Texas Net Metering Explained: What Solar Homeowners Need to Know

If you're thinking about going solar in Texas, you've probably heard the term "net metering." But here's the thing — Texas doesn't have traditional net metering the way most other states do. That surprises a lot of homeowners. Understanding how the system actually works in Texas can help you make a smarter decision about installing solar panels.

This guide breaks it all down in plain English.

What Is Net Metering (And Does Texas Have It)?

Net metering is a billing arrangement where your utility company gives you credit for the extra electricity your solar panels send back to the grid. In most states, you get a credit equal to the full retail rate of electricity — meaning if you pay $0.12 per kilowatt-hour (kWh), you also get $0.12 back for every kWh you export.

Texas does not have a statewide net metering law. Because most of Texas runs on a deregulated energy market called ERCOT (Electric Reliability Council of Texas), the state legislature has not mandated that utilities offer net metering. Instead, private retail electric providers (REPs) set their own rules.

The bottom line: your solar credits depend entirely on which energy company you choose and which plan you sign up for.

How Texas Solar Buyback Programs Work

In place of net metering, many Texas electricity providers offer what are called solar buyback plans or excess generation credits. Here's how they generally work:

• Your solar panels produce electricity during the day.
• Any power your home doesn't use flows back into the grid.
• Your retail electric provider tracks how much you exported.
• At the end of the billing period, you receive a credit or cash payment.

The key difference from traditional net metering: the buyback rate is often lower than the retail rate. Some plans pay you the wholesale rate for exported power, which can be significantly less than what you pay to buy electricity. Other plans offer 1-to-1 credits (matching the retail rate), but those plans may come with tradeoffs like higher base rates or monthly fees.

Comparing plans carefully before signing a contract is critical. Sites like PowerToChoose.org list Texas electricity plans and can help you spot solar-friendly options.

The Role of Municipal Utilities and Co-ops

Not all Texans are in the deregulated ERCOT market. If you live in a city served by a municipal utility (like Austin Energy or CPS Energy in San Antonio) or an electric cooperative, different rules apply.

• Austin Energy offers a well-known Value of Solar rate that compensates homeowners at a set rate determined periodically by the utility.
• CPS Energy has its own solar buyback program with specific terms and caps.
• Co-ops vary widely — some offer generous credits, others offer very little.

If you're served by one of these providers, contact them directly or check their website to get the current buyback rate before you invest in solar.

How to Size Your Solar System in Texas

Because Texas buyback rates vary so much, system sizing matters more here than in net metering states. In a state with true 1-to-1 net metering, you might benefit from a larger system that exports a lot. In Texas, over-producing and getting paid wholesale rates for the excess may not pencil out financially.

Most solar installers in Texas recommend sizing your system to cover roughly 80–100% of your annual electricity use — not more. This way you're using most of what you generate rather than exporting at a lower rate.

Want to get matched with a vetted solar installer who knows Texas buyback programs? Start a free intake here and we can connect you with someone in your area.

Other Texas Solar Incentives to Know About

Even without strong net metering, Texas homeowners have access to other financial incentives:

• Federal Solar Investment Tax Credit (ITC): As of 2025, homeowners can claim a 30% tax credit on the total cost of their solar installation. This is a federal benefit, not state-specific.
• Texas Property Tax Exemption: Texas law exempts the added value of a solar energy system from your property tax assessment. So your home value may go up, but your property taxes won't increase because of the solar system.
• No State Income Tax: Since Texas has no state income tax, there's no state-level tax credit — but there's also nothing to offset.
• Utility rebates: Some utilities offer one-time rebates for solar installation. Check with your specific provider.

FAQ: Texas Solar and Net Metering

Does Texas law require utilities to buy back my solar power?

No. Texas has no statewide net metering mandate. Retail electric providers in the deregulated market can choose whether to offer solar buyback plans and set their own rates. Municipal utilities and co-ops operate under their own rules.

What happens to the electricity my panels produce that I don't use?

It flows back to the grid. Whether you get paid for it — and at what rate — depends on your electricity plan. Without a solar buyback plan, you may receive no credit at all for exported power.

Is solar still worth it in Texas without net metering?

For many homeowners, yes. Texas has high electricity rates, abundant sunshine, a strong property tax exemption, and the 30% federal tax credit. The financial case depends on your specific usage, roof setup, provider plan, and financing terms. A local installer can run the numbers for your situation.

Can I switch electricity providers to get a better solar buyback rate?

Yes — if you're in the deregulated ERCOT market, you can switch providers. Just read the contract carefully. Look at the buyback rate, any monthly fees, and the contract length before committing.

How long does it take to break even on solar in Texas?

Break-even timelines vary widely based on system cost, buyback rates, energy usage, and financing. A rough range is 7–12 years for many Texas homeowners, but confirm this with a certified installer who can model your specific situation.

Texas may not have classic net metering, but the right solar setup — paired with the right electricity plan — can still significantly cut your energy bills and add value to your home.

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