The give and take of solar buyback plans
Everything is bigger in Texas, including the hot Texas Summer sun. With this in mind, more and more Texans are choosing to harness the energy of the sun to power their homes and businesses. Solar electric systems are not without their difficulties, but properly managed, solar panels and a Texas solar buyback program can generate substantial electric savings for you.
One of the key issues for Texas solar power is the fact that solar panels only generate electricity when the sun is shining. Cloudy day? You’re likely not going to generate as much power as you use. Night time? Your panels are not going to generate any electricity. If you choose to use electricity only when the sun is shining, solar panels might work for you. Otherwise, you’re going to need a backup source of power.
The other side of this issue is that, when the sun is shining bright outside, your solar panels can easily generate far more electricity than what you’re using.
Wouldn’t it be nice if you could find a way to save that excess solar energy for a rainy day (literally)?
Metering options for solar energy
Many solar retail electric providers (REP) in Texas offer their customers buyback plans that do just this. If you have an interconnection with the Texas grid, your excess electricity is exported into the power grid for other people to use. Your solar electricity becomes community solar energy. Later–when you need some of that extra electricity again–the electric provider returns it to you for free or at a discounted price. This is often referred to as simply Solar Buyback.
Each power provider has different options for their solar buyback programs, but these plans generally fall into one of two categories:
Net purchase and sale
With this solar energy buyback plan, you have two meters keeping track of your energy. One measures the excess energy that your solar panels feed into the Texas grid over the course of the month. The second tracks what you take from the electric grid when you’re running short. The provider then charges you one rate for the electricity used and pays you a different (usually lower) rate for all the solar excess your panels generate. The downside to this buyback arrangement is that, even if you generate more solar electricity than you use, you can still end up owing the energy provider.
For example, say you use 500 kwh from the power grid in a month and the provider charges you 10¢ per kwh. The energy provider is going to bill you $50 for the month.
On top of that, let’s say you feed 600 kwh of solar energy into the grid. The electric provider pays you 6¢ per kwh for this, for a total of $36.
At the end of the month, you have given the power grid 100 kwh more than you’ve taken; yet you have to pay a total of $14.
With net metering as the buyback method, you only have one electric meter; it just flows both ways. When you use energy from the grid, the meter measures this just as it would on a regular electric meter. However, when you sell solar electricity back into the power grid, the meter essentially runs backwards. This is net-metering at work.
Net metering is the better solar buyback arrangement for the Texas customer because the electric provider charges or pays you depending on the difference in the amount of solar electricity your solar panels generate and the amount you use. If you use more than you generate, a plan with net metering bills you for the difference. Using the same example as above, let’s say you use 500 kwh and you contribute 600 kwh of your own solar energy. With a net metering excess of 100 kwh, you owe nothing.
Although most states require providers to offer solar net metering with their buyback plans, this is not the case in Texas. This is yet another benefit of energy deregulation. If you live in a regulated area of Texas and your Transmission and Distribution Utility (TDU) does not offer plans with net metering, you have little recourse. In deregulated areas, however, you have the ability to shop around and find a provider that offers plans with the best net metering terms. Naturally, this creates an incentive for electric providers to have net metering (and fair offerings in general) on solar buyback electricity.
Solar net metering options
Each energy provider in Texas has its own solar buyback plans, and the terms vary with each.
- Some plans offer customers the same rate for the solar energy they contribute and the energy they use (net metering). Most, however, pay less than they charge.
- A very few will send customers a check for any surplus electricity they generate. Most plans only offer it as a bill credit.
- Some allow customers to “rollover” a net metering excess from one month to another. Others start from 0 each month. If you generate more solar than you use, you just share it for free.
- Some plans have an expiration on the rollover. At a certain time of the year, you go back to 0 and forfeit anything extra you have saved up through the year.
