Most new electricity generation in Texas will come from wind power, and next year solar power growth is expected to exceed natural gas-fired power plants in terms of new capacity added to the grid, according to a new report Tuesday from the Electric Reliability Council of Texas.
The capacity, demand and reserves report from ERCOT, which manages nearly 90 percent of the state’s grid load, shows that Texas is upping its share of renewable power and that growth of solar farms will begin to pick up next year in the state. No new coal plants have received permits, and ERCOT expects companies will retire more coal-fired power plants in coming years.
Since May, the grid has added nearly 3,000 megawatts of power capacity — about two-thirds from new wind farms and the remainder from two new gas-fired power plants. In 2016, ERCOT anticipates adding more than 4,200 megawatts of new power capacity, including nearly 2,800 megawatts of wind power, more than 1,000 megawatts from solar farms and the rest from a new gas plant.
On Monday, Atlanta-based Southern Company said it bought a 51 percent stake in the planned, 157-megawatt Roserock solar farm near Fort Stockton as the utility giant makes its first renewable power entry into the Lone Star State.
About 2,000 megawatts of solar power is expected on the grid by 2018, said Warren Lasher, director of system planning for ERCOT, compared to just 200 megawatts of solar power now.
“That’s a significant growth expected over the next few years,” Lasher said.
Wind and solar projects, however, have benefited from federal tax credits that will end after 2016 unless renewed by Congress.
ERCOT noted that distributed power, such as rooftop solar, has not grown enough in Texas to affect demand on the grid.
In all, ERCOT has about 79,300 megawatts of generation resources available and that amount is projected to grow to 87,300 megawatts by 2025. One megawatt is typically enough to power about 500 Texas residence during mild weather conditions and 200 homes during peak demand. ERCOT’s reserve margins are expected to exceed projected peak power demand through the next 10 years.
Even the electricity demand from oil and gas producers during the ongoing crash in oil prices has only shown a slight slowdown, according to ERCOT.
Federal rules like the Obama administration’s Clean Power Plan — under legal challenge in a number of states — are putting stricter carbon emission standards on power plants, with coal generation affected most. ERCOT projects the grid will lose more than 7,000 megawatts of coal power capacity within the next five years.
With the new rules on the way, some major power generators including Dallas-based Luminant, which has a lot of coal generation, are turning more to gas-fired power. Luminant, the largest power generator in Texas, said Friday that it will buy two Texas gas-fired power plants for $1.6 billion from Florida-based NextEra Energy Resources.
In a note Tuesday, Houston-based investment bank Tudor, Pickering, Holt & Co. said Texas power prices have fallen to “unsustainably low levels,” putting stress on coal plant profits. At the same time, low natural gas prices have offset some costs during peak energy demand, while strong wind power has made power exceedingly cheap.
The NextEra deal makes it more likely Luminant will shut down some coal plants, the note added, specifically citing the Big Brown, Martin Lake and Monticello plants in East Texas.
“Luminant’s coal plants are most at risk for retirement and retiring coal generation would benefit the rest of the fleet through higher power prices,” the note added.