The Core Distinction: Net Metering vs. Solar Buyback
Net metering, in its traditional form, is a regulated utility mechanism. When your solar panels generate more electricity than your home uses in a given moment, the surplus flows back to the grid and your meter runs backward. At the end of a billing cycle, you owe only the net difference between what you consumed and what you exported. Many states mandate this arrangement by law.
Texas does not.
The state’s deregulated electricity market means retail electric providers (REPs) compete for customers rather than operating under a single utility tariff. The Public Utility Commission of Texas (PUCT) does not require REPs to purchase your excess solar generation at any particular rate, or to purchase it at all. What exists instead is a collection of voluntary solar buyback programs, each with its own rate structure, contract terms, and fine print.
This is not a semantic difference. Under true net metering, a kilowatt-hour you export is worth the same as a kilowatt-hour you consume from the grid. Under most Texas solar buyback programs, the export rate is lower than the retail rate you pay for consumption. Sometimes significantly lower.
Understanding that gap is the first thing any Texas solar owner or prospective solar buyer needs to do.
Why Texas Took a Different Path
The 1999 restructuring of the Texas electricity market through Senate Bill 7, which opened retail customer choice on January 1, 2002, created the deregulated retail market. (The Competitive Renewable Energy Zone transmission system came later, under Senate Bill 20 in 2005.) Vertically integrated utilities were unbundled. Transmission and distribution utilities (TDUs) like Oncor, CenterPoint, and AEP Texas still own and operate the wires, but they don’t sell electricity to retail customers in competitive areas. REPs do.
Because REPs buy power on the wholesale market and resell it, they’re exposed to commodity price volatility. When a solar customer exports power, the REP typically has to credit that customer while simultaneously managing its own wholesale position. The economics of crediting exports at the full retail rate are difficult for a REP operating on thin margins in a competitive market.
The result is a market-driven patchwork. Some providers offer buyback rates that approach retail value. Others pay a flat rate per kilowatt-hour that hovers near the wholesale spot price, which in Texas averages well below retail. A few providers still don’t offer solar buyback at all.
For customers in areas served by municipally owned utilities or electric cooperatives (Austin Energy, CPS Energy, Pedernales Electric Cooperative), the situation is different. Those entities operate outside the deregulated market and do offer programs that more closely resemble traditional net metering, with regulatory mechanisms that set export credit rates. This article focuses on the deregulated market, where the provider choice matters and where the variation is sharpest.
How Texas Solar Buyback Programs Actually Work
Most Texas solar buyback programs fall into one of three structural categories.
Avoided-cost buyback. The provider credits your exported generation at something close to the wholesale cost of electricity. This rate fluctuates with market conditions and is almost always lower than the retail rate. If you’re paying 12 cents per kilowatt-hour to consume power and receiving 4 cents per kilowatt-hour for exports, your solar panels are producing asymmetric value. You’re buying high and selling low.
Flat-rate buyback. The provider sets a fixed credit rate per kilowatt-hour exported, disclosed in the Electricity Facts Label (EFL). This is more predictable than avoided-cost pricing, but the fixed rate is still typically below the retail consumption rate. The EFL is the document that matters here. LightCompanies conducts EFL math in-house for every plan it reviews, and across the 11 solar-adjacent plan reviews published as of the August 2026 research cycle, 10 were flagged as high-gimmick, meaning the headline rate or marketing language obscured the actual export credit terms when you ran the numbers.
Bill credit or net billing. Some providers calculate credits against your bill rather than paying cash for surplus generation. The credit rate, what it can be applied to, and whether it rolls over month to month varies by provider. Credits that expire at the end of a billing period have significantly lower practical value than those that accumulate across a 12-month true-up cycle.
What to Look for in an EFL
The Electricity Facts Label is a standardized disclosure document that every Texas REP is required to provide. For solar customers, it’s still the best starting point for comparing buyback programs, but note that PUCT rules don’t require the EFL to state an export credit rate — the EFL disclosure chart only has to answer whether the provider purchases excess distributed renewable generation at all, so the actual rate often lives in a solar addendum or the terms of service instead. The problem is that the EFL is designed around consumption pricing and can bury buyback terms in footnotes or describe them in ways that require calculation to interpret.
When reviewing an EFL for solar buyback purposes, focus on these four elements.
The export credit rate, stated explicitly. Look for a line that says something like “excess generation credit” or “solar buyback rate” and confirm it’s a number, not a reference to a separate document or a variable rate tied to an index without a cap.
The consumption rate at your actual usage tier. Texas EFLs show the effective rate per kilowatt-hour at 500 kWh, 1,000 kWh, and 2,000 kWh monthly usage. Solar owners typically consume less from the grid than average customers, so the 500 kWh column is often more relevant. Promotional rates that look strong at 2,000 kWh can look very different at 500 kWh when fixed charges are distributed across fewer kilowatt-hours.
