Renewable energy, natural gas growth on the Texas grid

The growth of renewable energy and natural gas cannot be disputed. But how do these burgeoning sources of power affect the Texas electricity grid?

That question was addressed recently by the Texas Clean Energy Coalition (TCEC) in its report titled, Exploring Natural Gas and Renewables in ERCOT Part II: Future Generation Scenarios for Texas. The paper outlines six future scenarios for how the Texas grid (ERCOT) may be impacted by natural gas and renewable energy growth in the state.

TCEC’s report builds on a June 2013 study, which we contributed to, exploring the sometimes complementary and other times competitive nature of renewables and natural gas.

We attended a luncheon this month sponsored by the TCEC in which the authors of the most recent report shared a summary of their findings.

Here are some of the highlights:

  • Renewable energy and natural gas comprise all new generation expected to be built in ERCOT through 2032, though the mix between the two varies largely based on natural gas pricing and the adoption and stringency of any federal carbon policy.
  • The share of renewable energy in ERCOT today is 10% of all energy generated. Under the status quo, existing wind plants are retired at the end of their expected 20-year life and the amount of renewables on the grid could decrease. On the other hand, renewables could increase to a high of 43% of all generation if natural gas prices rise, renewable energy prices decline, and Congress adopts a strong federal carbon policy.
  • Greenhouse gas emissions could increase by 18% if more gas generation is built than renewable generation, or they could decrease by two-thirds under a strong federal carbon policy.
  • While no new coal plants are expected to be built in any scenario, existing plants are expected to remain in operation under five of the six scenarios. Only if a strong federal carbon rule is introduced would existing coal plants be retired (though coal plants would decrease the amount of energy they produce even under a moderate carbon policy).
  • Utility-scale solar PV costs are expected to decline between 2.6% to 4.4% per year, with solar PV becoming economical in ERCOT in 2028.
  • New wind generation is likely to be built across the state, with wind farms located in the Texas Panhandle having the highest efficiencies and coastal wind production best matching up with periods of peak energy demand (which could mean fewer natural gas plants would have to be brought online to meet these peaks).
  • A large increase in renewable energy generation is not expected to cause reliability concerns despite the intermittency of wind and solar generation; however, the ERCOT market will have to adjust to be able to effectively integrate these resources.
  • Meeting future energy needs with renewables and natural gas does not necessarily mean much higher wholesale electricity prices. Real (inflation-adjusted) prices are not expected to rise until 2032.