2018 Solar Buyback Programs and Net Metering in Texas
Solar photovoltaic systems are a source of clean power, having simple maintenance needs and typically lasting for more than two decades. The main challenge when using solar panels is managing their variable energy output: they generate electricity based on the availability of sunshine, unlike a diesel generator that provides power on demand. Generation from a solar power system can exceed consumption at times, especially in homes that are empty during the day.
Utility companies often deploy programs to reward solar PV system owners for surplus generation. These programs are varied, but their common purpose is making surplus generation more valuable for the client.
Ready to go solar? I’ll guide you from quote to installation. -Mary Pressler, Sunfinity Solar Dealer
What is net metering?
- Net metering basically subtracts solar generation from electricity consumption, and you are only billed for the difference. If generation exceeds consumption, the rules change depending on the utility company: in most cases you get a credit that is rolled over to the next month, and in some rare cases they actually pay you for surplus energy.
- Feed-in tariffs are rates that apply for surplus electricity exported to the grid. While net metering values consumption and generation equally, a feed-in tariff provides a different price tag for surplus generation. FITs are normally smaller than the retail kWh price, but utility companies may set them higher to incentive solar power in new markets. If the FIT and the retail kWh price are equal, you are basically getting net metering.
- Performance-based incentives reward you based on generation, even if you don’t have surplus production. This means you get the incentive regardless of whether you consume or export the electricity generated.
Keep in mind that utility companies may create hybrid programs. For example, you may find a company that gives you net metering for all generation below your consumption, switching to a reduced feed-in tariff to pay balances in your favor.
This article will provide an overview of the solar buyback and net metering rules used by electricity retailers in Austin, San Antonio, Houston and Dallas-Fort Worth.
Austin Energy Solar Buyback For Homes and Businesses
Austin Energy is the municipal utility of Austin, and they manage separate solar buyback programs for residential and commercial clients.
Residential energy consumers get a Value of Solar credit (VOS) for every kWh generated, at a rate of 9.7 cents/kWh. Since the incentive is for generation, you get it for the full output of your photovoltaic system, not only for surplus production – the value is then subtracted from your power bill.
The VOS credit was previously available only for residential systems up to 20 kW, but the upper size limit has been eliminated since 2014. The benefit now applies for all residential PV systems with at least 2 kW of solar power capacity, if they meet the following conditions:
- Your installation must not face north and must get at least 6 daily hours of direct sunlight to be eligible: if there are tall trees or buildings around your property, avoid the shaded areas.
- You must own the property where you plan to deploy the photovoltaic array.
- Your contractor must be participating in the Austin Energy Solar Program.
If a residential PV system is below 10 kW of capacity, Austin Energy also offers a cash rebate to help cover the upfront cost – the incentive is $0.40 per watt of installed capacity as of March 2018, covering up to 50% of the total photovoltaic system cost. Leased solar power systems do not get the rebate, but they are eligible for the VOS credit.
Commercial energy consumers also get the VOS credit since January 2018, but there are three possible values depending on the type of service contract and solar PV system capacity. The following table summarizes VOS credits for the commercial sector:
| Question 1: Does the client pay demand rates? | Question 2: What is the solar PV system capacity? | Applicable VOS Tariff |
| Yes | Above 1,000 kW | 4.7 cents/kWh |
| Yes | Up to 1,000 kW | 6.7 cents/kWh |
| No | Any | 9.7 cents/kWh |
In addition to the VOS credit, there is Performance-Based Incentive (PBI) for commercial clients with solar PV systems under 1,000 kW of capacity. The PBI program classifies clients into three tiers, and the incentive is calculated accordingly:
- Small commercial and non-profit: Up to 75 kW
- Medium commercial: Exceeding 75 kW, up to 400 kW
- Large commercial: Exceeding 400 kW, below the PBI limit of 1,000 kW.
