Texas Net Metering Explained: What Solar Homeowners Need to Know

What Is Net Metering and Why Texas Does It Differently

Net metering is a billing mechanism that credits solar homeowners for the excess electricity their panels send back to the grid. In most states, the utility tracks what you export and offsets it against what you consume — your meter effectively runs backward during peak production hours.

Texas, however, does not have a statewide net metering mandate. Because most of the state operates within the deregulated ERCOT grid, the way surplus solar energy is credited depends entirely on your Retail Electric Provider and the plan you choose. This makes Texas fundamentally different from states like California or New York, where utilities are required by law to offer net metering at retail rates.

How Solar Credits Work in ERCOT Areas

Within the ERCOT grid — which covers roughly 90% of Texas, including Dallas, Houston, Austin, and San Antonio — there is no single net metering policy. Instead, each REP sets its own rules for how they credit solar exports.

Some REPs offer what are called solar buyback plans, where your exported kilowatt-hours earn credits against your bill. The credit rate varies widely. Some plans offer 1:1 buyback, meaning you earn the same rate for exports as you pay for consumption. Others credit exports at wholesale rates — sometimes as low as 3 to 5 cents per kWh when you are paying 14 cents or more for grid energy.

The key difference from traditional net metering is that credits in Texas are plan-dependent, not utility-mandated. This means you have the freedom to shop for better terms, but it also means you need to read the fine print carefully.

Non-ERCOT Areas and Traditional Utilities

A small portion of Texas falls outside the ERCOT grid and is served by traditional regulated utilities. Areas around El Paso (served by El Paso Electric) and parts of East Texas (served by Entergy or municipal utilities) may have their own net metering or distributed generation policies.

In these areas, the utility is both the generator and the distributor, so solar credit policies are set at the utility level rather than through competitive REP plans. Some offer genuine net metering where credits roll over month to month. Others provide avoided-cost credits that are significantly lower than retail rates.

If you live outside the ERCOT footprint, contact your utility directly to understand your specific solar credit options. The rules are quite different from the deregulated market.

Credit Rollover and What Happens to Surplus

One of the most common questions Texas solar homeowners ask is whether unused credits carry forward from month to month. The answer depends entirely on your plan.

Some REPs allow monthly credit rollover, meaning excess solar credits from a high-production month like June can offset charges in a lower-production month like December. This is valuable because Texas solar production varies significantly by season — systems typically produce 40% to 50% more energy in summer than in winter.

Other plans settle credits monthly, meaning any excess you export beyond what you consume in a given billing cycle is either paid out at a lower rate or forfeited entirely. Understanding your plan's rollover policy is critical when choosing the right electricity plan for your solar setup.

Why Your TDU Charges Stay the Same

Even with favorable solar credits, your TDU delivery charges from Oncor, CenterPoint, or AEP remain on every bill. These charges cover the cost of maintaining the power lines, transformers, and infrastructure that deliver electricity to your home — and they apply to every kilowatt-hour that flows from the grid to your meter.

Your solar panels reduce the amount of energy you pull from the grid, but they do not eliminate it entirely. At night and on overcast days, your home still draws grid power, and those deliveries incur TDU charges. Understanding how TDU charges work helps you set realistic expectations for your post-solar bills.

How to Maximize Your Solar Credits in Texas

Since Texas relies on market competition rather than mandated net metering, the single most impactful thing you can do is choose the right REP and plan. A 1:1 buyback plan can save you hundreds of dollars per year compared to a plan that credits exports at wholesale rates.

Beyond plan selection, these strategies help maximize your credits:

Shift heavy usage to daytime hours. Running your dishwasher, laundry, and EV charger during peak solar production means you consume your own energy directly rather than exporting it at a potentially lower credit rate.

Right-size your system. A system that significantly overproduces may not benefit you if your plan caps credits or settles them at low rates. Matching production to consumption patterns is key.

Consider battery storage. A home battery system lets you store excess daytime production and use it at night, reducing your reliance on grid power and the credits game altogether.

The Bottom Line on Texas Net Metering

Texas does not offer traditional net metering, but the deregulated market gives solar homeowners something arguably better — the ability to shop for competitive solar buyback plans that can match or exceed what mandated net metering provides in other states. The tradeoff is that you need to actively compare plans and understand the terms.

Start by reviewing your current plan's buyback rate and credit rollover policy. If you are earning less than your consumption rate for exports, switching plans could be the fastest way to increase your solar savings. Use our solar savings calculator to see how much a plan change could save based on your specific usage and system size.