New analysis sees strong future for renewables in Texas

The future of the Texas electric market will very likely include substantial amounts of renewable and gas-fired energy, economists and power system experts with The Brattle Group find in a new report prepared for the Texas Clean Energy Coalition (TCEC), a natural gas industry-funded group. Importantly, the in-depth analysis found Texas utility system operator ERCOT would experience no technical difficulties in reliably obtaining up to 43% of its electricity from renewable energy.

Released December 10, “Exploring Natural Gas and Renewables in ERCOT, Part II: Future Generation Scenarios for Texas” provides a 20-year outlook for the ERCOT [Electric Reliability Council of Texas] system, which serves most of the state.

The study’s findings about the future of natural gas and renewable energy in Texas include:

• Across the more likely scenarios, wind and solar grow to provide between 25 and 43 percent of electricity in ERCOT. Natural gas-fired generation provides all of the remaining incremental generation, adding 12 GW (gigawatts) to 25 GW of new combined-cycle capacity–a 38 percent to 80 percent increase from the current installed base.

• The study “found no technical difficulties accommodating much higher levels of variable wind and solar energy, while fully preserving reliability.” At very high levels of renewable energy, an additional ancillary service known as the intraday commitment option became attractive in some cases, but the report notes that existing market mechanisms could also provide the same service. Energy storage was not found to be a necessary or economic source of flexibility for ERCOT through the year 2030.

• The mix of new gas and renewables generation is sensitive to the price of natural gas and cost declines in wind and solar power. Changes in these three factors can cause significant shifts in the mix of future installations, leading to a wide range of plausible generation shares for wind, solar, and natural gas. It’s worth noting that wind’s costs have declined sharply in recent years, bringing wind’s current costs well below what the study assumed in the reference case and even the low wind cost case. Thus, the study’s results should be viewed as a conservative prognosis for the prospects of wind energy in ERCOT.

• The scenarios with large amounts of renewables see drastic reductions in emissions of carbon dioxide (CO2), nitrogen oxides (NOx), and sulfur dioxide (SO2).

• Existing coal units in ERCOT remain profitable and are not retired unless a relatively stringent federal carbon policy is adopted. This finding addresses the worries expressed by some that low cost energy provided by wind and gas could potentially cause resource adequacy concerns by forcing existing generators to retire. Interestingly, the reserve margin has a very small overall effect on the generation mix or emissions in ERCOT through 2032.

• A federal carbon policy requiring 90 percent capture and storage of carbon, however, would prompt the retirement of most ERCOT coal units. In this scenario, gas and renewable generation would together replace the energy formerly supplied by coal plants, with renewable energy providing up to 43 percent of ERCOT generation by 2032.

• Among gas-fired power plants, nearly all future additions are combined-cycle gas turbine (CCGT) plants rather than traditional gas turbines, due to the fact that CCGTs are more efficient.

• The analysis shows that the federal renewable energy production tax credit (PTC) and construction of new transmission lines remain important drivers of wind development. Interestingly, the study found that new wind plants built in the Texas Panhandle region that is being opened up by the completion of the Competitive Renewable Energy Zone (CREZ) transmission lines would have average capacity factors exceeding 42%, well above the average capacity factor for existing wind plants in Texas.

The complete report is available at http://www.texascleanenergy.org/2013-research.php.

Photo credit: Edward Jackson – Wikimedia Commons