Last Updated on January 28, 2023 by Mary Pressler
AEP Texas Energy Incentive Programs in 2023
American Electric Power operates two Transmission and Distribution Utilities (TDUs) in the Lone Star State: AEP Texas Central and AEP Texas North.
- The AEP Texas service territory covers an area of 97,000 square miles in south and west Texas with major cities like Abilene, San Angelo, Laredo, Marfa and Corpus Christi.
- AEP Texas serves more than 1,000,000 homes and businesses, using over 8,400 miles of transmission lines and over 43,900 miles of distribution lines.
Like other TDUs operating in the state, AEP Texas has several incentive programs for its customers. The incentives available cover energy efficiency measures such as home weatherization and air conditioner upgrades, and there is also a solar rebate program. The following table summarizes all residential and commercial incentives available from AEP Texas:
| Market Segment | AEP Texas Incentive Programs |
| Residential – South Texas | CoolSaver A/C Tune-Up Program
Hard-to-Reach Standard Offer Program High-Performance New Homes Program |
| Residential – West Texas | Hard-to-Reach Standard Offer Program |
| Commercial – South Texas | CitySmart |
| Commercial – West Texas | CitySmart |
In this page, we will provide an overview of all the AEP Texas incentive programs listed above. Keep in mind that “west Texas” refers to the service territory covered by AEP Texas North, while “south Texas” refers to the territory covered by AEP Texas Central.
AEP Texas Energy Incentive Programs for Homes
AEP Texas manages six residential incentive programs as of 2023. Four programs are available in south and west Texas, and two programs are exclusively for south Texas.
1) CoolSaver A/C Tune-up Program
Availability: Only South Texas
An air conditioner tune-up can reduce your cooling costs by up to 30%, and this represents major power bill savings during summer. An AC tune-up also improves humidity control, making your home interior more comfortable.
AEP Texas offers an incentive of $75 – $150 when getting a professional AC tune-up from one of their participating contractors. The incentive amount is based on the size of your AC system, and units ranging from 1.5 to 5 tons are eligible. Your system must also meet the following requirements:
- At least one year old
- In good operating condition
- Not having received a CoolSaver A/C Tune-up during the last five years
The program also offers incentives of $120 – $1,225 for AC replacements in single-family homes. The incentive applies for systems ranging from 1.5 to 5 tons, and the rebate amount is determined based on system capacity and the efficiency (SEER) of the new unit.
| System Capacity | SEER 16 | SEER 17 | SEER 18 |
| 1.5 tons | $120 | $180 | $240 |
| 2.0 tons | $160 | $240 | $320 |
| 2.5 tons | $200 | $300 | $400 |
| 3.0 tons | $240 | $360 | $480 |
| 3.5 tons | $280 | $420 | $560 |
| 4.0 tons | $320 | $480 | $640 |
| 5.0 tons | $400 | $600 | $800 |
The incentive amount is increased by 50% if your new AC unit is purchased at least 0.5 ton smaller than the existing one. You also get a $25 bonus incentive if you’re getting an early replacement for an operational air conditioner.
In both cases (A/C tune-up or full system replacement), your contractor is responsible for submitting all the paperwork required by AEP Texas.
2) Hard-to-Reach Standard Offer Program
Availability: South and West Texas
The HTR Standard Offer Program focuses on households at or below 200% of the federal poverty guideline, who are in the AEP Texas service territory. The incentive program is also available for households participating in government programs: Supplemental Security Income, Medical Assistance, Children’s Health Insurance Program, Qualified Medicare Beneficiary, Public/ Section 8 Housing, Food Stamps, etc.
AEP Texas funds a wide range of energy efficiency measures through the Hard-to-Reach program, with the goal of reducing utility costs in eligible households.
- Insulation and other home envelope measures
- ENERGY STAR LED bulbs
- Water heater insulation blankets
- Water heater pipe insulation
- Low-flow showerheads
- Faucet aerators
- A/C system duct testing and sealing
- High-efficiency split-system air conditioners and heat pumps
- High-efficiency packaged-system air conditioners and heat pumps
The incentives are provided through participating contractors, and eligible measures are provided at zero cost for the end user (or very low cost).
