an honest, site-specific picture than a generic number.

A few questions worth asking any installer:

• What does the system cost with no federal credit, and what incentives actually apply at my address?
• Would a battery add meaningful resilience for my household, and could it qualify for a VPP program?
• If you’re offering a lease or PPA, who claims the tax credit, and how is it reflected in my price and contract terms?
• What warranty and long-term service do you provide?

NATiVE Solar has been designing and installing solar and battery storage in Texas since 2007. If you’d like an honest look at what makes sense for your home, start a conversation with our team or call 855-234-3131.

Frequently Asked Questions

Is the 30% solar tax credit still available for homeowners in 2026?

No. The Section 25D residential clean energy credit ended for systems installed after December 31, 2025. Homeowner-purchased systems installed in 2026 do not qualify.

Do solar leases or PPAs still get a tax credit?

Third-party-owned residential systems may qualify for the commercial Section 48E credit, which the system owner claims. For solar, the system generally must be placed in service by December 31, 2027. Ask the provider how that affects your pricing and terms.

Are there still incentives for home batteries in Texas?

Possibly. Depending on your utility or electricity provider, you may be eligible for utility incentives or virtual power plant programs, and qualifying storage can be exempt from Texas property taxes. Programs vary and change often.

Related NATiVE Solar Resources

• Smart Solar Investment for Texas Homeowners (Summer 2026 Update)
• Life After the Federal ITC Solar Tax Credits Expire
• Solar Property Tax Exemptions in Texas: The One-Page Form Many Owners Forget to File
• Austin Energy Announces New Residential Solar and Battery Backup Incentives
• New Texas Solar Law (SB 1252) Makes It Easier to Install Larger Home Batteries
• More Virtual Power Plants in Texas in 2026
• Residential Solar and Battery Backup Solutions

This article is for general information only and is not tax, legal, or financial advice. Consult a qualified tax professional about your situation. Originally published July 2025; updated September 2026.

The Big Picture: Solar & Storage Incentives in Flux

Federal solar incentives are potentially facing big changes. A new draft federal bill could significantly impact the 30% Investment Tax Credit (ITC) for solar and battery storage. While nothing is final yet, property owners should prepare now for what’s likely ahead. We’ve been covering this topic a lot lately here at The Feed because it’s important.

But I wanted to write a little about how a draft bill (The “Big, Beautiful Bill”) might affect short-term decision-making for Texas residents and businesses considering moving to solar+storage.

While there was some rumoured talk in Washington this week of potentially “softening” the current proposed language (especially for residential solar incentives), here’s what we’re looking at if this thing gets passed as-is :

• Energy Storage ITC remains intact through 2027 -but only for commercial and grid-scale systems
• Residential battery storage credits would expire 180 days after the bill is signed into law
• Grid-scale Solar PV and wind credits phase down to:
  • 60% in 2026
  • 20% in 2027
  • 0% by 2028

[Energy Storage News]

If passed, this legislation would reshape how Texas solar incentives work for both residential and commercial systems.

What It Means for Texans

Let’s be clear: this isn’t the end of solar in Texas. But it does mean the economics of clean energy could change -especially if you wait.

Texas leads the country in solar growth, and for good reason:

• Wide open space
• Strong sun
• High energy demand
• A deregulated, dynamic market

And our state NEEDS continued development, investment, and growth in the renewable/solar sector for other very good reasons:

• We have a stressed-out, aging, failure-prone, electrical grid
• Experts expect unprecedented electrical consumption growth projections through 2030 (think new data centers, factories)
• Coal and fossil fuel power generation levels are still on the decline in Texas.  *Although to be balanced here, there is talk about building more natural gas powered (ie “dirty”) “peaker plants”.