Texas as a top solar energy state
It’s not surprising that California is still the top solar energy producer in the United States. What is perhaps quite surprising to many people is that Texas comes in #2 for cumulative solar capacity according to the Solar Energy Industries Association (SEIA), ahead of even “Sunshine State,” Florida. Texas also came in #2 for new solar electric installations in 2020 and #1 for new solar installations in the first quarter of 2021, despite time lost in the chaos of the February winter storm and subsequent outages throughout Texas.
Some of the states with the highest solar rankings are listed in the table below.
|State||Cumulative Capacity (MW)||Equivalent Number of Residences Powered Annually||Overall Ranking (Total Capacity)||2020 Ranking (New Installations)||Q1 2021 Ranking (New Installations)|
Other solar incentives available in Texas
One of the reasons that Texas ranks so high nationally is its various incentive programs for solar users. In addition to federal tax credits for installing solar panels, many parts of Texas also have their own local incentive programs.
- AEP Texas – AEP solar customers can receive a rebate up to $5,000 for residential or up to $56,250 for commercial, depending on the size of the solar energy system.
- Oncor – Although it varies based on several factors, Oncor offers solar rebates for both residential and commercial solar customers in Texas.
- Austin Energy – In the Texas capital, there is an available solar rebate of $2,500 for completing their a Solar Education Course. Additionally, their buyback plan pays a fixed rate of 9.7¢ per kwh for residential and 4.7¢ – 6.7¢ for commercial (depending on the system’s capcacity) for solar energy you add to their grid.
- CPS Energy – In San Antonio, there are rebates of $2,500 for residential solar projects, a $500 premium for projects that utilize local modules, and 40-60¢ per watt for commercial solar projects (10¢ premium for local modules).
- City of Sunset Valley – In this Texas community outside of Austin, there are rebates of up to $3,000 ($1 per watt up to 3 kw) in addition to the Austin Energy rebate.
- Property tax exemption – Installing solar panels can raise the value of your home. While that is certainly a benefit, the downside is that a higher value comes with higher property taxes. The state of Texas, however, offers a tax exemption for the added value of your solar energy system.
- Many Homeowners’ Associations (Property Owners’ Associations) have regulations on what modifications the individual owners can and cannot make to a property. However, there is legislation that prevents these associations from imposing such restrictions on Texas solar owners
- There is also a federal solar tax credit called the Investment Tax Credit (ITC). This gives a credit of 30% for any solar energy system installed no later than 2019, a 26% for solar electric systems installed from 2020-2022, and a 22% credit for one installed in 2023.
Things to consider when selecting from solar buyback programs
Aside from caring about clean energy, one of the main reasons people in Texas choose to utilize solar energy is to cut expenses. However, if you choose the wrong solar plan with the wrong provider, you might not save nearly as much money as you could. If you’re looking into the possibility of having solar panels installed–or if you’re looking to shop around to see if there are better solar alternatives for you, here are some details to consider.
- How much does the provider pay for the excess energy you feed into their system? Does their buyback plan pay the same amount as they charge you for using their energy (net metering)? Do they pay less? How much less?
- When they pay you for pushing solar energy back into the grid, do they just give you a credit on your bill, or will they actually pay you the difference? If it’s a bill credit, does it max out at the total cost of your bill, or will they roll any extra over to the next month? Is there a limit on how long you can continue to roll credits over?
- Do they have a minimum charge on their bill–because of a monthly service charge, or simply because they have a cap on how much credit customers can receive?
- What is your total energy usage? If you install a system that is too much for your usage, you aren’t going to be able to break even, no matter what plan you select.
- What sort of base charge or monthly fee does the provider have? Some are up front about this; others try to hide it on their bills. Make sure you know what you’re paying.
If you have questions about net metering or other solar buyback options, contact us any time. We work with some of the best solar providers in Texas, including Chariot, Green Mountain, Reliant, and TXU. We can walk you through any potential issues and help you figure out your best solar options. Best of all, we’ll gladly help you for free. No asterisks, and no fine print! We’ll never bill you for those services, and you’re under no obligation to sign up with one of our providers.