Wholesale and retail deregulation in Texas has created two distinct market structures, but only one currently encourages solar development. Solar has rapidly expanded in the territories of municipal and cooperative utilities. These utilities are overwhelmingly exempt from retail deregulation and can take a holistic view. Consequently, municipal and cooperative utilities are providing innovative solar solutions to customers who want options and not simply low-cost, reliable power from any source.

By comparison, solar deployment has historically been limited in the second market structure, the competitive wholesale market with retail choice. In this setting, solar has struggled to compete against low natural gas prices and competitive wind resources. However, as project economics continue to improve, even the wholesale market for utility-scale solar has potential for rapid growth in the coming years.

These market insights are the result of a fact-finding mission to Texas where senior energy executives joined together to discuss the role of solar in a state with unique market dynamics. This article further explains the two distinct market structures that developed as a result of deregulation and how we can apply these findings to future solar initiatives.

You may also view this report by visiting the Public Utilities Fortnightly website here.