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Texas electricity rates average $0.14-0.16/kWh — lower than the Northeast but with extreme volatility. ERCOT wholesale prices can spike 300%+ in a single day during heat waves or cold snaps. In the deregulated market, your rate depends on your REP, your plan, and the weather. Solar eliminates this uncertainty.
Texas has a split electricity market: ~85% of customers are in deregulated ERCOT territory where they choose their REP, while municipal utilities like Austin Energy and CPS Energy set their own rates.
Deregulated TDU
15c
per kWh avg (2026)
Largest TDU in TX. Delivery charges ~$0.04/kWh. REP choice for supply.
Deregulated TDU
16c
per kWh avg (2026)
Higher delivery charges than Oncor (~$0.045/kWh). Significant storm recovery costs post-Uri.
Municipal Utility
12c
per kWh avg (2026)
Regulated municipal. Value of Solar rate for exports ($0.097/kWh). No REP choice.
Municipal Utility
13c
per kWh avg (2026)
Largest municipally-owned gas and electric utility in the US. Solar buyback available.
Deregulated TDU
14c
per kWh avg (2026)
Serves large rural areas. Higher line loss charges. Significant wind + solar generation in territory.
Deregulated vs. Regulated: Why It Matters for Solar
In deregulated areas (Oncor, CenterPoint, AEP Texas), your solar buyback rate depends on your REP — it can range from $0.00 to $0.10+/kWh. You must actively choose a solar-friendly plan. In regulated areas (Austin Energy, CPS Energy), buyback rates are set by the city council and are more predictable. Austin Energy's Value of Solar rate ($0.097/kWh) is one of the more generous buyback programs in TX.
Texas rates have increased 25-35% since 2020 depending on the market. The deregulated markets saw the biggest swings, while municipal utilities increased more gradually.
| Market | Type | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | Change |
|---|---|---|---|---|---|---|---|---|---|
| Oncor (DFW) | Dereg | 11.5c | 12.5c+8.7% | 14.0c+12.0% | 15.2c+8.6% | 14.5c-4.6% | 13.8c-4.8% | 15.0c+8.7% | +30.4% |
| CenterPoint (Houston) | Dereg | 12.0c | 13.2c+10.0% | 15.0c+13.6% | 16.2c+8.0% | 15.5c-4.3% | 14.8c-4.5% | 16.0c+8.1% | +33.3% |
| Austin Energy | Muni | 9.8c | 10.5c+7.1% | 10.8c+2.9% | 11.4c+5.6% | 11.8c+3.5% | 11.5c-2.5% | 12.0c+4.3% | +22.4% |
| CPS Energy (San Antonio) | Muni | 10.0c | 10.5c+5.0% | 11.0c+4.8% | 11.6c+5.5% | 12.1c+4.3% | 11.8c-2.5% | 12.5c+5.9% | +25.0% |
| AEP Texas | Dereg | 11.0c | 11.8c+7.3% | 12.8c+8.5% | 14.0c+9.4% | 13.5c-3.6% | 13.0c-3.7% | 14.0c+7.7% | +27.3% |
TX rates among lowest in US at ~10-12c/kWh. COVID briefly depresses demand. Abundant natural gas + wind keep prices low.
WINTER STORM URI: ERCOT wholesale prices hit $9,000/MWh cap for 4+ days. Grid nearly collapsed. Some customers received $10,000+ bills. 246 Texans died. Led to sweeping ERCOT reforms.
Post-Uri reforms add costs. ERCOT securitization bonds ($2.1B) paid by ratepayers. Natural gas prices spike from Russia-Ukraine war. REP rates increase 15-25%.
Summer heat wave drives ERCOT to record demand (85 GW). Wholesale prices spike 300%+ on multiple days. Some variable-rate customers see $0.50+/kWh bills.
Gas prices moderate. ERCOT adds 10 GW of solar and battery capacity. Average rates stabilize but remain above 2020 levels due to securitization charges.
Moderate summer keeps prices stable. Municipal utilities raise rates 3-5% for infrastructure. Deregulated market sees rate creep from capacity costs.
Rates at 12-16c/kWh depending on market. ERCOT reserve margins remain tight at 10-12%. Summer spike risk persists. Solar + battery adoption accelerating.
Texas has fundamentally different rate dynamics than the Northeast. Rates are lower on average but can spike dramatically. Understanding these drivers explains why solar provides uniquely valuable price stability in TX.
