Natural gas, wind, solar can fuel all Texas’s new power for 20 years
Market forces will likely be the driving force leading Texas’s primary electric grid during the next 20 years to a cleaner power future, propelled by continued affordable and abundant natural gas, a new report released this morning shows.
“Over the next 20 years, due to the free market alone, ERCOT can expect to see a cleaner grid that relies on Texas-produced natural gas, wind and utility-scale PV solar power at little additional cost to consumers,” concludes the fourth grid-forecasting study conducted by The Brattle Group for the Texas Clean Energy Coalition.
A few caveats are in order, though. The report did not take into account reliability concerns that could arise from the timing of coal-fired power plant retirements (such as too many at the same time) as coal’s contribution shrinks from an estimated 34 percent now to only six percent in 2035.
The report also did not analyze what impact rooftop solar installations might have, nor did it account for costs of additional high voltage transmission lines that might be needed to carry large amounts of utility-scale solar to population centers.
However “Exploring Natural Gas and Renewables in ERCOT Part IV: The Future of Clean Energy in ERCOT,” found that new power generation in Texas over the next 20 years could be completely provided by natural gas and renewable energy at little increased cost.
Among the biggest surprises: If market forces are allowed to work, CO2 emissions in Texas will drop even lower than requirements of the Environmental Protection Agency’s now-delayed Clean Power Plan, researchers found. The transition to natural gas, mainly combined cycle units, and renewables would cut carbon emissions on average 28 percent, or an average of 61 million tons less carbon in Texas air each year, the report found.
The impact of low natural gas prices – forecast in the report to rise no higher than $4 per MMBTU (on million British Thermal Unit) by 2035 – on the transition to clean power in Texas cannot be overstated. Fuels produced in Texas would rise no more than inflation, resulting in $41 per megawatt hour (MWh), similar to prices in 2014, the report noted.
Low natural gas prices, combined with the impact of the EPA’s requirements for coal plant retrofits under a rule cutting mercury and air toxins emissions, is resulting in fuel-switching from coal to natural gas, according to Ira Shavel, an energy economist and lead author of The Brattle team study.
“It was rather surprising how much we saw,” Shavel told Texas Energy Report. “It’s natural gas prices. I think that’s been a lot of the story.”
Indeed, natural gas prices are the largest driver of how electricity will be generated in ERCOT during the next two decades, while the impact of other market forces and currently proposed federal regulations are expected to be minimal.
Other key findings include:
--- 60 percent of coal-fired plants will be retired by the early 2020s.
--- 85 percent of power with low natural gas prices will come from natural gas, solar and wind, with combined cycle natural gas plants making up the lion’s share of natural gas generation.
--- Major additions of new generation will come from wind and solar – 9 GW for wind and 13 GW from solar.
--- Enhanced energy efficiency could reduce electricity demand by an extra five percent, helping to keep emissions and electric prices down.
The report notes that Texas is well positioned to lead the nation’s transition to clean energy as the first state to adopt (and far exceed) renewable portfolio standards, the deregulation of the Texas energy market and the state’s investment in CREZ (Competitive Renewable Energy Zone) lines to carry wind and solar power from West Texas and the Panhandle to the more populated cities east of I-35.
The study’s authors stressed their forecasts depend on allowing market forces to work “unimpeded” by political concerns, such as propping up existing coal-fired power plants beyond their natural ability to compete with natural gas, wind and solar power.
Full Report Here