Texas Renewable Electricity Terms

Texas Electricity Glossary

Texas generates more wind power than any other U.S. state and is rapidly growing its solar capacity. The deregulated market makes green electricity plans widely available — but terminology around RECs, solar buyback, net metering, and renewable certification can be confusing. These definitions cover the key concepts for evaluating renewable electricity options in Texas.

See also: REC · Net Metering Texas · EFL · ERCOT

Renewable Energy Certificate (REC)

A tradeable certificate representing 1 MWh of electricity generated from a renewable source. REPs purchase RECs to offer "100% renewable" or "green" plans. Texas wind power produces abundant RECs, keeping Texas REC prices among the lowest nationally. RECs are the industry-standard mechanism for tracking and claiming renewable electricity in deregulated markets.

Net Metering (Solar Buyback)

A billing arrangement for customers who generate their own solar electricity. Excess generation exported to the grid earns credits that offset future electricity bills. Texas does not have a traditional net metering law — each REP sets its own solar buyback rate and terms. Buyback rates vary widely, from avoided-cost (wholesale rate) to retail rate, depending on the plan.

Solar Buyback Rate

The per-kWh rate a REP pays a solar customer for excess electricity exported to the grid. In Texas, solar buyback rates are set by the market rather than state mandate. Some REPs offer 1:1 retail credit (full retail rate per kWh exported); others offer wholesale or avoided-cost rates (significantly lower). Compare buyback rates on EFLs before selecting a solar plan.

Community Solar

A shared solar arrangement where customers subscribe to a portion of an off-site solar installation and receive credits on their electricity bill proportional to their share's generation. Community solar is growing in Texas but lacks a formal state program — it is offered through voluntary REP programs. It allows renters and those with unsuitable roofs to benefit from solar economics.

Wind Power

Electricity generated by wind turbines. Texas is the largest wind power state in the United States, with over 40 GW of installed wind capacity — more than many countries. Texas wind farms are concentrated in West Texas and the Panhandle, connected to population centers by CREZ transmission lines. Wind provides approximately 25–30% of ERCOT's annual electricity generation.

Solar Power (Distributed Generation)

Electricity generated by rooftop or ground-mounted solar panels at a customer's location, interconnected to the ERCOT grid through the TDU. Texas solar capacity has grown rapidly — driven by falling panel costs and solar buyback plans. Distributed solar offsets daytime usage; excess is exported to the grid. Solar installations must be approved by the TDU for grid interconnection.

Green-e Certification

A third-party certification from the Center for Resource Solutions verifying that a renewable energy product meets specific standards for renewable content and provider disclosure. Green-e certified Texas electricity plans must have their REC purchases independently verified. Not all Texas renewable plans carry Green-e certification — check the EFL for renewable content disclosures regardless.

Additionality

A concept in renewable energy accounting referring to whether REC purchases directly cause new renewable generation capacity to be built. RECs from existing renewable projects (already built and profitable without subsidy) have low additionality; RECs from new projects may have higher additionality. Most Texas RECs come from existing wind farms — additionality is rarely specified in residential green plans.

Power Purchase Agreement (PPA)

A contract between a renewable energy generator and a buyer for the long-term purchase of electricity at a fixed or formula price. Large commercial buyers (corporations, utilities, REPs) use PPAs to secure renewable electricity at predictable costs. Some premium Texas residential plans are backed by specific PPAs with named wind or solar projects, providing stronger renewable claims than standard REC purchases.

Energy Storage (Battery Storage)

Technology that stores electricity for later use — most commonly lithium-ion battery systems at the utility scale or residential scale. Texas is one of the fastest-growing battery storage markets in the U.S., driven by the need to balance variable wind and solar generation. Residential battery storage (such as Tesla Powerwall) can be paired with solar and time-of-use plans to maximize self-consumption.

Solar Interconnection

The process of connecting a residential or commercial solar installation to the ERCOT grid through your TDU. Interconnection requires TDU review and approval, an interconnection agreement, and utility-grade equipment (inverters, disconnect switches). TDU processing times and fees vary. Once interconnected, the customer can export excess solar generation and participate in solar buyback plans.

Renewable Portfolio Standard (RPS)

A policy requiring utilities or REPs to source a minimum percentage of their electricity from renewable sources. Texas had a voluntary renewable portfolio standard under SB7 — generators were encouraged to develop renewable capacity. Texas met its voluntary target years ahead of schedule and did not adopt a mandatory standard, relying instead on the REC market to drive renewable investment.

Carbon Offset

A credit representing the reduction of one metric ton of CO2 emissions, used by companies or individuals to compensate for their own emissions. Some Texas REPs offer carbon offset add-ons to electricity plans — distinct from RECs, which represent renewable generation rather than emissions reductions. Carbon offsets are not regulated by PUCT or ERCOT and vary widely in quality and verification standards.

Avoided Cost Rate

The marginal cost a utility or REP avoids by receiving exported solar electricity instead of purchasing it from the wholesale market. The avoided cost rate is typically the wholesale electricity price — significantly lower than the retail rate. Some Texas REPs use avoided cost as the solar buyback rate; others offer retail or above-retail buyback to attract solar customers.

← Back to Texas Electricity Glossary