Unlike ISO-NE which pays generators to be available, ERCOT uses an "energy-only" market where generators only earn money when they actually produce. This keeps average prices low but means there is no financial incentive to maintain excess capacity. When demand exceeds supply, prices spike to the $5,000/MWh cap (reduced from $9,000 post-Uri) to incentivize every available generator to run.
Texas generates more electricity from natural gas than any other state. While TX sits on top of major gas production (Permian, Eagle Ford), extreme weather events can disrupt both gas supply and power demand simultaneously. During Winter Storm Uri, gas wells froze while demand for both heating and electricity spiked, causing the cascading failure.
TX has a cooling-dominant climate where 80%+ of peak electricity demand comes from air conditioning. Summer temperatures above 100 degrees F in DFW and Houston push ERCOT demand to 80-85 GW, leaving razor-thin reserve margins of 5-10%. Every degree above 100 adds ~1 GW of demand. This is why ERCOT issues conservation appeals almost every summer.
TX leads the nation in wind (40 GW) and utility-scale solar (25 GW). During peak hours, renewables can supply 40-50% of ERCOT demand. But when wind dies during summer heat waves — a common pattern called a "wind drought" — the grid loses 20-30 GW of capacity in hours. This intermittency creates the largest wholesale price swings.
ERCOT operates independently from the Eastern and Western Interconnections, with only ~1.2 GW of DC ties to neighboring grids. When TX has a supply emergency, it cannot import large amounts of power from other states like New England can. This isolation is why Uri was so catastrophic and why TX has unique price volatility.
After Winter Storm Uri, the Texas legislature authorized $2.1 billion in securitization bonds to cover REP defaults and ERCOT market shortfalls. These bonds are being repaid by all ratepayers through monthly surcharges (~$0.005/kWh) that will persist through the 2040s. Additional weatherization and grid hardening costs add further upward pressure.
300%+
Intraday wholesale price swings during 2023 summer heat waves. Variable-rate customers saw bills double or triple.
$5,000/MWh
Current ERCOT price cap (reduced from $9,000 post-Uri). At cap, electricity costs $5.00/kWh — vs. your normal $0.15/kWh.
$0.00/kWh
What solar owners pay during price spikes. Your panels generate the most during the exact hours when ERCOT prices are highest.
Texas rate forecasts depend more on weather and ERCOT market dynamics than regulatory proceedings. Here is what the market indicators suggest.
ERCOT reserve margins remain at 10-12%. If TX sees above-normal temperatures, wholesale prices will spike above $100/MWh on 15-25 days. Variable-rate customers at highest risk.
Fixed-rate plans will average 14-17c/kWh depending on TDU territory. REPs are building in higher risk premiums after 2023 summer losses. Expect fewer ultra-low promotional rates.
City council approved a 5% rate increase effective Oct 2026. Value of Solar rate expected to remain at ~$0.097/kWh. Infrastructure costs from grid modernization are driving increases.
Board approved 4% increase for 2026. Solar buyback rates under review. CPS has significant renewable portfolio reducing wholesale exposure but infrastructure costs are rising.
Uri securitization surcharge ($0.005/kWh) continues through 2040s. Additional grid hardening costs from weatherization mandates will add further charges. These are unavoidable for all grid customers.
TX population growing 1,000+/day. Each new home adds A/C demand. ERCOT needs 5-10 GW of new capacity by 2030. Unless massive storage is built, summer spike risk persists indefinitely.
Bottom Line on TX Rate Forecasts
TX average rates will remain lower than the Northeast, but the volatility is the real risk. Fixed-rate plans protect against spikes but cost more than the true average. Variable plans offer lower average rates but expose you to $0.50+/kWh events. Solar eliminates this entire dilemma — your panels generate the most during peak demand hours when ERCOT prices are highest, and your cost per kWh is always $0.
TX has lower average rates but higher solar production (~1,500 kWh/kW vs ~1,150 in the Northeast). Combined with lower system costs ($2.60-2.80/W), the payback math works — especially when you factor in spike protection.
| System Size | Annual kWh | Bill Offset | Monthly Savings | Annual Savings | 25-Year Savings | Payback (No ITC) |
|---|---|---|---|---|---|---|
| 7 kW | 10,500 | 90% | $131 | $1,572 | $39,300 | 10.2 yrs |
| 9 kW | 13,500 | 92% | $175 | $2,100 | $52,500 | 9.6 yrs |
| 11 kW | 16,500 | 95% | $222 | $2,664 | $66,600 | 9.1 yrs |
| 14 kW | 21,000 | 97% | $291 | $3,492 | $87,300 | 8.5 yrs |
Based on $2.70/W system cost (TX average), $0.15/kWh rate, 1,500 kWh/kW annual production, no federal ITC (expired 2025). TX has no state solar incentive but lower costs and more sun compensate.