3) High-Performance New Homes Program
Availability: Only South Texas
Through this program, AEP Texas collaborates with participating contractors who build High-Performance Homes and ENERGY STAR Certified Homes.
- Both types of homes exceed the requirements of residential construction codes, and they save thousands of dollars in energy bills over time.
- High-performance/ENERGY STAR homes are also more comfortable, since their efficient HVAC systems achieve better control over air humidity and dust.
- These homes also qualify for better financing options than homes built according to minimum performance requirements.
The High-Performance New Homes Program classifies residential constructions into three performance tiers, which determine the incentive amount awarded. There are mandatory and elective requirements for each tier, and homebuilders must meet all mandatory requirements and a specified number of elective requirements to qualify for the incentive.
| Performance Level | Tier 1 | Tier 2 | Tier 3 |
| Mandatory Requirements | SEER 16+ cooling
Grade 1 wall insulation R38+ ceiling insulation |
SEER 16+ cooling
Grade 1 wall insulation R42+ ceiling insulation |
SEER 16+ cooling
Grade 1 wall insulation R42+ ceiling insulation 0.95+ electric water heater efficiency HSPF 9.5+ heat pump |
| Elective Requirements | Meet 3 of 6 | Meet 4 of 6 | Meet 4 of 6 |
| Duct leakage, CFM/ 100 sq.ft. | 4 or less | 3.5 or less | 3.5 or less |
| Infiltration ACH50 | 4.5 or less | 4 or less | 4 or less |
| Avg. window solar heat gain coefficient (SHGC) | 0.24 or less | 0.22 or less | 0.22 or less |
| Avg. wall + sheathing R-value | R-15 or higher | R-15 or higher | R-15 or higher |
| High efficiency lighting % | 90% or more | 95% or more | 95% or more |
| Radiant barrier | Yes | Yes | Yes |
| Incentive | $250 | $350 | $550 |
The High-Performance New Homes Program also provides bonus incentives for specific energy efficiency measures. These incentives are the same for all three performance tiers:
- Heat pump water heater (per home) = $300
- Level 2 EV charger (per home) = $100
- Heat pump, at least 9.0 HSPF (per home) = $200
- ENERGY STAR smart thermostat (per home) = $25
- Foam encapsulated attic, R-21 o higher = $50
- Optimal HVAC sizing (per system) = $25
Affordable and Low-Income Housing projects qualify for a bonus incentive of $100 per home.
4) Residential Standard Offer Program
Availability: South and West Texas
The Residential Standard Offer Program provides financial incentives for a wide range of energy efficiency measures, which are offered through participating contractors. The energy efficiency measures covered by this program are very similar to those in the Hard-to-Reach Program, and they include:
- Ceiling, wall and floor insulation
- ENERGY STAR windows
- Central air conditioner and heat pump replacements
- Duct efficiency improvements in single-family homes
- ENERGY STAR thermostats
- ENERGY STAR LED lamps
- Faucet aerators
- Low-flow showerheads
- Water heater tank and pipe insulation
- Heat pump water heaters
The AEP Texas Residential Program assigns a specific incentive rate for each energy efficiency measure. In most cases, the incentive is calculated per kilowatt-hour of energy savings and per kilowatt of demand savings.
5) SMART Source Solar Incentives
AEP Texas offers rebates for residential and commercial solar installations through the SMART Source Solar PV Program. The incentive is calculated based on system capacity, according to the following table:
| Solar PV System Capacity | Incentive Rate |
| Smaller than 3 kW | $0.50 per watt DC |
| 3 kW – 4.999 kW | $1,500 per system |
| 5 kW – 7.499 kW | $2,250 per system |
| 7.5 kW – 30 kW | $3,000 per system |
In 2022, AEP Texas assigned a budget of $572,790 for residential solar incentives: $385,024 for the AEP Texas Central division, and $187,766 for the AEP Texas North division.