But if this bill passes as written, several ripple effects could follow:

1. Electricity Prices May Rise

Slower solar adoption means less downward pressure on wholesale prices. It’s impossible to know for sure what the future holds for us, but a 2023 analysis found that wind and solar reduced ERCOT wholesale costs by $28 billion from 2010 to 2022. If deployment slows, Texas ratepayers could lose out on over $115 billion in cost avoidance through 2040. [source]

2. Volatility Could Increase

Solar and wind help stabilize peak demand. During the 2022 summer heatwave, renewables saved Texans $11 billion in wholesale power costs. Without incentive support, reliability and price stability could deteriorate. [source]   And we aren’t even getting into how this bill may harm grid stability if it passes.

3. Households Will Feel It

A 2023 ACP report estimated that slowing clean energy development could increase the average Texan household’s utility bills by $225–$370/year by 2035. [ACP Texas Economic Impact Report]

4. Many Businesses and Families will still Pull the Trigger on Solar and Battery Storage

Lot’s of folks we’re talking to are telling us that even without the tax credits, “going solar” is still something that they’ll strongly consider. Why? Because the benefits of solar-harvested energy independence outweigh the costs. Period. These folks aren’t as concerned about overall “ROI” as they are about their commitment to embracing the global energy transition, and up-front cost isn’t their most important concern.

Storage Still Has a Bright Future

One positive note: Battery storage technology continues to get better, more powerful, and less expensive.  VPP’s (Virtual Power Plants) are becoming more and more popular, and more widely available to participate in. Energy storage incentives will remain available for commercial and utility-scale projects through at least 2027 -and there’s a TON of spending at this level right now.  But for homeowners, time is short.

The current 30% tax credit for residential batteries (like those used with Tesla Powerwall or Enphase IQ Battery Systems) will vanish 180 days after the law is enacted.   So if you and your family have been planning to “go solar” NOW IS THE TIME to lock in 30% federal credit on residential battery  energy storage (and solar harvesting!) before expiration.

How NATiVE Solar Can Help

At NATiVE Solar, we’ve helped Texans navigate changing incentives for more than a decade. Whether you’re a homeowner, commercial property manager, or sustainability leader, we’ll help you:

• Design the right solar + storage system for your goals
• Maximize incentives before deadlines hit
• Understand ROI and the full benefits of solar in the context of evolving policy

Why Act Now?

This isn’t about panic—it’s about planning.

Congress is still negotiating the final version of this bill, but the direction is clear: solar incentives may be changing. Soon. So what’s the best way to protect yourself from rising prices and missed opportunities?

Many Texas residents will likely make a mad rush to purchase and schedule solar+battery installation so they can take advantage of the tax credits in case that congress removes or reduces the current incentives. This (solar design/installation) process normally takes 90-120 days. Solar design and construction firms such as ours are already seeing increased demand and are getting booked up with new projects. This will almost certainly push out new solar construction/installation timelines across the entire country.  

Act while the 30% ITC is still guaranteed -and while you can get on our installation calendar!

Let’s Talk Strategy

We’re helping customers act now to lock in Texas solar incentives before any potential rollbacks take effect.

Schedule a free assessment — before the sun sets on solar incentives.

Heads Up: 30% Solar Tax Credit Sunset Threat -Residential Solar Installation Timelines Could Soar

By Adam Glick, Solar Sherpa, NATiVE Solar

Heads Up: Threat to 30% Solar Tax Credit Could Mean Longer Install timelines.

The solar tax credit deadline could be closer for you than you think. If the U.S. Senate passes the new “Big Beautiful Bill” as already passed by the House, solar project completion by Dec 31, 2025 might be your last chance to get the full 30% tax credit for residential solar. And with demand already heating up with folks getting nervous, delay too long and you risk missing out—even if the credit stays in place.

Why You Should Act Before the Solar Tax Credit Deadline

Congress is considering legislation that would shorten the federal residential solar tax credit, accelerating the expiration date from 2032 to the end of 2025. To qualify, the solar system on your roof must be installed, inspected, and interconnected by December 31, 2025.