The hidden value of TX solar is not just average rate offset — it is spike protection. During the 2023 summer, variable-rate customers paid $0.30-0.50/kWh on peak days. Solar owners paid $0. Even on a fixed-rate plan, you are still paying the elevated fixed rate that includes the REP's risk premium for those spike days. Solar removes you from the entire ERCOT pricing game.
After Winter Storm Uri, battery storage interest in TX exploded. A solar + battery system provides backup power during grid outages (which TX experiences more than any other state), peak demand shaving, and the ability to avoid exporting excess solar at low buyback rates. Instead, you store it and use it during expensive evening hours when solar production fades.
Unlike other states with standard TOU rates, TX's deregulated market offers dozens of plan types. Understanding these plans helps solar owners maximize savings.
14-17c/kWh
Solar fit: Good
+ Predictable cost, no spike risk
- Higher than true average to cover REP risk premium
Solar note: Savings are predictable. Look for plans with solar buyback at 8-10c/kWh.
10-50c+/kWh
Solar fit: Risky
+ Lowest average cost in mild months
- Massive spike risk. Summer bills can be 3-5x normal.
Solar note: Solar provides natural hedge: generates most when wholesale prices spike.
18-22c/kWh (paid hours)
Solar fit: Poor for solar
+ Free electricity overnight
- Paid rate is 30-40% above flat-rate plans. Bad for solar since free hours are when you export.
Solar note: Avoid with solar. You export during the day (free anyway) and pay premium at night.
14-16c/kWh + buyback
Solar fit: Best
+ Specifically designed for solar owners with competitive buyback credits
- Not all REPs offer these. Buyback rates vary widely ($0-0.10+/kWh).
Solar note: Best option. Look for 1:1 buyback or plans with 9-10c/kWh export credits.
15-20c/kWh
Solar fit: Neutral
+ No credit check, no contract
- Higher rates, no long-term savings guarantee
Solar note: Solar reduces prepaid balance drain but buyback credits may not apply.
12-12.5c/kWh
Solar fit: Good
+ Lowest and most stable rates in TX. No REP choice needed.
- No plan competition. Rate set by city council.
Solar note: Austin Value of Solar ($0.097/kWh) is generous. CPS offers tiered buyback.
In deregulated areas, choose a solar buyback plan from a REP that credits your exports at a competitive rate (aim for 8-10c/kWh or higher). Avoid "free nights" plans — they are designed for non-solar homes and charge you a premium during the hours your solar is generating. Use PowerToChoose.org and filter for solar buyback plans in your TDU territory. In Austin or San Antonio, your municipal utility automatically offers solar programs.
~$0.15/kWh
Average TX Rate
Lower than NE, but TX gets 30% more sun. Combined with lower system costs ($2.70/W), payback is under 10 years.
8.5-10 yrs
Payback Period
TX solar pays for itself faster than most people expect. High sun + low costs compensate for lower rates. No ITC needed.
$0 Risk
Spike Protection
Solar eliminates ERCOT volatility risk entirely. No more worrying about variable-rate bills or summer price spikes.
For an 11 kW system producing 16,500 kWh/year:
With ERCOT volatility factored in:
Rising ERCOT rates are the perfect argument for solar. Propel financing lets you go solar with $0 down and lock in a predictable monthly payment for 25 years — eliminating your exposure to future rate spikes. A third-party owner installs FEOC-compliant Silfab 440W panels and claims the 40% Section 48E ITC, passing the savings to you. An 8 kW system at $2.90/W ($23,200) becomes ~$13,920 effective cost at ~$117/month. 8.99% APR, 660 FICO minimum. Must begin construction before July 4, 2026.
See Propel Financing DetailsWhether you are on a fixed or variable plan, you are still exposed to ERCOT's structural volatility. Solar gives you 25 years of guaranteed $0/kWh electricity from the Texas sun.
No sales calls. Instant online estimate. See your exact savings at current TX rates.