by Alison Silverstein, TXSES Board Member
When the Texas Legislature created the $10 billion Texas Energy Fund in 2023 to fund new generation after Winter Storm Uri, they set aside $1.8 billion of that Fund to help qualifying entities acquire and install Texas Backup Power Packages (TBPPs) at critical facilities that support community health, safety and well-being.
This program was created to make Texas critical facilities and communities more resilient in the face of system-wide and local grid failures. There are over 30,000 critical facilities across Texas, and about 90% of Texas distribution utility feeders serve critical facilities. Once TBPPs have been installed, electric utilities will be able to rotate outages more effectively and fairly among neighborhoods because they don’t have to protect power to critical facilities under emergency conditions.
A TBPP is a standardized, stand-alone, behind-the-meter combination of backup generator, photovoltaic arrays, batteries and on-site fuel that can keep its host critical facility powered and operational for at least 48 hours without refueling or recharging from the grid. The Commission has not yet set the rules for TBPP package designs (which by statute can include an electric school bus in lieu of a microgrid).
The law creating TBPPs set restrictions around the critical facilities that can receive TBPP funding:
- They must support public safety, health and well-being, such as police and fire stations, hospitals and clinics, assisted living centers, gas stations and convenience stores in rural areas and along hurricane evacuation routes, community heating and cooling centers, 9-1-1 centers, and water and wastewater utilities.
- They must be less than 2.5 MW in size.
- They cannot be charter schools or commercial oil and gas facilities.
- They cannot use the TBPP to sell energy back into the grid.
The Public Utility Commission of Texas (PUCT) will administer the Texas Backup Power Program as it does the large generator portion of the Texas Energy Fund. The PUCT has an active rulemaking (Project No. 59024) to set the rules for TBPP funding (grants up to $500/kW plus forgivable low-cost loans), specify TBPP design and performance requirements, set up the critical facility application process, define the criteria for TBPP awards, and specify the criteria for TBPP loan forgiveness.
The PUCT’s proposed rule was issued in December 2025. Commenters have asked that the final rule include requirements for minimum vendor warranties for TBPPs, specify some common cost and performance metrics so critical facilities seeking TBPP proposals can easily compare competing vendor offerings, allow a critical facility’s chosen vendor to act as its agent in applying for the TBPP award, and require a host facility to meet several years of minimum refueling, maintenance and testing once its TBPP has been installed.
The final PUCT rule should clarify whether a TBPP host can use its backup power for limited hours of peak-shaving behind the meter to lower its electric bill, or for compensated demand response as part of a third-party aggregator’s Virtual Power Plant or Aggregated Distributed Energy Resource.
The PUCT could find it appropriate to allow ERCOT (the grid manager serving 90% of Texans) to direct critical facilities with TBPPs to island from the grid and use their TBPP supply in the event of another major grid emergency, to free up electric supply to keep other Texans’ lights on. And although a TBPP is prohibited from feeding energy into the grid, the final rule will likely direct utilities to expedite interconnection of TBPPs onto the electric distribution system.
While there is no set schedule for the PUCT to issue the final TBPP rule, that could occur this spring and be fully resolved after rehearing by summer. It could take until late 2026 or early 2027 to establish and open the TBPP application process, with first financial awards issued in 2027.
There is keen interest in the TBPP program for several reasons. This is the first program in the nation to offer substantial financial assistance to critical facilities to secure backup power systems to help protect their communities. The $1.8 billion available represents a huge market opportunity for equipment vendors and microgrid packagers and a potentially great benefit to the over 30,000 critical facilities across Texas. In a few years, the TBPP program could play an important role in protecting Texas communities under diverse emergency conditions.