The spread between export rate and consumption rate. This is the number that tells you how much value you’re losing on exports versus what you’d save by self-consuming that power. A plan with a 13 cents per kWh consumption rate and a 6 cents per kWh export rate has a 7-cent spread. A plan with an 11.5 cents consumption rate and a 9 cents export rate has a 2.5-cent spread. The second plan has both a lower consumption rate and a much more favorable buyback structure for a household with a solar array that consistently produces more than it consumes.
Contract length and early termination fees. Solar equipment typically carries a 20-to-25-year lifespan. A two-year fixed-rate electricity contract with a $200 early termination fee is a relatively minor constraint. A three-year contract with a $500 fee, attached to a buyback rate that turns out to be below market after 18 months, is a more meaningful lock-in. Read the term.
Solar Buyback vs. Net Metering: The Math
To make the difference concrete, consider a household with a 7-kilowatt solar array in the Dallas-Fort Worth area, served by Oncor’s distribution network.
Assume this household consumes 1,200 kWh per month from the grid on average after solar production, and exports 400 kWh per month of surplus generation.
Under true net metering at a hypothetical retail rate of 12 cents per kWh, those 400 exported kilowatt-hours would offset 400 kilowatt-hours of consumption. The household’s effective bill would be calculated on 800 net kilowatt-hours. Monthly electricity cost from the provider: roughly $96 before TDU delivery charges.
Under a flat-rate solar buyback program paying 5 cents per kWh for exports, the household pays for 1,200 kWh consumed (about $144 before delivery charges) and receives a $20 credit for 400 kWh exported. Net electricity cost: roughly $124 before delivery charges. The difference is $28 per month, or $336 per year, purely because the export credit rate is below the retail consumption rate.
At a buyback rate of 9 cents per kWh, the credit is $36, and the net cost drops to roughly $108. The gap versus true net metering narrows to $12 per month, or $144 per year.
Those numbers scale with system size. A larger array with more surplus production magnifies the impact of the spread between export and consumption rates.
Comparing Providers on Solar Buyback
LightCompanies tracks 34 providers under active coverage and has conducted 96 head-to-head comparisons across that set (figures from the August 2026 research cycle). Solar buyback rate structure is one of the scored dimensions in those comparisons, under the plan flexibility and rate transparency lenses.
The general pattern in the deregulated Texas market, based on EFL review and PUCT filing data, is that providers marketing specifically to solar customers tend to offer better export credit rates than providers offering a solar buyback add-on to a standard residential plan. This is not a universal rule, and the headline marketing rate requires EFL verification in every case. The 10-out-of-11 high-gimmick flag rate on solar-adjacent plan reviews LightCompanies has published is a reasonable signal of how common the mismatch is between promotional language and actual terms.
When comparing providers at the same usage tier, the factors that differentiate solar buyback programs are the export rate, the roll-over policy for unused credits, and whether the program requires a dedicated buyback meter or works with the standard bidirectional meter the TDU installs for net-capable customers.
The TDU’s Role
One element that is easy to overlook: the TDU, not your REP, owns the meter infrastructure. Oncor, CenterPoint, and the other TDUs operating in deregulated Texas install bidirectional meters for solar customers, and they charge a fee for that service or recover the cost through their tariff. Those delivery charges appear on your electricity bill regardless of which REP you choose.
TDU delivery charges are not negotiable and do not vary by provider. They are, however, a meaningful portion of your total bill, particularly at lower consumption levels. A solar household consuming only 500 kWh per month from the grid might see TDU delivery charges representing 30 to 40 percent of their total electricity cost. Focusing exclusively on the energy charge rate and buyback rate without accounting for delivery charges will produce an inaccurate comparison.
What This Means for the Shopping Decision
For a Texas homeowner with solar panels, or someone planning to install them, the REP selection process requires more scrutiny than it does for a standard residential customer.
The steps that produce the most accurate comparison are: pull the EFL for each candidate plan, calculate the effective cost at your estimated post-solar consumption level (not the 1,000 or 2,000 kWh tiers used in standard comparisons), identify the export credit rate explicitly, compute the monthly spread between what you pay to consume and what you receive for exports, and factor in TDU delivery charges at your usage level.
Provider complaint data is also relevant. The PUCT complaint dataset LightCompanies has on file, covering July through December 2025 and normalized to complaints per 10,000 estimated customers, shows meaningful variation across providers in billing dispute rates. Solar billing introduces additional complexity compared to standard consumption billing, so providers with elevated billing complaint rates in the general population are a reasonable concern for solar customers specifically.
The short version: Texas does not have net metering in the regulated sense. What exists is a market of provider-specific buyback programs with varying rates and terms. The spread between your consumption rate and your export credit rate is the number that determines how much of your solar investment you recover through electricity bill savings. That number lives in the EFL, and it requires calculation to find.