Even if the bill doesn’t pass, installers across the country—including here in Texas—are already seeing higher demand. That means longer lead times for site assessments, permits, equipment, and interconnection approvals. So while the credit might stick around, the ability to actually use it in 2025 could slip away if you don’t act early.

How Long Does a Residential Solar Installation Take?

From contract execution to commissioning and final grid interconnection, most home solar projects take 60 to 120 days—and that’s in normal conditions. Add in supply chain delays, limited labor availability, and overloaded city permit offices, and you could be looking at a six-month timeline or more.

As we move closer to the solar tax credit deadline, more homeowners are lining up to get systems installed before it’s too late. And once that rush begins in earnest, you’ll want to already be in the queue, not just starting your research.

Should I Wait to See If the Bill Passes?

You could. But you’d be gambling with your own tax savings. The proposed legislation hasn’t passed yet, but the threat of early expiration is already having an effect. Some customers are moving up their timeline just in case—and that alone could be enough to jam up installer calendars well before the actual deadline.

Whether or not the bill passes, locking in your installation well before the solar tax credit deadline puts you in the best position to save.

Ready to Make the Leap?

If you’re solar-curious or halfway committed, it’s time to take the next step. Schedule a consult. Get your site evaluated. Compare proposals. And most importantly—get your place in line.

The 30% solar tax credit is one of the strongest incentives ever offered to homeowners. But it won’t wait forever. Let’s make it happen while the sun’s still shining on federal incentives.

Whether or not Congress pulls the plug on solar incentives this year, it’s clear the Texas grid is not ready to support planned loads through 2026. The urgency is real. If you’re serious about solar, don’t sit back and watch the clock run out. The earlier you act, the better your odds of qualifying—and the sooner you can stop renting unstable, dirty, and increasingly costly power from the grid.

Want to talk timelines? Permits? Panels? Other Specific Goals?   Reach out and we’ll give it to you straight.

Dear Reader —this is not a drill.

Buried inside the Trump administration’s proposed “Big Beautiful Bill” is something big. But it sure ain’t beautiful: it represents a massive rollback/deletion of the federal solar tax credits and financial incentives for both residential and commercial/grid-scale investment. We’ve seen (and reported on) political attitudes and proposed policy drafts which could direct potential headwinds vs. clean energy legislation floating around in various state and U.S. Congressional committees over the past few months. This is first time we can all see it in a complete, final draft form -and attached to a specific bill coming up for a vote. 

These federal solar tax credits and incentives (aka The ITC)—enacted under President Bush in 2005, have made solar more affordable for millions of Americans, supported over 280,000 clean energy jobs, and helped Texans power nearly 5 million homes with solar. Now, they’re on the chopping block.

*Click here now for list of single-click solar advocacy tools you can access in this moment to let your voice be heard!*

What’s at stake?

Well, if this gets passed into law, the outlook isn’t bright. So, what are we looking at here?

• Higher electric bills: Repealing the credit could raise average Texas household electricity bills by up to $29/month.
• Job loss: Our state alone supports over 12,000 solar jobs. The repeal could cost 100,000+ U.S. clean energy jobs by 2040.
• Grid reliability: ERCOT and grid experts agree we need more renewable energy, not less. Solar generation (along with battery storage (BESS)) are key to stability as demand surges.
• National progress: The U.S. now ranks #3 in global solar manufacturing, up from #7. This repeal halts that momentum bigly.

This potential new legislation would starkly contrast with our state’s (mostly bipartisan) embrace and adoption of renewable energy initiatives -and could seriously dampen the forward momentum we broadly support!

Why It Matters for us Texas Folks—In Real Terms

Texas is leading the nation in solar growth. Over 6.6% of our state’s power now comes from solar, and it’s not slowing down. In fact, 92% of new power generation in the past 4 years came from wind, solar, and storage. Energy grid projections published by ERCOT and the Texas PUC are ringing alarms about the viability of our grid after 2026 – at which point our beloved state’s electrical demand is expected to exceed BOTH total installed power line capacity AND generation capacity.  Any federal or state policy-making to slow the adoption of renewable power makes the situation only that much more dire.

