Texas
The information provided below will help you understand and navigate through the regulatory environment in Texas.

Number of CHP Sites: 137
Installed Megawatts: 16.7 GW

Industrial BP Texas City Refinery Domain Industrial Park Shell Chemical Company Citgo Refining Baytown Energy Center LP Commercial/Institutional Rebekah Baines Johnson Health Center R.E. Thomason Hospital City of Lubbock Vista Hills Medical Center

Education University of Texas at Austin University of Texas at San Antonio University of Texas at Dallas Texas A&M University Rice University Texas State University

In June 1999, restructuring legislation, Senate Bill 7 (The Texas Electric Restructuring Act), was enacted to restructure the Texas electric industry to allow for retail competition. Municipals and cooperatives are not affected by this law, unless they chose to open their territories to competition after January 2002. The law also required an increase in renewable generation and 50 percent of new capacity to be natural gas-fired.

A facility may choose to utilize the electric grid for back-up power in case its CHP system goes offline. Connecting to the grid requires the facility to enter into an interconnection agreement with the utility providing the backup support. Interconnection is a problem because most states lack standardized processes. In Texas, however, the Public Utility Commission designed an interconnection process that specifies the appropriate level of review and the associated technical and equipment requirements for each DG project. Consequently, the review of small, low-impact DG projects are simpler and less costly in terms of both money and time.

• Substantive Rule §25.211 ( 23 KB) - Texas Interconnection of On-Site Distributed Generation
• Substantive Rule §25.212 ( 28 KB) - Technical Requirements for Interconnection and Parallel Operation of On-Site Distributed Generation

One way to improve the economics of a CHP system using a renewable energy fuel source is to enter into a net metering arrangement with the utility to sell back any excess electricity produced by the system.

The net metering policy in Texas was established by the Public Utility Commission of Texas (PUCT) to promote the generation of electrcitiy by small wind and photovoltaic systems. The PUCT requires certain utilities to offer net metering to qualified facilities 50 kW or less that use renewable resources. The rule applies to all Texas price-to-beat retail electric providers (PTB REPs), transmission and distribution utilities (TDUs), and integrated investor-owned utilities that have not unbundled in accordance with Public Utility Regulatory Act §39.051 ( 2.62 MB). This rule does not apply to municipal utilities, river authorities or electric cooperatives.

• Substantive Rule §25.242(h)(4) ( 32 KB) - Standard Rates for Purchases from Qualifying Facilities with a Design Capacity of 100 kW or less

There are no exit fees for DG applications smaller than 10 MW. The Texas Restructuring Act does allow for stranded cost recovery for applications greater than 10 MW. However, the Public Utility Commission made the determination in June 2003 that utilities have recovered their stranded costs. This may change after the final market evaluation.

All self-generating energy facilities must register with the Public Utility Commission of Texas pursuant to Senate Bill 7 Sec. 29.2351 - Registration of Power Generation Companies.

There are 8 counties in severe non-attainment, 5 counties in serious non-attainment, and 3 counties in moderate non-attainment for ozone. There is also one area in moderate non-attainment for carbon monoxide and one area for particulate matter. To view a list of these counties please click here.

Minor source turbines and internal combustion engines are eligible for the Air Quality Standard Permit for Electric Generating Units ( 12 KB). Most new units opt for the standard permit; however the state does have a program for issuing a construction permit as part of state new source review. Units being permitted through this method are required to do Best Available Control Technology for all criteria pollutants, but for most pollutants that just means complete combustion. The processing time for this permit can range from 4-12 months. There is a 30-day public comment period as well.

The requirements for East Texas (includes all counties east of Highway 35 or 37) are much more stringent than those of West Texas due to the local ozone attainment problems. The standards are as follows:


Special Considerations

1. Units using combined heat and power (CHP) are eligible for credit from the heat recovered at a rate of 1 MWh for each 3.4 MMBtu of heat recovered. The heat recovered must also be a minimum of 20% of total energy output by the unit.
2. East Texas units burning landfill gas, digester gas or oil field gas with <1.5 grains hydrogen sulfide or 30 grains sulfur compounds shall meet a NOx emission rate of 1.77lb/MWh.
3. All units in the Houston area must also participate in the cap and trade program if the source has an uncontrolled potential to emit greater than 10 tons per year of NOx or VOC. Controlling emissions to less than 10 tons per year does not exempt a unit from participating in this program.

A potential to emit 250 tons of any criteria pollutant in attainment areas triggers a Prevention of Significant Deterioration(PSD). 25 tons of NOx or VOCs in severe nonattainment areas and 50 tons in serious nonattainment areas triggers New Source Review (NSR). 100 tons of NOx, VOCs, PM or CO triggers NSR in moderate nonattainment areas.

Renewable Energy Systems Property Tax Exemption
The Texas property tax code allows an exemption of the amount of the appraised property value that arises from the installation or construction of a solar or wind-powered energy device that is primarily for the production and distribution of energy for on-site use. "Solar" is broadly defined to include a range of biomass technologies.

"Solar energy device" means an apparatus designed or adapted to convert the radiant energy from the sun, including energy imparted to plants through photosynthesis employing the bioconversion processes of anaerobic digestion, gasification, pyrolysis, or fermentation, but not including direct combustion, into thermal, mechanical, or electrical energy; to store the converted energy, either in the form to which originally converted or another form; or to distribute radiant solar energy or the energy to which the radiant solar energy is converted.

For more information please contact Pam Groce (Texas State Energy Conservation Office) at (512) 463-1889 or pam.groce@cpa.state.tx.us.

LoanSTAR Revolving Loan Program
Through the State Energy Conservation Office, the LoanSTAR Program offers low-interest loans to all public entities, including state, public school, colleges, university, and non-profit hospital facilities for Energy Cost Reduction Measures (ECRMs). Such measures include, but are not limited to: HVAC, lighting, and insulation. Funds can be used for retrofitting existing equipment or, in the case of new construction, to finance the difference between standard and high efficiency equipment. The LoanSTAR Program funds "Design, Bid, Built" or "Design, Built" projects. All projects are approved based on the Detailed Energy Assessment Report, which must be prepared according to LoanSTAR Technical Guidelines or the Performance Contracting Guidelines. SECO performs design specification review and on-site construction monitoring at the very minimum when the project is 100% complete. [See details]