Texas is Leading America’s Electrical Revolution

Energy underpins human prosperity at the base level, and a radical change is underway in Texas. In an increasingly multipolar world, with technology and access to energy largely defining success or failure on the global stage, Texas is helping lead the way for the US.

A Narrative Violation in Texas

In the debates about energy, electricity innovation has often been painted with a broad, politically charged brush. Environmentalists champion “green” energy, while conservatives dismiss renewable technologies as impractical wishful thinking. But Texas—a state not typically associated with progressive anything, let alone energy policies—is proving that modern electrical technology is neither a hippie fantasy nor a partisan battleground, but a pragmatic pathway to economic growth, technological innovation, and American ingenuity.

When most people think of Texas, their mental model is trucks, guns, and oil. With the exception of the center of the large cities, Texas is one of the most red states in the nation. Yet today, we’re unexpectedly becoming the national leader in battery technology and electrical infrastructure innovation. This is surprising to those that have more interaction with Texas from the air between LA and NYC than they do on the ground. This isn’t happening by accident, but through a deliberate combination of forward-thinking policy, regulatory flexibility, and a uniquely Texan approach to technological advancement.

Base Power, the home energy startup I co-founded in 2023, has been squarely in the midst of this shifting landscape. Our model provides a backup battery for Texas homeowners alongside an energy service whereby we bill customers monthly for their usage (unique to the Texas market, more on that later). For most Texans, battery adoption isn’t about making an environmental statement. It’s about resilience, independence, and economic pragmatism. Most Texans aren’t concerned with what technology is used, just that their lights stay on and the monthly electricity bill doesn’t go up. Said differently, the fundamental consideration is the outcome, not the method.

In a state prone to extreme weather events, battery storage represents personal energy security. Especially in suburban and rural Texas, the value driver for most of our customers is security and independence for their family. Taking away the potential unknown of outages, often at highly inconvenient times, resonates most. The 2021 winter storm, where most customers had days-long outages, particularly exposed vulnerabilities in the Texas power grid that drove many to consider independent power solutions.

Even the Governor of Texas Greg Abbott recently voiced his support of renewables, citing the job growth it has provided in the state:

Two factors have led to an increase in adoption rates of batteries at homes: cost and size. As has been well publicized, battery cell costs have come far down the cost curve. Batteries are now in many cases far cheaper than comparably-powered generators, and as such have increased in kWh that can be economically deployed. For instance, Tesla’s Powerwall 3 (the flagship product in the category) is now 13.5kWh/11kW, meaning it can support most loads of a home. Base Power’s batteries are either a 25kWh/11kW or 50kWh/22kW configuration, representing well over a day of usage for most customers.

At the grid scale, these cost declines have also made a large impact as well. The marginal cost of a kilowatt-hour produced by solar and stored in a battery is lower than that of any other commercialized source today. Hilariously, a solar panel is now cheaper in many cases than a sheet of plywood.

Texas’s electricity grid and financial markets are unique in many ways to the rest of the country. As you’d expect, Texas does its own thing: it has its own physical grid that is largely not connected to the rest of the nation. There are three grids in the US: the west, the east, and Texas and as such, unlike every other state in the lower 48, Texas can’t easily borrow from its neighbors when it needs more and lend some when it has too much energy. This drives supply/demand crunches that result in outages and price volatility that can make its way to consumers.

Also unique to Texas is the structure of its electricity market. In Texas (and interestingly in the mostly-blue northeast states), energy retailers sell electricity to consumers as opposed to the default utility. If you live in Houston for instance, you have to choose who you buy your electricity from. These retail companies compete for customers and sell fixed-rate contracts while purchasing electricity from the grid at real-time prices that change every 15 mins. Retailers are then incentivized to reduce the load that they supply during high price events, and do so by pricing customers differently, controlling devices such as thermostats and batteries, etc. In this structure, the monopoly utility only owns the poles and wires, and gets paid by the customer for delivery of energy, but not the energy itself.

This unique model leads to retail price competition amongst the 100’s of retailers, driving down costs for the average Texan. As such, residential Texas electricity rates are 11% below the national average and less than half of those in California.

Furthermore, the Texas electricity markets, managed by the non-profit Electric Reliability Council of Texas (ERCOT) are structured as what’s called “energy only”. This means that generators (nuclear, wind, coal, solar, etc.) get paid for every unit of energy they produce. Seems like that’s the way it should work elsewhere, right? Not the case. All other markets in the US are considered “capacity markets” where generators are paid for being available to be called on, whether or not they actually produce electricity. This subtle but important difference also drives innovation unique to Texas: it incentivizes fast-acting, low cost, flexible resources like batteries to get deployed in the state. ERCOT maintains a sweet set of live metrics on the Texas grid on its website.

Due to this, Texas added more grid-scale solar & battery storage capacity than any other state in the nation this year, and is rapidly approaching California in total deployed. The difference is philosophical and fundamental: Texas views electrical innovation not as an ideological statement, but as a business opportunity.

At the residential level, there are typically two authorities controlling installations: 1) the city and 2) the utility. The city is concerned with life safety and code compliance, whereas the utility is typically more selfishly concerned about equipment on their infrastructure and how it interacts. Across the tens of thousands of cities and 3000+ utilities in the United States, there is minimal agreement on requirements for even minor things like the color and verbiage on labels on electrical equipment. In practice, residential energy installers end up building up a database of each city and utility they work with: what do they care about, what are there specific rules, what is their specific process for application, etc. The National Renewable Energy Lab attempted to solve the city portion of this problem with a standard permitting software they developed called SolarAPP+. It has been minimally adopted throughout the US, primarily in California. This patchwork drives the cost of residential solar in the US to be more than twice that of Australia; where labor costs are similar to the US.

Besides the correctly-incentivized market structure, isolated grid, and wealth of renewable resources in Texas, the regulatory environment has set the state up well for free market forces to drive the energy mix towards that which is lowest cost.

While certainly imperfect, multiple policy actions at the state level have contributed. Texas has lagged behind California in this area, resulting in different permitting processes, requirements, inspections, and timelines from city to city. SolarAPP+ and standardization frameworks for utilities and cities have struggled to make progress in the heavily locally-governed political environment.

One bright spot surrounds the city and county jurisdiction in Texas: outside of cities (all of the non-shaded locations below), counties can not require permits for residential energy equipment. This results in far lower installation costs and overhead on both installers and customers. The Houston metro area (Harris County) is a particular boon in this way: as of the 2020 census, 2 million people live outside of the city limits in that county alone. Furthermore, legislation passed in 2011 limited the power of HOA’s with “Not In My Backyard” residents from preventing homeowners from installing solar or batteries on their own property. Freedom!

At the grid scale, the policies shaping Texas’ large increase in solar are more market-structured, as regulatory hurdles surrounding permits have less of an impact on deployment speed and cost. That said, the interconnection queue is far shorter in the ERCOT region due to the “connect and manage” policies that reduce the years-long studies typically required for interconnection in other states.

A Model for National Innovation

Texas is showing America a blueprint for technological advancement that transcends partisan divides. By creating a regulatory environment that encourages innovation, maintaining an independent & flexible electrical grid, and allowing market forces to drive technological development, the state is proving that electrical technology can be a unifying force.

The electrical revolution isn’t coming—it’s already here. And surprisingly, its most powerful engine isn’t in Silicon Valley or Washington, D.C. It’s in the heart of Texas, where innovation meets pragmatism, and technology serves people rather than ideology.

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