Once approved, a client gets the PBI for a 10-year term. However, the benefit does not apply for leased solar PV systems, only those used by non-profit organizations. As of March 2018, the PBI rates are:
- Small commercial and non-profit: 6 cents/kWh
- Medium commercial: 5 cents/kWh
- Large commercial: Each client gets 4 cents/kWh for the first 800 kW of installed capacity, 3 cents/kWh for the next 800 kW, and 2 cents/kWh for any capacity above 1,600 kW. However, keep in mind that a single installation must not exceed 1,000 kW.
Finally, there is net metering available for commercial solar PV systems below 20 kW. The business case for solar power is excellent for these clients, since they are eligible for the full range of Austin Energy incentives.
San Antonio: CPS Energy Net Metering
CPS Energy has a Rooftop Solar PV System Program for the residential market, and the rules are very simple:
- Homeowners get net metering for all generation below their monthly consumption. For example, if a household draws 500 kWh from the power grid and exports 450 kWh of surplus solar production, the bill is calculated for 50 kWh.
- For solar generation that exceeds consumption, CPS Energy applies a feed-in tariff of 1.65 cents/kWh. For example, if a household draws 500 kWh and exports 700 kWh, the credit for the 200 kWh surplus is $3.30. When the next monthly bill arrives, this credit is subtracted.
CPS Energy also manages a rebate program to help homeowners afford solar PV systems. The base rate is $0.60 per watt, but there are two bonuses: $0.08/watt for using local solar panels, and $0.02/watt for using local inverters. Therefore, clients can get up to $0.70/watt by purchasing equipment from local providers.
Net Metering Programs in Houston and Dallas-Fort Worth
Unlike Austin and San Antonio, where a single municipal utility sets the rules for solar power, Houston and DFW have a deregulated market where electricity consumers can choose their provider. This section will focus on the main retail electricity providers (REP) with solar buyback programs: MP2 Energy, Green Mountain, TXU and Reliant.
MP2 Energy Net Metering Program
MP2 energy has a net metering program for the Oncor and CenterPoint service areas. All surplus generation from solar PV systems is credited at the retail price, and subtracted from subsequent power bills. The only drawback is that you cannot bank your credits indefinitely: if there is a balance in your favor after the October bill, the account is cleared. In other words, you can reduce your yearly power bill to zero, but MP2 Energy does not pay for accumulated credit.
Green Mountain Energy Net Metering Program
Green Mountain Energy offers a net metering program similar to MP2 Energy, where surplus generation is credited at the retail price, but in this case credits do not expire. The program is available if you have a bidirectional power meter and enroll in the Renewable Rewards buyback program. Net metering is available for both residential and commercial users, but there is a renewable generation capacity limit of 50 kW. In addition, the benefit applies for both solar and wind power.
This program is available for customers served by Oncor, CenterPoint, AEP and TNMP.
TXU Energy
TXU Energy offers the Renewable Buyback program, where you get credit for surplus renewable generation. Unlike the MP2 and Green Mountain programs, which give you credit at retail prices through net metering, TXU Energy offers a reduced feed-in tariff.
The retail price of each kWh changes depending on your service area, and so does the feed-in tariff. There are 24-month and month-by-month versions of the Renewable Buyback program, but you get a much better feed-in tariff with the 24-month version. TXU offers the Renewable Buyback program for customers served by Oncor, CenterPoint, AEP and TNMP.
Reliant Energy
Reliant offers the Simple Solar Sell Back plan, where you get net metering: surplus generation from a solar PV system is credited at the retail price. In addition, you get a 12-month price discount for electricity consumed from the power grid. This plan is only available in the Oncor and CenterPoint service areas.
Final Recommendations
Solar buyback programs in Texas are as varied as the retail electricity providers in the deregulated market. Each company sets its own rules, and some offer better deals than others. If you are considering a solar PV system for your property, find an electricity plan that offers favorable conditions:
- Look for net metering to get full credit for surplus generation. If you don’t have access to net metering, look for the best feed-in tariff available.
- Check the conditions for surplus generation: Look for a plan where you can bank credits for subsequent power bills.
If you live in the Austin Energy or CPS Energy (San Antonio) service territories you do not have provider choice, but fortunately these municipal utilities offer solar buyback programs as well.