The 2023 residential solar incentive budget is $569,966: The AEP Texas Central territory gets $383,126, and the AEP Texas North territory gets $186,840.
6) Targeted Low-Income Program
Similar to the Hard-to-Reach SOP, the Targeted Low-Income Program is available for households at or below 200% of the federal poverty guideline. AEP Texas collaborates with nonprofit community agencies who identify eligible customers and conduct home assessments. The program focuses on whole-house retrofits, offering an incentive of up to $6,500 per home.
The energy efficiency measures covered by the Targeted Low-Income Program are very similar to those in the Residential and HTR Programs:
- Insulation
- Air infiltration reduction: door weatherstripping, door thresholds, plumbing fixture sealing, attic access sealing, etc.
- ENERGY STAR LED lamps
- Water heater insulation blankets and pipe insulation
- Faucet aerators
- Low-flow showerheads
- ENERGY STAR home appliances: refrigerators, dishwashers, clothes washers, etc.
- Air conditioning system testing and duct sealing
- High-efficiency split-system air conditioners and heat pumps
- High-efficiency packaged-system air conditioners and heat pumps
Nonprofit agencies who are interested in the Targeted Low-Income Program must attend the annual rollout meeting held by AEP Texas, which takes place during the first days of February.
AEP Texas Energy Incentive Programs for Commercial Buildings
AEP Texas manages eight commercial incentive programs as of 2023. Seven programs are available in south and west Texas, and the CoolSaver A/C Tune-up Program is only available in south Texas.
1) CitySmart Program
Availability: South and West Texas
The CitySmart Program has the goal of improving energy efficiency in government buildings within the AEP Texas service territory. The CitySmart program offers financial incentives for eligible projects, along with several no-cost solutions:
- Technical assistance for projects
- Energy performance benchmarking
- Energy master planning workshops
- Financing assistance
- Communication expertise to publicize energy efficiency achievements
Thanks to the CitySmart program, government agencies in the AEP Texas service territory have achieved cumulative savings of over $34.7 million.
The following table summarizes the incentive rates available from CitySmart in 2023. As you can see, incentives in the AEP Texas Central territory are calculated per kilowatt saved (demand), while those in the AEP Texas North territory are calculated per kilowatt-hour (energy).
| Energy Efficiency Measures | AEP Texas Central Incentives | AEP Texas North Incentives |
| Air compressors | $150 per kW | $0.05 per kWh |
| Air infiltration | $10 per door sweep
$20 per weatherstrip |
$10 per door sweep
$20 per weatherstrip |
| Commercial kitchen | $150 per kW | $0.04 per kWh |
| HVAC – Chillers | $200 per kW | $0.05 per kWh |
| HVAC – Direct expansion | $150 per kW | $0.04 per kWh |
| LED lighting | $200 per kW | $0.05 per kWh |
| Other lighting measures | $150 per kW | $0.04 per kWh |
| Refrigeration | $150 per kW | $0.05 per kWh |
| Roofing | $150 per kW | $0.04 per kWh |
| Variable frequency drives for air handling units | $150 per kW | $0.05 per kWh |
After an incentive is approved, AEP Texas will normally issue the check within 4-6 weeks.
2) Commercial Solutions Program
Availability: South and West Texas
The Commercial Solutions Program uses the same incentive rates as the CitySmart Program, but in this case for commercial electricity consumers.
| Energy Efficiency Measures | AEP Texas Central Incentives | AEP Texas North Incentives |
| Air compressors | $150 per kW | $0.05 per kWh |
| Air infiltration | $10 per door sweep
$20 per weatherstrip |
$10 per door sweep
$20 per weatherstrip |
| Commercial kitchen | $150 per kW | $0.04 per kWh |
| HVAC – Chillers | $200 per kW | $0.05 per kWh |
| HVAC – Direct expansion | $150 per kW | $0.04 per kWh |
| LED lighting | $200 per kW | $0.05 per kWh |
| Other lighting measures | $150 per kW | $0.04 per kWh |
| Refrigeration | $150 per kW | $0.05 per kWh |
| Roofing | $150 per kW | $0.04 per kWh |
| Variable frequency drives for air handling units | $150 per kW | $0.05 per kWh |
The program also provides technical assistance and training at no additional cost. So far, businesses in the AEP Texas service territory have saved over $37.7 million in energy expenses thanks to this program.
