Solar economics · Austin Energy
The offset knee, drawn from real Austin Energy rates
The percent of your electric bill that solar covers, against system production as a percent of your usage. The knee is where the bill hits zero and one more panel stops paying. Three Austin Energy homes, computed from the published 2026 inside-city tariff. Toggle between the pre-October 2026 Value-of-Solar credit and the rate revised effective October 1, 2026.
Why the knee exists
Austin Energy buys every kilowatt-hour your system makes at the Value-of-Solar rate and sells you every kilowatt-hour your home uses at retail. The credit nets against the whole bill: the usage tiers, the riders, and the $17.35 fixed customer charge. Once credits swallow the entire bill, the bill is $0, and further production only banks credit that rolls forward. AE never cuts a check. That corner is the knee.
Covering 100% of your usage does not zero the bill. The fixed charge stands regardless of usage, and the average retail rate runs above the credit rate, so solar has to over-produce past both.
Why the knee moves with usage, both ways
Two forces position it. The fixed $17.35 is a big share of a small bill, so a lower-usage home needs proportionally more production before the bill zeroes. And above 900 kWh a month, the upper usage tiers push the all-in marginal rate above the credit rate, so a heavy user's bill outruns its credits. The knee is tightest near typical usage.
So tier position does matter, in the direction few would guess: the biggest consumers need proportionally more over-sizing to zero the bill, not less.
What this argues for sizing
Everything left of the knee earns the full credit rate; everything right of it earns nothing. Sizing near 100% of usage keeps a system on the paying side for every profile here, and anyone selling a system far past the knee is selling panels the bill can't use.
The 110% line is Austin Energy's rebate-program gate, not physics: the rebate paperwork requires a signed acknowledgement, with a stated reason, for systems expected to produce past 110% of historical annual consumption.
How the Value-of-Solar rate is set
Austin Energy calculates the Value-of-Solar credit from four avoided-cost components: what the utility saves by not buying ERCOT energy, ancillary services, and transmission capacity, plus a Council-set societal-benefits value. But the customer-facing rate you actually see on your bill doesn't move every year with those inputs. Austin Energy only changes it when City Council approves an update through the budget review process, and there's no fixed schedule for when that happens.
The 9.91¢ rate was set in March 2023 and held for three and a half years. City Council adopted the revised rate as part of the FY2026-2027 budget in August 2026, effective October 1, 2026. That gap is why the toggle above lets you compare both: the rate that held for three and a half years, and the one taking effect this fall.
The fine print
Computed from Austin Energy's inside-city residential schedule effective October 1, 2026: $17.35 customer charge, four usage tiers, 6.808¢/kWh in riders, 1% city sales tax, and the Value-of-Solar credit at 9.91¢ (through September 30, 2026) or 12.88¢ (revised, effective October 1, 2026). Production assumes an Austin-typical 1,400 kWh per kW-dc per year. Three modeled homes at steady monthly usage; outside-city AE rates differ, and so does your home. The chart teaches the shape. Your estimate does the arithmetic on your actual usage, roof, and utility.
More on how these mechanics show up in sales pitches: Myth 08, savings claims and the glossary entry on the Value of Solar tariff. And the honest flip side: when solar isn't worth it.