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Quick Answer
Texas deregulated its electricity market in 2002. About 85% of TX is in the ERCOT competitive market where you choose your Retail Electric Provider (REP). Unlike states with mandatory net metering, your REP decides whether and how to credit excess solar. Buyback rates range from 3-12 cents/kWh. Shopping for the right REP is the single most important decision after choosing your solar installer.
Texas is unlike any other state for solar. No mandatory net metering, 100+ competing retail electric providers, and a deregulated wholesale market that can spike to $9/kWh. This guide explains every layer of the system so you can make the right solar investment.
85%
of TX is deregulated
100+
REPs to choose from
3-12¢
Buyback rate range
$0
Federal ITC (expired)
The Electric Reliability Council of Texas (ERCOT) manages the electric grid for approximately 85% of the state. It is one of three major grid interconnections in the United States, and uniquely, it operates almost entirely within Texas borders with minimal connections to other grids.
In 2002, Texas deregulated its retail electricity market through Senate Bill 7. This means that in most of the state, the generation and retail sale of electricity is competitive. Homeowners choose their Retail Electric Provider (REP) from over 100 options, each offering different rates, contract terms, and solar buyback programs. Wholesale electricity is bought and sold on the ERCOT market, with prices determined by supply and demand in real time.
This creates unique dynamics for solar homeowners that do not exist in any other state. There is no guaranteed net metering. Your solar economics depend heavily on which REP you choose and what buyback plan they offer. Getting this decision right can mean the difference between a 10-year payback and an 18-year payback.
Manages the wholesale market. Ensures grid reliability. Sets the rules for how electricity flows across Texas. Does NOT sell electricity directly to consumers.
Owns and maintains the physical infrastructure: poles, wires, transformers, and meters. Handles your solar interconnection. You cannot choose your TDU.
The company you pay. Sets your consumption rate AND your solar buyback rate. You choose your REP, and you can switch. This is the key decision for solar.
Your solar strategy depends entirely on which side of the line you fall. Deregulated areas require REP shopping. Regulated areas have a single utility with fixed solar programs.
Homeowners choose their REP. Solar buyback plans available. Must actively shop for the best rates.
| Metro Area | TDU | REPs Available | Avg Rate |
|---|---|---|---|
| Dallas / Fort Worth | Oncor | 80+ | $0.15/kWh |
| Houston | CenterPoint | 60+ | $0.16/kWh |
| Corpus Christi | AEP Texas | 30+ | $0.14/kWh |
| Midland / Odessa | Oncor | 80+ | $0.14/kWh |
| Waco / Temple | Oncor | 80+ | $0.15/kWh |
| Rio Grande Valley | AEP Texas | 30+ | $0.13/kWh |
Single utility, fixed rates, different solar programs. No REP shopping needed (or possible).
| City | Utility | Rate | Solar Program | Rating |
|---|---|---|---|---|
| Austin | Austin Energy | $0.12/kWh | Value of Solar ($0.097/kWh) + $2,500 rebate | Excellent |
| San Antonio | CPS Energy | $0.125/kWh | Solar buyback at avoided cost | Good |
| Lubbock | LP&L | $0.11/kWh | Limited solar buyback | Fair |
| New Braunfels | NBU | $0.12/kWh | Net metering at avoided cost | Fair |
| Bryan / College Station | BTU | $0.13/kWh | Limited solar program | Fair |
| Co-op areas | Pedernales, GVEC, etc. | Varies | Varies widely — some charge standby fees | Mixed |
Not sure if your area is deregulated?
Enter your ZIP code on PowerToChoose.org (the PUC's official comparison tool). If you see multiple REP options, you are in a deregulated area.
Texas has no statewide net metering law. In Massachusetts, New Jersey, and Connecticut, utilities are required by law to credit your excess solar at or near the full retail rate. In deregulated Texas, your REP decides whether and how to credit you. Some REPs offer generous retail-match plans. Others offer just 3 cents per kWh. Some offer nothing at all.
What this means for you: Your REP choice directly determines what your excess solar is worth. A 10 kW system exporting 400 kWh/month earns $48/month at 12 cents or just $12/month at 3 cents. Same system, same production, $432/year difference.
REPs offer voluntary solar buyback plans with rates ranging from 3 cents to 12 cents per kWh for exported electricity. The best plans offer retail-match rates (effectively 1:1 net metering), but these are limited to specific TDU territories and can be changed or discontinued at any time. Contract lengths range from 12 to 36 months, after which you must renew at whatever rate is available.
For a deep dive on every available plan, see our Texas Solar Buyback Plans Guide and current buyback rate comparison.
