by Patrice “Pete” Parsons, TXSES Executive Director
As Texas prepares for the 90th Legislature this January, TXSES is preparing to advance policies that put more Texans in control of their energy future. This session, TXSES will advocate for two complementary priorities: ensuring that Texans who generate electricity are fairly compensated for the full value of the energy they provide to the grid, and expanding access to balcony and small-scale solar.
Electricity demand is surging, and Texans are increasingly turning to solar and batteries to generate and manage their own power. The upcoming Texas Legislative Session, convening on January 12th, will give lawmakers an opportunity to shape how these distributed energy resources (DERs) become part of Texas’ rapidly evolving electric grid.
TXSES will be advocating for two policies that can help build a stronger, more equitable energy system: 1) ensuring DERs are fairly valued and homeowners are compensated for the benefits their energy resources provide to the electric grid; and 2) expanding access to small-scale solar, including plug-in and balcony solar.
Creating a Fair Framework for Distributed Energy
DERs include a wide range of technologies that produce, store, or manage electricity at or near the point of use. These include solar, solar-plus-storage, standalone batteries, microgrids, natural gas generators, and other technologies.
The state has begun exploring how utilities can develop methodologies for determining the value of these resources. For example, in May, the Texas House Committee on State Affairs held a hearing to evaluate DERs, microgrids, and how the state should value and integrate these assets into the ERCOT grid. The hearing brought together representatives from various industries to provide ideas about how Texas should approach DER valuation.
This conversation is likely to become an important part of the 2027 legislative session, and I believe this presents a significant opportunity—but also a critical responsibility. As different industries develop proposals for DER legislation, solar must remain part of the conversation.
The nonprofit organization Powerhouse Texas has received a grant to convene a broad stakeholder group to develop ideas and work toward a unified legislative proposal, and TXSES is participating in that process. The goal is to create legislation that works across technologies while ensuring that the value of distributed solar is not overlooked.
What Is the “True Value” of Solar?
Solar can provide multiple benefits to the grid. Depending on where and when it is generated, customer-sited solar can provide energy, reduce demand on portions of the transmission and distribution system, and provide other grid and societal benefits. Texas therefore needs a credible and transparent methodology for determining that value.
For us, a key principle is that utilities should compensate distributed energy resources based on their actual value to the electric system, rather than simply assigning a value based on the utility’s avoided cost of purchasing electricity.
One potential model already exists here in the state. Austin Energy’s Value of Solar methodology provides a framework for evaluating multiple benefits associated with customer-generated solar. Rather than treating exported solar electricity as having only one simple value, the methodology considers a broader range of benefits to the utility and the electric system.
I believe Austin Energy’s approach can serve as an important model as Texas considers statewide DER policy. Utilities may have different circumstances and different transmission and distribution needs, particularly across Texas’ varied electricity markets. But the process for determining value should be transparent, technically sound and based on the actual benefits provided—not on an assumption that customer-generated solar has little or no value.
Avoiding a Race to the Bottom
One challenge will be ensuring that utilities rely on credible methodologies when determining the value of DERs. A utility’s choice of consultant can have a significant impact on the outcome. If a consultant approaches the analysis with the assumption that solar provides little value, the resulting methodology can reinforce that conclusion.
The Legislature should establish a framework that prevents this kind of race to the bottom and gives utilities a consistent, defensible process for determining DER value.
A recent example in Bryan, Texas, demonstrates why this matters:
Bryan Texas Utilities (BTU) changed its compensation structure for rooftop solar customers in 2026. Previously, customers received full-retail net metering at approximately 11.44 cents per kilowatt-hour (kWh). Under the new avoided-cost net-billing structure, excess electricity sent to the grid earns roughly 3.8 cents per kWh, while electricity purchased from the grid is billed at the standard retail rate of approximately 12 cents per kWh.
The new structure took effect June 1, 2026, following approval by the Bryan City Council. Existing customers were not grandfathered into the previous rate, meaning some homeowners who had installed solar only months earlier suddenly faced a substantially different economic proposition. Many customers have expressed frustration with the change.
However, the issue is bigger than Bryan. Similar questions about how to value customer-generated solar are emerging across Texas. Without a consistent and transparent framework, the value of a homeowner’s solar investment can depend heavily on which utility serves that homeowner.
Keeping Solar at the Table
TXSES and our colleagues at Solar United Neighbors and Public Citizen have joined to create the Texans for Local Energy Freedom Coalition (TELF) to make sure solar remains an important part of the broader DER conversation.
The coalition plans to hire a lobbyist to help ensure that solar is not pushed aside as other industries bring their own priorities and technologies to the Legislature. Solar United Neighbors and Public Citizen have already identified a lobbyist to work on legislation addressing plug-in solar, and with support from the Energy Foundation, TXSES hopes that same advocacy effort can also help advance the broader DER legislation.
Expanding Access with Balcony Solar
Traditional rooftop solar is not an option for everyone. Renters, residents of multifamily housing and homeowners with unsuitable roofs can face significant barriers to installing conventional systems. However, small plug-in and balcony systems could provide another path. Alongside our broader DER effort, and again with the TELF Coalition, TXSES will advocate for legislation supporting plug-in and balcony solar.
These systems could allow more Texans to generate some of their own electricity without requiring a traditional rooftop installation. Clear statewide rules would provide consumers, landlords, utilities, and local governments with greater certainty while maintaining appropriate electrical and safety requirements.
Expanding access to these technologies is particularly important as Texas considers how to meet rapidly growing electricity demand. Millions of homes and buildings represent a potentially significant distributed energy resource.
Building the Market Texas Needs
Texas is entering a period of extraordinary electricity growth. Data centers, industrial development, population growth and electrification are all increasing demand on the grid. At the same time, technological advances are making it easier for customers to generate, store and manage electricity themselves.
Texas should take advantage of that opportunity.
A fair DER framework can give utilities better tools for evaluating distributed resources, provide consumers with greater transparency and create a more predictable market for businesses investing in solar, storage and other technologies.
We recognize that legislation alone will not immediately change utility compensation structures. Any legislation must pass the Legislature, be signed into law, and then be implemented through the appropriate regulatory processes. But establishing the right framework is an essential first step.
Our goal is straightforward: Texas should recognize the true value of the energy Texans produce and give more Texans the opportunity to participate in producing it. The 90th Legislature will be an important step toward making that vision a reality.
TXSES will work to keep distributed solar at the table this legislative session, as well as work to advance a fair statewide DER valuation framework, and expand access to solar for Texans who have historically been left out of the rooftop market. The work may take more than one legislative session, but I believe the direction is clear: more distributed energy, more consumer choice, and a fairer value for the resources Texans bring to the grid.