3) Commercial Standard Offer Program
Availability: South and West Texas
This is another energy incentive program for commercial consumers in the AEP Texas territory. The Commercial SOP covers a wide range of energy efficiency measures: LED lighting, air conditioning upgrades, building envelope upgrades, foodservice equipment, refrigeration, etc. Incentives are available for both new constructions and existing building retrofits.
The incentive is calculated based on savings achieved, and it depends on the type of energy efficiency measure:
- $350/kW and $0.09/kWh for HVAC efficiency measures
- $200/kW and $0.07/kWh for all other measures
- The project must achieve at least $500 in total incentives
The program manual provides a long list of energy efficiency measures that are eligible for incentives, and the following are some examples:
| Energy Efficiency Measure Category | Eligible Projects | Examples of Eligible Measures |
| LED lighting | New constructions
Retrofits |
LED tubes
LED fixtures Indoor and outdoor lighting |
| Air conditioning | New constructions
Retrofits |
Split-system air conditioners
Split-system heat pumps Packaged air conditioners Packaged heat pumps Electric chillers Variable frequency drives on air handlers |
| Building envelope | Only retrofits | ENERGY STAR roofs
Window treatments Entrance/exit door air infiltration Programmable thermostats |
| Food service equipments | New constructions
Retrofits |
ENERGY STAR equipment:
Pre-rinse spray valves |
| Refrigeration | Only retrofits in most cases
(New constructions eligible for some measures) |
Door heater controls
ECM evaporator fan controls Electronic defrost controls Evaporator fan controls Night covers for open refrigerated display cases Door gaskets for walk-in and reach-in coolers and freezers Available for New Constructions: Solid and glass door reach-ins Strip curtains for walk-in refrigerated storage Zero energy doors for refrigerated cases |
| Other measures | Only retrofits | Vending machine controls
Lodging guest room occupancy sensor controls Pump-off controllers for oil pump jacks |
All incentives are offered through participating contractors, who are approved by AEP Texas. Project applications must be pre-approved and there is a limited annual budget – acting quickly is recommended!
4) CoolSaver A/C Tune-Up Program
Availability: Only South Texas
The commercial version of the CoolSaver A/C Tune-Up Program is only available in south Texas. An air conditioner tune-up is a simple procedure that can reduce cooling costs by up to 30%, while improving humidity control and indoor air quality.
AEP Texas offers an incentive of $100 – $350 if you’re interested in professional AC tune-up from one of their qualified contractors. Your system must meet the following conditions to be eligible:
- Having a capacity between 1.5 and 25 tons
- The unit must be at least one year old, and in good operating condition
- Not having received a CoolSaver A/C Tune-up during the last five years
Texas normally reaches its highest electricity consumption during summer, and that also when kilowatt-hours are more expensive. An AC tune-up can greatly reduce your space cooling costs.
5) Load Management Program
Availability: South and West Texas
AEP Texas offers financial incentives for nonresidential consumers and service providers who are capable of reducing their power usage at times of peak demand. Participants must be able to respond on short notice, and they get an incentive based on verified demand savings. There are both scheduled and unscheduled interruptions, and participants are notified at least 30 minutes in advance.
The Load Management Program has a summer version and a winter version, and the differences are summarized in the following table. In both cases, nonresidential consumers must have a peak demand of at least 500 kW to participate in the program, and the building must be equipped with an Interval Data Recording Meter or Advanced Metering Infrastructure (AMI).
| Load Management Program Version | Summer | Winter |
| Demand reduction capacity | Must be capable of reducing demand by at least 5 kW | Must be capable of reducing demand by at least 100 kW |
| Program duration | June – September | December – February |
| Unscheduled interruptions | Based on the program option selected:
A – Up to 4 interruptions, lasting 4 hours each B – Up to 12 interruptions, lasting 4 hours each C – Up to 12 interruptions, lasting 2 hours each D – Up to 8 interruptions, lasting 4 hours each E – Up to 8 interruptions, lasting 2 hours each |
24/7 availability required |
| Incentive rate | $15 – $35 per kW, depending on the program option:
Option A – $15/kW Option B – $35/kW Option C – $25/kW Option D – $25/kW Option E – $20/kW |
$35/kW |
Program conditions and incentive rates are the same in both TDU service territories: AEP Texas Central and AEP Texas North.
