Wind to beat coal in Texas for the first time — report

Source: By Christa Marshall, E&E News reporter • Posted: Monday, September 23, 2019

Texas will produce more electricity next year from wind than coal — a first for the state’s annual generation, according to a new report.

Rystad Energy AS said the state will generate 87 terawatt-hours of electricity from wind in 2020, compared with an expected 84.4 terawatt-hours from coal. While wind has surpassed coal in Texas on average for monthly periods, doing so for a year would be a “milestone moment,” the energy research firm said in the analysis last week.

“The Lone Star State is about to break out of its hydrocarbon-rich mold,” Rystad said in a statement.

Multiple factors are driving the electricity shift. Low natural gas prices are putting a squeeze on coal across the U.S., and Texas is no exception. As of July, gas provided more than half the state’s power, with coal powering about 20%.

Yet coal fired 40% of Texas electricity in 2010. A string of coal plant retirements — including four last year — have reduced the fossil fuel’s share (Climatewire, July 23).

According to the U.S. Energy Information Administration, Texas produced one-fourth of the nation’s wind power in 2017. West Texas in particular has experienced a wind boom for years, helped by federal tax credits and state investment in transmission lines.

In 2005, the state Legislature directed the Public Utility Commission of Texas and Electric Reliability Council of Texas (ERCOT) to develop the Competitive Renewable Energy Zone initiative, a multibillion-dollar transmission project to connect wind hubs with more populated areas.

“However, our view is that renewable energy technologies are reaching a level where new installations are not driven solely by policies or subsidies, but by economics,” said Carlos Torres-Diaz, head of gas market research at Rystad, in a statement.

The research firm cited data from the International Renewable Energy Agency showing that the global average levelized cost of electricity from onshore wind farms dropped below 6 cents per kilowatt-hour last year. Technology advancements with wind and economies of scale have helped drive costs down nationally, according to analysts.

The Texas report comes as the federal production tax credit for wind is set to phase out at the end of the year. Earlier this year, the Department of Energy said wind capacity additions could decline without the tax credit (Energywire, Aug. 13).

Rystad projected that wind likely will remain competitive in the Midwest and South-Central U.S. without government subsidies.

“Further expansion in the Rockies and California is likely, as state governments pursue more carbon-friendly energy solutions. However, downside risk to wind could materialize in the mid-Atlantic and New England states, as the loss of subsidies will make it harder to clinch new market share,” Torres-Diaz said.

In a separate report Friday, the International Energy Agency said onshore wind globally this year will increase 15%, assisted by U.S. developers accelerating deployment ahead of the PTC phaseout.

As for Texas this year, coal has pulled ahead of wind in the main Texas power market for energy used through August, accounting for about 20.5% of the power used in the ERCOT region. Wind was close behind at about 19.7%. Gas was first with about 47.5%.

Reporter Edward Klump contributed.