This is your energy freedom they’re threatening. This is your return on investment. And this is your chance to push back.federal solar tax credit repeal

Both Solar Income Tax Credits and Other Tax Incentives are Being Targeted. Both matter.

When people talk about the “30% solar tax credit,” they’re usually thinking about the Residential Clean Energy Credit—a federal income tax credit that allows homeowners to deduct 30% of the cost of purchasing and installing their smart solar and battery energy storage system from their tax bill. This has been a game-changer for Texas families investing in solar and energy storage —and it’s currently under threat.

But that’s just one part of the current federal solar incentive ecosystem that’s at risk. There’s also a set of commercial and utility-scale solar tax credits that help enable adoption of everything from community solar to school districts to municipal and grid-scale projects. The proposed “One Big, Beautiful Bill” doesn’t just target residential—it threatens to unwind the commercial side too.

Residential Solar Tax Credit at Risk (ITC, Section 25D)

• Applies to: Homeowners installing solar or battery systems on a primary or secondary residence
• Value: 30% of total system cost, credited against personal income taxes
• Expires: Currently set to phase out gradually through 2034—but the bill proposes ending it in 2025

Commercial and GRID-Scale Solar Incentives at Risk (ITC, Sections 48 & 48E)

• Applies to: Businesses, nonprofits, schools, and large-scale solar developers
• Value: 30% base credit, up to 50% for projects including U.S.-manufactured tech, low-income areas, or energy communities
• Transferable: Can be sold or transferred—allowing flexible project financing
• Includes depreciation: Businesses can claim MACRS depreciation in addition to tax credits
• Big Beautiful Bill impact: Would begin phasing these credits down starting in 2029 and eliminate transferability and bonus adders

The 30% residential tax credit makes solar more accessible for homeowners—but the commercial incentives power the growth of clean energy infrastructure across Texas and the nation. Rolling back either one is short-sighted. Rolling back both? That’s a direct hit to our energy economy, grid stability, and job growth. federal solar tax credit repeal

These tax credits are doing exactly what they were designed to do: lower costs, drive investment, and create energy independence. If the “Big Beautiful Bill” passes as written, all those gains are at risk.

Texans Support Solar.

Recent polling shows:

• 80% of Texans support clean energy tax incentives.
• 73% believe solar and storage make the grid more resilient.
• 82% want a level playing field with oil & gas—not more red tape for solar.

What You Can Do (Right Now!)

Let your voice be heard!  It only takes a minute—and it matters more than ever:

• Send a message to Congress via SEIA’s one-click form
• Use Solar United Neighbors’ form to urge your Congressional reps
• Take action with Solar Powers of America

Or call the U.S. Capitol switchboard directly: (202) 224-3121

Bonus Points: Reach Out to Our State’s Senators

And let them know you’re watching how they vote.

• Senator John Cornyn
• Senator Ted Cruz

You can also find your U.S. House Representative here.

federal solar tax credit repeal

Let’s Be Loud, Texas.

We’ve always stood up for independence, and clean energy is no different. Tell Congress: Keep your hands off the 30% tax credit. Let solar compete, grow, and continue to power more American communities.

Thanks for being part of the NATiVE Solar family, and for standing up now to make your voice count.

—The NATiVE Solar Team

Solar energy isn’t just about being environmentally conscious — for many Texas homeowners, it’s also a long-term financial decision. Electricity costs keep climbing, demand for energy-efficient homes keeps growing, and there are still real incentives on the table at the state and local level, even though the federal picture changed this year. Here’s an updated look at where the financial case for solar in Texas actually stands.

Long-Term Energy Savings
Solar’s core value proposition hasn’t changed: generate your own electricity, reduce what you draw from the grid, and shrink your exposure to rising energy costs over the life of the system. Texas gets more sun than almost anywhere in the country, so a well-designed system can produce a meaningful share of a typical home’s annual energy use.