Solar homeowners must evaluate multiple factors when choosing a REP. The buyback rate is important but not the only consideration. Here is the complete checklist:
| Factor | What to Evaluate | Priority |
|---|---|---|
| Buy rate (consumption) | What you pay per kWh when drawing from the grid | High |
| Sell rate (buyback) | What you get per kWh for excess solar exported | Critical |
| Base charges | Monthly minimum bill or fixed fee ($5-$15/mo) | Medium |
| Contract length | Typical: 12, 24, or 36 months | Medium |
| Early termination fee | Penalty for breaking contract ($150-$200 typical) | Medium |
| Credit rollover | Whether unused credits carry forward month to month | High |
| TDU territory match | Not all REPs serve all TDU areas | Critical |
| Contract end credits | What happens to accumulated credits when contract expires | Medium |
Key insight: TDU charges are pass-through costs that are the same regardless of which REP you choose. They cover transmission and distribution (the physical wires) and typically add $30-$50/month to your bill. Do not compare REP plans based on total cost without separating the TDU portion.
Some REP plans (like the now-bankrupt Griddy) exposed customers directly to ERCOT wholesale electricity prices. While this can mean very cheap electricity during normal conditions, it carries extreme risk. During Winter Storm Uri in February 2021, wholesale prices hit $9 per kWh — nine thousand percent above normal. Some customers received bills exceeding $9,000 in a single month.
Solar plus battery storage eliminates this risk by reducing or eliminating grid dependence during price spikes. Even without a battery, solar significantly reduces your total grid consumption and exposure to volatile wholesale pricing. See our ERCOT Solar + Battery Backup Guide for complete backup sizing recommendations.
Some REPs offer Time-of-Use plans where electricity costs more during peak hours (typically 2-7 PM in summer) and less during off-peak hours. Solar panels produce the most electricity during these expensive peak hours, which means each kWh of solar production displaces higher-cost grid electricity and provides more value per kWh generated.
With a battery, you can store midday solar production and discharge during evening peak hours (5-8 PM) when solar production drops but rates remain high. This strategy is covered in detail in our ERCOT Rate Tracker.
Federal Tax Credit Update (2026)
The residential solar ITC (Section 25D) expired December 31, 2025. Homeowners who purchase solar in 2026 receive $0 in federal tax credits. Third-party-owned systems (leases and PPAs) may still access Section 48/48E if the financing company begins construction before July 4, 2026. Your solar buyback plan and REP choice are now even more critical to your financial return.
These REPs offer the best solar buyback programs as of early 2026. Rates change frequently — always verify current offers on PowerToChoose.org before signing a contract.
Retail-match
Oncor, CenterPoint
Credits at full retail rate. Effectively 1:1 net metering. Annual true-up.
Retail-match
Oncor only
Exports credited at same rate as consumption. Oncor territory only.
7.0¢/kWh fixed
All 4 TDUs
Available in all TDU territories. Indefinite credit rollover.
9.5¢/kWh fixed
Oncor, CenterPoint
Competitive fixed rate. Real-time monitoring via app.
TOU-based
Oncor, CenterPoint
Higher credits during peak hours. Flexible pricing for solar + battery.
Rates Change Frequently
REP solar buyback rates are not regulated and can change when your contract expires. The rates listed above are based on plans available in early 2026. Always check PowerToChoose.org (the PUC's official comparison tool) for the most current offers. Also see our buyback rate comparison page which we update regularly.
Even in deregulated markets, the physical wires are owned by a Transmission & Distribution Utility (TDU). TDU charges are pass-through (the same with any REP). Solar interconnection goes through your TDU, not your REP.
~10 million customers
DFW, most of north/central TX
Interconnection: 2-4 weeks, $0 application fee
Largest TDU in Texas. Fastest interconnection processing.
~2.7 million customers
Houston metro area
Interconnection: 3-6 weeks
Second largest. Higher TDU delivery charges than Oncor.
~1 million customers
South TX, Rio Grande Valley, Corpus Christi
Interconnection: 4-8 weeks
Fewer REP options but competitive consumption rates.
~250,000 customers
Scattered areas (Lewisville, Galveston, etc.)
Interconnection: 4-6 weeks
Smallest TDU. Limited but growing solar interconnection experience.
One of the most misunderstood aspects of deregulated Texas is the interconnection process. Many homeowners assume their REP handles interconnection, but that is incorrect. Here is how it actually works:
The solar installer submits an interconnection application to your TDU (Oncor, CenterPoint, AEP Texas, or TNMP). This is separate from your REP relationship.
The TDU reviews your system design, may inspect the installation, and ensures it meets safety and grid compatibility standards.
The TDU installs a bidirectional smart meter that tracks electricity flowing in both directions — consumption from the grid and exports from your solar.
Once the TDU grants permission to operate, your system is live. You can then choose any REP with a solar buyback plan.