6) Open Small Business Program
Availability: South and West Texas
This program offers energy incentives for small businesses in the AEP Texas territory. The list of energy-saving measures eligible for incentives includes LED lighting, occupancy sensors and refrigeration controls. This incentive program is available for commercial customers who meet one the following conditions:
- Having a peak demand of no more than 150 kW in a single facility.
- Having a total demand of no more than 250 kW, across all facilities owned by the same customer in the AEP Texas territory.
Commercial electricity consumers who qualify for the Open Small Business Program can get rebates for LED lighting, HVAC upgrades or refrigeration upgrades. The incentives rates offered by this program are higher than the typical rates in other commercial programs, and they can cover up to 80% of project costs.
- AEP Texas Central region: Up to $650 per kW of peak demand saved
- AEP Texas North region: Up to $750 per kW of peak demand saved
Air infiltration measures are also eligible for rebates: up to $100 per weather strip and up to $50 per door sweep. In this case, the incentive amount is not limited to 80% of project costs.
AEP Texas also provides a free no-obligation assessment, with the goal of identifying the best energy upgrades for your facility. The assessment includes an estimate of potential energy savings, project costs and payback period. Incentives are offered through approved contractors, and they are subtracted from the cost of energy saving measures.
7) SCORE Program
Availability: South and West Texas
SCORE is an energy incentive program for educational institutions. The program offers incentives for energy efficiency improvements, and several types of zero-cost assistance:
- Performance benchmarking
- Energy master planning workshops
- Technical assistance
- Communications support
The SCORE program is available for all educational facilities in the AEP Texas territory. The program uses the same incentive rates as the CitySmart and Commercial Solutions Programs: incentives per kW (demand) in the AEP Texas Central region, incentives per kWh (energy) in the AEP Texas North region, and fixed incentives for air infiltration measures.
| Energy Efficiency Measures | AEP Texas Central Incentives | AEP Texas North Incentives |
| Air compressors | $150 per kW | $0.05 per kWh |
| Air infiltration | $10 per door sweep
$20 per weatherstrip |
$10 per door sweep
$20 per weatherstrip |
| Commercial kitchen | $150 per kW | $0.04 per kWh |
| HVAC – Chillers | $200 per kW | $0.05 per kWh |
| HVAC – Direct expansion | $150 per kW | $0.04 per kWh |
| LED lighting | $200 per kW | $0.05 per kWh |
| Other lighting measures | $150 per kW | $0.04 per kWh |
| Refrigeration | $150 per kW | $0.05 per kWh |
| Roofing | $150 per kW | $0.04 per kWh |
| Variable frequency drives for air handling units | $150 per kW | $0.05 per kWh |
The energy savings achieved by the SCORE program are enough to cover the salaries of 2,241 teachers, or to purchase 2.1 million books for students.
8) SMART Source Solar PV Program
Availability: South and West Texas
The SMART Source Solar PV Program benefits both residential and commercial solar installations. Commercial electricity consumers who install solar panels are eligible for the following incentive rates:
- $0.50 per watt, for systems up to 25 kW of capacity
- $0.25 per watt, covering capacity higher than 25 kW up to 200 kW
For example, a 50-kW solar PV system would get $12,500 for the first 25 kW and $6,250 for the remaining 25 kW.
In 2022, AEP Texas assigned a budget of $245,280 for commercial solar rebates. The AEP Texas Central division received $174,157, and the AEP Texas North division received $71,123.
The 2023 commercial solar incentive budget is $244,020: The AEP Texas Central territory gets $173,298, and the AEP Texas North territory gets $70,722.