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What is net metering, and does Texas have it?

Updated

General information, not a substitute for the advice of an attorney.

Short answer: Net metering is a billing arrangement in which the kilowatt-hours a customer's solar system exports to the grid are credited against the kilowatt-hours they draw, usually at the retail rate. Texas does not mandate it statewide. State law guarantees interconnection for small renewable generators but says surplus electricity is sold to the retail provider at "a value agreed to between the parties" (Texas Utilities Code 39.916).

What Texas law actually requires

Section 39.916 of the Utilities Code defines "distributed renewable generation" as "electric generation with a capacity of not more than 2,000 kilowatts" on the customer's side of the meter (Texas Utilities Code 39.916). It then sets out:

  • A utility "shall allow interconnection" if the equipment carries "a five-year warranty against breakdown or undue degradation" and its rated capacity does not exceed the utility's service capacity (subsection b).
  • The Public Utility Commission "by rule shall establish safety, technical, and performance standards," considering UL, the National Electric Code, the National Electric Safety Code, and IEEE standards (subsection d).
  • Utilities and providers may not require extra liability insurance from owners whose equipment meets those standards (subsection e).
  • Surplus purchases are permissive: a utility or retail electric provider "may contract" with the owner so surplus is sold to the grid and credited to the owner (subsection h).
  • In areas with retail choice, the owner "must sell the owner's surplus electricity produced to the retail electric provider that serves" its load, at a value the parties agree on (subsection j).

Nothing in the section sets a price or requires retail-rate credit. In ERCOT's competitive areas, that means a solar customer shops for a retail plan with a buyback term, and the terms differ by provider and change over time. Municipal utilities and cooperatives set their own policies.

Why it matters for the payback math

The value of an exported kWh is one of the four inputs in whether panels pay off. For scale, Texas's 2024 average retail price across all sectors was 9.79 cents per kWh (EIA Texas Electricity Profile); a buyback rate below retail lowers the value of every exported kWh relative to one you consume yourself.

See rooftop solar and net metering by state, what ERCOT is, and grid interconnection by market.

General information from the sources linked above, not legal, tax, or financial advice.

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