Study for Texas grid finds wind- and gas-powered energy provide needed growth

Source: Daniel Cusick, E&E reporter • Posted: Thursday, December 12, 2013

The future of electric power in Texas will depend largely on the state’s ability to tap its sizable natural gas and renewable energy resources, a new report prepared by the Brattle Group for the Texas Clean Energy Coalition (TCEC) has found.

The report, released yesterday, examines six scenarios under which Texas might meet rising electricity demand using gas, wind and solar energy as primary fuels and explores how rising and falling prices for each energy source affect the operation of the Electric Reliability Council of Texas (ERCOT) grid through 2032.

“Under the range of scenarios, natural gas and renewables both play substantial roles in ERCOT and provide all new generation needed to respond to growth in the state’s population,” the report states, adding that no new coal plants are expected to be needed to meet future power demand.

“The objective of this report was to examine broad patterns of interaction between renewable resources and natural gas over the next two decades,” TCEC Chairman Kip Averitt said of the Brattle analysis, which fleshes out the findings of an earlier white paper exploring some of the same issues.

And while the new report doesn’t make policy recommendations, it “illustrates the key drivers of gas and renewable development in ERCOT” to help guide Texas policymakers and decisionmakers in charting the state’s energy future, added Averitt, a former state legislator and chairman of the Senate Natural Resources Committee.

Under the more likely supply-and-demand scenarios, the Brattle analysis found that wind and solar energy will surge from their current 10 percent generation share to between 25 and 43 percent of ERCOT’s load. New combined-cycle gas plants — accounting for between 12,000 and 25,000 megawatts of generation capacity — would meet the grid’s remaining demand, the report found.

With more than 12,000 MW of installed wind power capacity (roughly the equivalent of 12 large nuclear power plants), Texas is the largest producer of wind energy in the United States. It is also the leading U.S. producer of natural gas with more than 40 percent of its electricity coming from gas-fired generators.

2 scenarios for carbon-priced energy

According to Peter Fox-Penner, chairman of the Brattle Group and the report’s co-author, the analysis was careful to explore both the short- and long-term interactions between natural gas and renewable energy resources in Texas — including price volatility and other market forces — to paint a comprehensive picture of how the ERCOT grid would function under various scenarios.

“The mix of new gas and renewables generation is sensitive to the price of natural gas and cost declines in wind and solar power,” the report states. “Changes in these 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.”

While the analysis includes scenarios where all of ERCOT’s current generation assets are available and operating, it also includes two cases where carbon dioxide regulations are in place. One scenario involves a “moderate” carbon rule where coal-fired power plants are required to sequester about 50 percent of total CO2 output, and a stronger rule scenario where those plants would have to sequester 90 percent of carbon by 2025.

Under the stronger rule scenario, the analysis projects that most of ERCOT’s coal-fired generation would be replaced by gas and renewable generation. Under such conditions, renewable energy could account for as much as 43 percent of ERCOT’s total generation by 2032.

Report co-author Ira Shavel noted that the analysis assumes that as intermittent energy sources like wind and solar are added to ERCOT’s grid, actions to address short-term power supply dynamics become more important. These include “the ability to quickly start and ramp power resources up and down to closely follow the fluctuating renewable supplies.”

Under scenarios that involve adding large amounts of renewable generation, Brattle found that ERCOT managers would need to use an ancillary service — known as the “intraday commitment option” — to guard against unexpected surges and provide more flexibility to the grid.