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Texas PUC Clarifies That Back-Up Power Generation Under TBPP Program May Not Export Power To Grid Under Any Circumstance, May Not Participate In REP Demand Response Programs
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The Texas PUC adopted final rules to implement the Texas Backup Power Package (TBPP) Program which will provide loans and grants to qualifying critical facilities for the installation of back-up power systems, with the PUC clarifying that generation installed under the TBPP shall not export power to the grid
"The commission clarifies that PURA §34.0201 requires that a TBPP functions exclusively as a standalone, behind-the-meter backup power resource for its host critical facility. Accordingly, TBPPs must be designed to operate only in an islanded mode and must not export power to the electric grid," the PUC said in an order
A TBPP may not be used for, "the wholesale or retail sale of electric energy, ancillary
services, emergency response service, or other reliability service
in which the provider receives compensation in Texas," the final rule provides
The PUC said that this prohibition on the use of the TBPP for any purpose other than emergency power, with grid exports prohibited, applies to the TBPP itself, regardless of who owns, hosts, or operates the system
"TBPPs must not participate in activities other than serving the critical facility during reliability or adequacy events," the PUC said
"The commission clarifies that TBPPs are not permitted to participate in wholesale or retail electric energy markets; participate in ERCOT or another ISO’s ancillary service, ERS programs, or other reliability services; the Aggregated Distributed Energy Resource (ADER) program; solar buyback, or peak load reduction program that results in grid interaction; or participate in any demand response program, including as a Controllable Load Resource, administered by an ISO, retail electric provider, electric utility, or other entity," the PUC said
TBPPs, the PUC held, may not operate during non-emergency periods for peak shaving, baseload support, revenue generation, or cost recovery.
"While the limited non-emergency operation could improve cost efficiency or maintenance, it would erode the TBPP’s availability and reliability during actual outage events and also create broader ISO reliability risks and unintended market impacts," the PUC said
However, the PUC declined to require that all back-up generation (even non-TBPP back-up generation) at a critical facility must comply with the limitations on TBPPs as a condition of a critical facility's eligibility for the TBPP program
Addressing comments about who may serve as a vendor under the TBPP, the PUC said that sub-contractors may be used by a "prime" vendor approved for the program without the sub-contractors needing PUC approval
"The commission explains that for approved TBPP projects, the commission will enter into a grant and credit agreement with the awardee and the prime approved vendor responsible for delivering a turn-key TBPP to the critical facility. The prime vendor will be selected by the commission through a competitive selection process. The prime vendor may engage sub-contractors through its own contractual arrangements. The prime vendor is required to be an approved vendor, but the sub-contractors are not required to be approved by the commission," the PUC said
The PUC further said, "while third parties including consultants, community managers, or other unaffiliated entities may assist in preparing application materials, the [TBPP] application itself must be submitted by the entity identified in subsection (e)(1)(A) that has legal authority to act for and bind the critical facility. The rule does not permit unaffiliated entities, such as a distribution service provider, to be applicants."
The PUC's final rule also removes prescriptive battery and photovoltaic sizing requirements for TBPPs, which had been included in a draft proposal
"The commission agrees with commenters that prescriptive battery and photovoltaic sizing requirements in proposed subsection (b)(3)(A)(vii) may exclude otherwise viable projects, particularly for space constrained or smaller facilities, and may, in some cases, result in increased costs without a commensurate benefit in asset performance. Accordingly, the commission modifies the rule to remove subsection (b)(3)(A)(vii). Under the revised rule, approved vendors will work with eligible critical facilities to assess site specific conditions, operational requirements, and constraints," the PUC said
The PUC said that, under the rule, backup power packages must be capable of operating for at least 48 continuous hours without disruption or refueling. The systems must include a combination of natural gas or propane generation, battery storage, and solar generation designed to provide reliable power during prolonged outages and emergency conditions.
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May 8, 2026
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Copyright 2026 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com
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