Net Metering in Texas: Getting Paid for Solar?

What Is Net Metering?

Net metering is a solar incentive that allows homeowners and businesses with photovoltaic (PV) solar systems to receive credit for the surplus electricity they generate and feed back into the local grid. Think of it like a rollover system for your electricity—when your panels produce more power than you use, the extra energy is sent to the grid, and you get billing credits that offset your future electricity consumption.

In a typical day, solar systems generate the most energy during peak sunlight hours—usually more than the household needs in real time. Instead of letting that excess go to waste, it flows through your bi-directional smart meter, which tracks both incoming and outgoing electricity. Later, when solar generation drops (like in the evening or on overcast days), those stored credits can be used to lower or even eliminate the cost of pulling electricity from the grid.

This process not only makes solar systems more financially attractive by shortening payback periods, it also contributes to energy grid resilience and the broader goal of renewable energy adoption.

For more in-depth information on how net metering works nationally, visit the U.S. Department of Energy’s Net Metering page.

Net metering benefits include:
- Lower electricity bills over time
- Faster return on investment for solar systems
- Encouragement of energy-efficient behavior
- Contribution to a decentralized, sustainable energy future

However, it's important to note that not all states or utility companies handle net metering the same way—which brings us to how it works in Texas.

How Net Metering Works in Texas

Texas operates under a deregulated electricity market, which means there's no statewide mandate for net metering. Instead, policies vary by electricity provider. Unlike states such as California or New York that enforce 1:1 net metering, Texas leaves it up to Retail Electricity Providers (REPs) to decide whether and how to compensate customers for their solar overproduction.

In areas like Houston, Dallas, or Plano—where consumers can choose their REP—solar buyback plans function as an alternative to traditional net metering. While the core concept is the same (you export excess energy and receive a form of credit), the details of each plan can vary significantly:

• Full retail credit: Some REPs offer a credit that matches what you pay per kWh.
• Wholesale rate credit: Others base credits on real-time market rates, which are usually lower than what customers pay for electricity.
• Fixed-rate buyback: A set rate per kWh is credited, regardless of current retail or wholesale prices.

In all cases, a smart meter is essential to track energy inflows and outflows. This allows for precise monitoring and accurate crediting of solar exports.

A few other important things to know:
- Some plans place a cap on how many credits you can earn monthly.
- Others may exclude buyback credits from covering TDU (Transmission and Distribution Utility) delivery charges.
- Not all plans allow rollover credits, so unused credits might expire at the end of your billing cycle.

Because of these variations, shopping carefully for a solar-friendly plan is essential. You can browse and compare solar buyback plans with clear rate structures on our energy comparison platform.

Solar Buyback vs Traditional Net Metering

In Texas, most solar incentive programs offered by Retail Electricity Providers (REPs) are technically solar buyback plans, not traditional net metering. This distinction is critical for solar owners to understand, as it directly affects the value of the excess energy your panels produce.

Traditional Net Metering—offered in states with regulatory mandates—provides a 1:1 retail rate credit for every kilowatt-hour (kWh) of excess electricity sent back to the grid. This means that if your utility charges you 14¢/kWh, they also credit you 14¢/kWh for solar exports. The meter "spins backward," offsetting your consumption and lowering your bill.

Solar Buyback Plans, however, are voluntary programs offered by individual REPs in deregulated markets like Texas. These plans vary widely in structure:
- Some REPs provide full retail credit (1:1), though this is uncommon and may come with caps or restrictions.
- Others credit you at the wholesale electricity rate, which is market-based and can fluctuate hourly, often falling below 5¢/kWh.
- A few offer fixed-rate buyback—for example, 9¢ per kWh—regardless of time-of-day or market conditions.

This means that even if your solar panels generate a lot of surplus electricity, the value of those credits depends on your REP's buyback structure. It's also important to note:
- Not all solar buyback credits can be applied to TDU delivery charges, which make up a large portion of your bill.
- Some plans reset credits monthly, while others allow them to roll over to future billing periods.
- Certain REPs impose limits on the total kWh eligible for credit per month.

To better understand these plan structures, the Public Utility Commission of Texas offers regulatory insight into retail electric competition and consumer rights.

Here’s a quick comparison:

Understanding these differences helps solar customers in Texas choose a plan that maximizes savings and return on investment.

Tips for Choosing a Solar-Friendly REP

Not all Retail Electricity Providers are created equal—especially when it comes to supporting solar energy customers. In Texas’s deregulated electricity market, your choice of REP can significantly impact the financial return on your solar installation.

Here’s how to ensure you select a solar-friendly electricity plan:

• Use the Ladybug Energy comparison platform to shop solar buyback plans by zip code. It’s the easiest way to compare rates, terms, and solar credit policies in one place.
• Look for keyword indicators in plan names like “solar buyback,” “solar credits,” “net metering,” or “green energy rewards.”
• Read the Electricity Facts Label (EFL) for every plan. This document outlines crucial terms, including the buyback rate, contract length, base charges, and credit eligibility. Need help reading it? Here’s a guide that explains the grid's workings.
• Compare buyback credit structures—some REPs offer full retail credit, while others offer less favorable wholesale rates.
• Check for credit rollover policies. Do unused solar credits carry over, or do they reset each billing cycle?
• Verify any caps on creditable exports. Some providers only credit a fixed number of kWh per month, which can limit your solar savings if you overproduce.
• Ask if the REP applies solar credits toward both energy and TDU delivery charges. Some limit credits to energy use only, leaving you with delivery costs even if your net usage is zero.

Looking for a head start? These providers are among the most solar-friendly REPs in Texas:
- Green Mountain Energy: Offers 100% renewable plans and competitive buyback options.
- Rhythm Energy: Known for straightforward pricing and 1:1 buyback plans in select markets.
- BKV Energy: Provides fixed-rate solar buyback plans with rollover credit options.

Ultimately, the REP you choose plays a pivotal role in how much you save—and earn—with your solar system. With the right plan, you can turn your rooftop into a revenue-generating asset.

Should You Go Solar in Texas?

Absolutely—Texas is one of the most solar-ready states in the country. Here's why:
- Abundant sunshine and long summers.
- High electricity demand, especially in peak months.
- Deregulated electricity markets that let you choose a REP with solar incentives.
- Local and federal incentives, including the Federal Solar Investment Tax Credit (ITC).

To find current incentives and rebates in your area, check the DSIRE database. Even without perfect 1:1 net metering, solar in Texas still pays off. And with the right REP and plan, you can boost your savings even further.

While Texas may not mandate statewide net metering, there are still plenty of ways to get rewarded for going solar—you just have to choose the right REP. By comparing solar buyback plans, reading the fine print, and using tools like Ladybug Energy, you can maximize your solar ROI and reduce your monthly energy costs.

Your rooftop has the power to do more than provide shade—it could be your next best investment.