An 8 kW system in Texas can generate somewhere around 12,000 kWh per year. At today’s average Texas residential rate — around 16–17 cents per kWh, up from under 15 cents just a couple of years ago (per EIA and EnergySage data) — that’s a real dent in a monthly bill. Payback timelines have shifted now that the federal 25D (solar tax) credit is gone for owner-financed systems (more on that below), so we’d rather give homeowners an honest, project-specific estimate than a generic number. Talk to our team about what payback actually looks like for your roof, usage, and provider.

Increased Property Value
Installing solar can also affect what your home is worth. Studies have found that homes with solar tend to sell for more and sell faster than comparable homes without it — buyers increasingly understand the long-term value of not starting from zero on energy costs. In Texas, the Renewable Energy Systems Property Tax Exemption means you get that added value without a corresponding property tax increase.

In practice: if you own a $350,000 home in San Antonio and add a $25,000 solar system, your property taxes stay based on the original $350,000 valuation — not $375,000. That’s one of the few Texas solar incentives that hasn’t changed and isn’t going anywhere.

Where Solar Incentives Actually Stand in 2026
This is the part that’s changed the most, so let’s be direct about it. The federal Investment Tax Credit (Section 25D) — the 30% credit that homeowners have claimed on solar purchases for years — expired at the end of 2025. The key detail: the credit now depends on when your system is placed in service, not just when you paid for it. If your system wasn’t up and running by December 31, 2025, it doesn’t qualify — even if you signed a contract or made a deposit before then. If you buy a system outright or finance it with a loan in 2026, there’s no federal tax credit attached to that purchase. [We aren't tax experts. We always recommend discussing this with your accountant or tax professional]

That doesn’t mean incentives disappeared entirely:

• Local utility rebates are still active — and in some cases growing. Austin Energy raised its residential solar rebate to as much as $4,000 for qualifying systems above 3 kW, up from $2,500 previously. Rebate programs vary by utility, so it’s worth checking what’s available in your specific service territory.
• Third-party ownership (lease/PPA) structures can still pass through a federal credit indirectly. Under these arrangements, the system owner — not the homeowner — can claim the commercial solar credit (Section 48E), which generally remains available at 30% for new lease and PPA projects placed in service through 2027, and may pass some of that value along through the rate structure. This is a different financial arrangement than owning your own system outright, with its own tradeoffs worth understanding before signing anything.
• The property tax exemption above still applies regardless of the federal changes.
• Net metering / buyback arrangements (below) are unaffected by the federal credit expiring.

We wrote more on what this shift means for Texas homeowners in Life After the Federal ITC Solar Tax Credits Expire — worth a read if you’re weighing timing.

Net Metering in Texas
Net metering, or solar buyback, is another lever that’s independent of the federal tax situation. Texas doesn’t have a single statewide net metering policy, but many retail electricity providers offer buyback plans that credit homeowners for excess solar energy sent back to the grid.

Credit rates vary a lot by provider — some offer close to full retail value, others considerably less. Comparing buyback plans is one of the more overlooked ways to improve a system’s long-term value, and it’s worth doing before you pick a provider, not after.

Battery Storage Is Increasingly Part of the Conversation
With the federal credit gone for pure solar purchases, more homeowners are weighing solar + battery energy storage together rather than solar alone — not for the tax treatment, but for the resilience it adds during grid outages and peak-rate periods. It’s a different decision than the one homeowners were making a few years ago, and one we’re happy to walk through project by project.

Why Choose NATiVE?
As you weigh the financial case for solar (and battery storage!), the provider you choose matters as much as the incentives do. NATiVE Solar has been designing and installing solar and battery systems in Texas since 2007 -nearly two decades through several rounds of shifting incentives, including this one. We’re not going anywhere, and neither is our commitment to designing systems for the next 25 years, not just the current tax cycle.

Contact us today to talk through what solar actually looks like for your home under the current incentive landscape.