Texas’ love affair with renewable energy is undeniable. But even after another banner year for clean energy in the state, a market redesign, fueled by political rhetoric from state leaders, could thwart future deployment, experts say.
Wind and solar accounted for nearly all new generating capacity added to the Texas grid in 2021, according to newly released market data. S&P Global Market Intelligence notes that power plant operators added 8,139 MW of new generating capacity to the ERCOT market last year — 42% came from wind and 40% from solar. Natural gas-fired additions made up 13% of the new capacity.
Nationally, wind and solar made up a slightly smaller share of new generating capacity — 41% and 36%, respectively — of the 27,959 MW of capacity added.
Jeff Clark, president and CEO of the Texas-based Advanced Power Alliance, said Texas continues to benefit from corporate and consumer demand for clean electricity and long-term price certainty. He added that broad electrification, including within the transportation sector, offers opportunities for even more growth.
“These are tremendously exciting times in the clean power sector, thanks to continued improvements in technology and economics,” said Clark, who also advocates for the replacement of coal-fired generating capacity with cleaner natural gas. “The addition of energy storage projects, and the extraordinarily large pipeline of projects ahead, will bring greater reliable and resilient integration of renewables, accelerating these trends.”
ERCOT is gaining ground in the energy storage sector. While California claimed the largest battery energy storage system in 2021 — the 230 MW McCoy Battery Storage Project — Texas added the next two largest systems with the 102 MW Gambit Battery Energy Storage Park and 100 MW North Fork Battery Storage Project.
Paired with the rapid deployment of renewables, energy storage can provide resilient, clean electricity to residential, commercial, and industrial customers in Texas, where an extreme winter storm nearly caused a complete collapse of the electric grid in February 2021. The California ISO region grabbed 55% of new energy storage capacity in 2021, while Texas took 38%.
Dr. Joshua Rhodes, a research associate at the University of Texas at Austin, and a founding partner of energy consultancy IdeaSmiths, said additional incentives for energy storage and investments in transmission infrastructure would unlock even greater deployment of renewable energy resources in Texas.
“The interconnection queue (at ERCOT) is full. It’s comically full,” Rhodes told Renewable Energy World. “I think we’re going to see a lot more storage connected to the grid.
“Before, the only way we could get more renewables on the system is to build more transmission. That’s not really true anymore with storage.”
Can Texas keep up the momentum?
Uncertainty surrounding a market redesign by the Texas Public Utilities Commission has started to slow the deployment of renewable energy resources, experts say.
In July, Gov. Greg Abbott directed the PUC to “allocate reliability costs to generation resources that cannot guarantee their own availability, such as wind or solar power” and to “streamline incentives within the ERCOT market to foster the development and maintenance of adequate and reliable sources of power, like natural gas, coal, and nuclear power.”
Doug Lewin, a Texas-based energy consultant, said adding ancillary service costs to renewables would be a “major change” that could threaten future deployment in the state.
“It will really stifle development,” Lewin said. He said there is little interest in building new thermal plants, which could leave Texas in a “terrible spot” in which renewables are at a disadvantage and the market is not favorable for new thermal capacity.
“There’s a real danger there,” Lewin said.