Your interconnection stays with the TDU. You can switch REPs at any time without affecting your solar interconnection. This is a major advantage of the Texas system.
Rate
$0.12/kWh
Solar Rebate
$2,500
Value of Solar
9.91¢/kWh
Austin Energy is the best solar market in Texas. They offer a $2,500 rebate plus a Value of Solar tariff that pays you 9.91 cents per kWh for all solar production — not just exports. The VOS rate is guaranteed for 10 years. Combined with lower electricity rates, Austin solar typically has an 8-10 year payback even without federal incentives.
Rate
$0.125/kWh
Solar Rebate
None
Buyback
Avoided cost
CPS Energy provides solar buyback at avoided cost (roughly 4-5 cents per kWh for exports). Lower electricity rates and no solar-specific rebate make San Antonio a moderate solar market. Savings are real but payback periods are longer than Austin or deregulated areas with high REP rates.
Texas has dozens of electric cooperatives (Pedernales Electric Co-op, GVEC, Bluebonnet, etc.) serving rural and suburban areas. Solar policies vary dramatically:
Some co-ops offer net metering at retail rate
Some charge $25-$50/month standby fees
Some offer low-interest solar loans
Some cap system size at 10 kW
If you are in a co-op area, contact your co-op directly to understand their solar interconnection policy and any standby charges before investing.
In states with 1:1 net metering (like Massachusetts), the grid effectively acts as a free battery — every kWh you export is worth the same as a kWh you consume later. In deregulated Texas, your export rate is typically lower than your consumption rate, which means storing solar and using it later provides more value than exporting it. This fundamentally changes the battery calculus.
Store solar during the day instead of exporting at low buyback rates
Discharge during evening peak (5-8 PM) when rates are highest
Avoid wholesale price spikes during extreme weather
Participate in VPP programs for additional revenue
Backup power during ERCOT grid emergencies and rolling blackouts
Export at 28¢ = consume later at 28¢. Battery adds backup value only.
Export at 7-10¢ vs consume at 15¢+. Battery saves 5-8¢/kWh + backup + VPP revenue.
Some REP plans are structured in ways that significantly reduce solar savings. Watch for these red flags before signing any contract.
Even if your solar covers 100% of usage, you still pay the minimum. This cuts into savings significantly for smaller systems.
Some plans charge based on your peak 15-minute consumption, not total kWh. Solar does not eliminate demand charges since peak usage often occurs at night.
TDU delivery charges apply even with zero grid consumption. These are typically $30-$50/month and cannot be avoided with solar.
Excess credits are forfeited each billing cycle. During high-production months (April-September), you lose value.
Accumulated credits vanish when your contract ends. If you have a large summer credit balance and your contract ends in October, you lose it all.
Pro Tip: Size Your System for Self-Consumption
Because TX buyback rates are lower than consumption rates, the smartest strategy is to size your solar system to match your daytime consumption as closely as possible, minimizing exports. Add a battery to capture any excess. This approach maximizes the value of every kWh your panels produce. Use our solar sizing tool for a personalized recommendation.
Texas electricity rates are lower than the Northeast, but Texas has significantly higher solar production. A system in Texas produces about 1,600 kWh per kW per year, compared to roughly 1,200 in New England — 33% more energy from the same equipment.
$0.15
Avg rate per kWh
Deregulated avg (varies by REP)
$2.75
Avg cost per watt
Before any incentives
12-16 yr
Typical payback
Depends on REP rate + buyback
Texas also offers a 100% property tax exemption for solar installations, which means your property taxes will not increase due to the added home value from solar. There is no state income tax in Texas, so there are no state tax credits available. With the federal residential ITC (Section 25D) having expired on December 31, 2025, homeowners purchasing solar in 2026 receive $0 in federal tax credits for cash or loan purchases.
For detailed cost data by metro area, see our Texas Solar Panel Cost 2026 guide, and track rate trends on our Texas electricity rates page.
ERCOT (Electric Reliability Council of Texas) manages the electric grid for about 85% of Texas. Unlike most U.S. states, Texas deregulated its retail electricity market in 2002, meaning homeowners in ERCOT territory choose their Retail Electric Provider (REP). For solar owners, this means there is no statewide net metering law — your REP decides whether and how to credit your excess solar production. Shopping for the right REP with a good solar buyback plan is critical to maximizing your solar investment.
Most of Texas is deregulated (ERCOT competitive market): Dallas, Houston, Fort Worth, and most urban areas. However, several cities operate their own municipal utilities and are NOT deregulated: Austin (Austin Energy), San Antonio (CPS Energy), Lubbock (LP&L), Bryan (BTU), and New Braunfels (NBU). Electric co-ops like Pedernales and GVEC are also regulated. Enter your ZIP code on PowerToChoose.org — if you see multiple REP options, you are in a deregulated area.
