Clean energy is rapidly rising on the Texas power grid, but regulators in the Lone Star State are now considering a plan that could give fossil fuels a boost.
The zero greenhouse gas emissions trio — wind, solar, and nuclear energy — provided more than 40 percent of electricity in the state in 2022. It was a year when several Texas cities experienced their hottest summers on record, driving electricity demand to its highest levels ever as fans and air conditioners switched on. Winter proved stressful too, with freezing temperatures last month pushing winter electricity peaks to record-high levels, narrowly avoiding outages.
Texas wasn’t alone. Over the past year, states like California have faced their own brushes with blackouts as searing temperatures drove up electricity consumption while the ongoing drought in the Western US throttled power supplies. Throughout the country, renewable energy is growing, but so are threats to the power grid. Utility regulators are trying to come up with ways to cope, and Texas — the largest energy producer in the US — could provide critical lessons.
However, Texas has some unique factors at play.
Texas leads the US in oil and natural gas production, but it’s also number one in wind power. Solar production in the state has almost tripled in the past three years. Part of the reason is that Texas is particularly suited to renewable energy on its grid. Wind turbines and solar panels in Texas have a high degree of “complementarity,” so shortfalls in one source are often matched by increases in another, smoothing out power production and reducing the need for other generators to step in. That has eased the integration of intermittent energy sources on the grid.
Coal, meanwhile, has lost more than half of its share in Texas since 2006. For a long time and across much of the country, the story was that cheap natural gas from hydraulic fracturing was eating coal’s lunch on the power grid. Coal was also facing tougher environmental regulations like stricter limits on mercury, requiring coal power plants to upgrade their equipment, and raising electricity production costs.
“The combination of the environmental regulations that are tightening and the cheapness [of competitors] mean that coal has trouble competing in the market,” said Michael Webber, a professor of energy resources at the University of Texas at Austin.
But in Texas, natural gas’s share of the electricity mix has been holding around 40 percent for more than a decade. On the other hand, renewable energy has surged as coal withered. Wind alone started beating out coal in 2019 and is now the second-largest source of electricity behind natural gas in the state.
Clean energy sources (wind, nuclear, solar) generated about 40% of electricity in @ERCOT_ISO in 2022, natural gas once again took the top spot, holding steady at its 17-year average of 43%, and coal continued its decade plus long decline. pic.twitter.com/X0Pv0oAN5X
— Joshua D. Rhodes (@joshdr83) January 17, 2023
An important factor is that the state has its own internal power grid, serving 26 million customers and meeting 90 percent of its electricity demand. It’s managed by the nonprofit Electric Reliability Council of Texas, or ERCOT. In the freewheeling Texas energy market, the cheapest sources of electricity become dominant, and wind and solar — with low construction costs, rapid build times, and zero fuel expenses — have emerged as winners.
Some Texans are also going out of their way to buy renewable electricity. Utilities like Austin Energy offer customers the choice of paying extra to buy wind and solar power, and thousands have done so. “As a public utility, Austin Energy’s decades-long shift towards renewable energy reflects the priorities of our customers and our city,” Matt Mitchell, a spokesperson for Austin Energy, said in an email.
Since there are few grid connections to other states, the Texas power grid avoids federal oversight, giving Texans more flexibility in setting their own rules. The downside is that Texas has a hard time getting extra juice when its own dynamos lose steam.
That was starkly evident in February 2021 when Winter Storm Uri chilled huge swaths of the United States. In Texas, more than 4 million customers lost power as temperatures dipped below those in Alaska. The official death toll was 246, though some estimates place the number higher.
The blackouts resulted largely from frozen coal piles and natural gas pipelines, stalling the flow of fuel into power plants. Nonetheless, Texas Republicans, including Gov. Greg Abbott, blamed wind power for the crisis.
Some lawmakers are now working to tilt the balance toward fossil fuels. “There are different political figures who are trying to incentivize gas power plants or deny, prohibit, or inhibit renewables,” Webber said.
Last year, the Texas legislature passed a law that would prevent the state’s retirement and investment funds from doing business with companies that “boycott” fossil fuels.
Texas Lt. Gov. Dan Patrick said one of his legislative priorities for this year is to secure more support for natural gas-fired generation. “We have to level the playing field so that we attract investment in natural gas plants,” Patrick said during a press conference last November. “We can’t leave here next spring unless we have a plan for more natural gas power.”
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He may get his way. With recent winter storms in mind, the Texas Public Utility Commission, which regulates electricity, is now considering proposals for how to reform the electricity market to boost reliability. This month, the commission approved a proposal that is ostensibly technology-neutral, but may end up favoring natural gas plants.
While wind and solar power are ascendant, they are intermittent, and regulators want to make sure there is enough dispatchable power like natural gas to ramp up on still, cloudy days. The new proposal would create a credit scheme that would encourage more of these dispatchable plants to come online and extend a lifeline to some existing generators that are struggling to compete. But it would also raise the costs of electricity production.
Environmental groups like the Sierra Club noted that the proposal leaves the door open for other tactics for balancing electricity supply and demand, like energy storage, increasing energy efficiency, and demand response.
While Texas regulators hammer out the details of these reforms, the rest of the country should pay attention. With climate change pushing average temperatures upward, the US power grid is more stressed than ever, not only from rising demand and struggling supplies, but from extreme weather damaging infrastructure. Clean energy sources may be more abundant than ever, but so are the threats to the power grid.
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