A predicted spike in energy prices could change the market
Recently, we talked about how Texas has become a leading state for renewable energy despite its historic association with the fossil fuels industry. Now circumstances are shaping up to possibly spike solar adoption in the Lone Star State even further – and homeowners who miss out could find themselves dealing with dramatically higher energy bills.
To understand what’s going on, we first need to talk about Texas’s deregulated energy market. Our readers in Texas will already know about this, of course, but for those elsewhere, the differences compared to what they’re used to may be surprising.
In most U.S. states, homeowners have no choice but to buy electricity from the regional monopoly utility which operates the grid in their area. A few states, like Texas, have a deregulated energy market. In Texas, there is a difference between the Transmission and Distribution Utility (TDU), which manages the grid, and the electricity providers which sell power to customers. Several different TDU’s operate the grid in different regions of the state and serve most of the Texas population under the authority of the Electric Reliability Council of Texas. However, many different electricity provider companies who do not play a role in the day-to-day management of the grid compete for customers, offering contracts which typically range in duration from 12 to 36 months.. This system means that most Texans have a lot of freedom to comparison shop for the best rates on energy and change plans to get the best deal – but it also means that homeowners have to be prepared to research and potentially change plans frequently as providers constantly compete on pricing.
While the rates offered by the various electricity providers do vary somewhat, they’re all generally tied to the price of natural gas futures. As long as that price has remained fairly low, Texans have usually been able to get a decent deal on electricity regardless of which provider they choose – the average price of energy in Texas has generally remained markedly below the national average. However, rates are on the rise. The Fort Worth Star-Telegram reported in mid-May that prices had gone up 30% in just a one-month period, and 70% in the past year. And the worst could be yet to come. Some experts are predicting that a radical spike in the price of natural gas futures might be on the horizon, due to the ongoing conflict in Eastern Europe and a number of other factors – and that this spike could occur in the middle of the sweltering Texas summer, when demand for electricity to cool homes would be at its highest.
Under these circumstances, the value of being able to generate your own power becomes obvious. Solar-empowered homeowners wouldn’t be at the mercy of rate fluctuations caused by volatility in the natural gas market, and net metering provides a lucrative payout for sending energy back to the grid to help meet high demand. Many retail energy providers in Texas already offer a net metering program for solar customers, and more are likely to start as the retail rate climbs and makes solar more attractive for homeowners. Although we don’t have a crystal ball, we think it’s highly likely that some of the competing electricity providers in Texas will soon look at making solar part of their appeal to homeowners as a dependable way to save money.
This is a story we’ll be keeping an eye on in the weeks and months ahead, so stay tuned to our social media for any updates. In the meantime, if you’re looking for a way to save money and stay more comfortable during the summer, whether you’re in Texas or elsewhere, one of our trained energy consultants would be happy to have a conversation and see if solar is right for you.