No. Texas has no statewide net metering mandate. This is fundamentally different from states like Massachusetts, New Jersey, or Connecticut where net metering is required by law. In deregulated Texas, REPs voluntarily offer solar buyback plans with rates ranging from 3 cents to 12 cents per kWh for excess solar. In regulated areas, programs vary: Austin Energy offers a Value of Solar tariff at 9.91 cents per kWh, while CPS Energy provides buyback at avoided cost.
A TDU (Transmission and Distribution Utility) owns the physical wires and poles that deliver electricity to your home. The four TDUs in deregulated Texas are Oncor, CenterPoint, AEP Texas, and TNMP. Your solar interconnection application goes through your TDU (not your REP). TDU delivery charges are the same regardless of which REP you choose, and they apply even with solar. You cannot choose your TDU — it is determined by your address.
Your solar installer submits an interconnection application to your TDU (Oncor, CenterPoint, AEP Texas, or TNMP). The TDU reviews the application, may inspect the installation, and installs a bidirectional smart meter. Processing time is typically 2-4 weeks for Oncor, 3-6 weeks for CenterPoint. There is no application fee for residential systems. Once interconnected, you can choose any REP with a solar buyback plan — and you can switch REPs later without affecting your interconnection.
Yes. Your solar interconnection is with your TDU, not your REP. You can switch REPs at any time (subject to contract terms and early termination fees). The transition takes one to two billing cycles, and your solar system works normally during the switch. This is actually a major advantage of deregulation — you can shop for better buyback rates every time your contract expires.
For Oncor territory, TXU Solar Buyback Match 36 and Green Mountain Renewable Rewards offer retail-match credits (effectively 1:1 net metering). For the best fixed-rate buyback, Rhythm Energy offers 9.5 cents per kWh. Chariot Energy offers 7 cents per kWh but is available in all four TDU territories. Rates change frequently, so always check PowerToChoose.org for current offers before committing.
Some REP plans expose you to ERCOT wholesale electricity prices, which can spike dramatically during extreme weather. During Winter Storm Uri in February 2021, wholesale prices hit $9 per kWh, causing some customers to receive bills over $9,000 in a single month. Solar plus battery storage eliminates this risk by reducing or eliminating your grid dependence during price spikes. Even without a battery, solar reduces your total grid consumption and exposure.
In many cases, yes. In states with 1:1 net metering (like Massachusetts), the grid effectively acts as a free battery — every kWh exported is worth the same as a kWh consumed. In deregulated Texas, your buyback rate is typically lower than your consumption rate, so storing solar and using it later is more valuable than exporting it. A battery also lets you avoid wholesale price spikes and participate in Virtual Power Plant (VPP) programs for additional revenue.
Even with a solar system that produces 100% of your electricity, you still pay TDU delivery charges (transmission and distribution fees). These are typically $30-$50 per month and apply based on any grid consumption. You also pay a minimum bill amount set by your REP (usually $5-$15 per month). These non-bypassable charges mean solar cannot completely eliminate your electricity bill in Texas.
Some REPs offer TOU plans where electricity costs more during peak hours (typically 2-7 PM in summer) and less during off-peak hours. Solar panels produce the most electricity during these expensive peak hours, which means each kWh of solar production displaces higher-cost grid electricity. If you add a battery, you can store midday solar and discharge during evening peak (5-8 PM) when solar production drops but rates remain high.
Austin is the best solar market in Texas thanks to Austin Energy offering a $2,500 rebate plus a Value of Solar tariff at 9.91 cents per kWh with a guaranteed 10-year rate. San Antonio (CPS Energy) offers modest solar buyback at avoided cost. Other regulated areas vary: some co-ops are supportive, while others charge standby fees that can significantly reduce solar savings. Always check your specific utility program before investing.
Compare every REP buyback plan in TX
Side-by-side rate comparison table
Live TX electricity rate data and trends
Sizing, models, and grid independence
Metro-by-metro rate breakdown
Pricing by city and system size
Earn revenue from your battery
ERCOT deregulation means your solar value depends on choosing the right REP buyback plan. With NuWatt's Propel financing, you also get access to the 40% Section 48E ITC through a third-party owner — $0 down, fixed monthly payment ~$117/month on an 8 kW system (at $2.90/W), 8.99% APR, 25-year term, 660 FICO minimum. FEOC-compliant Silfab 440W panels. Must begin construction before July 4, 2026.
Learn About Propel FinancingOur Texas solar experts will help you navigate the deregulated market, recommend the best REP for your TDU territory, and size your system for maximum self-consumption.
Free assessment includes system sizing, REP recommendation, and projected monthly savings
Last updated: March 2026
Sources: ERCOT, PUCT, PowerToChoose.org, utility program pages