Texas Solar

October 19th, 2015

With a hot and sunny August, Texas set a new record in 2015 for peak demand in electricity at 69,621 MW. For comparison on your home electricity bill that is 69,621,000 kW hours. These figures are for ERCOT which manages reliability and transmissions for the majority of Texas electricity demand. ERCOT’s job of managing the grid is becoming increasingly complex with the rise of renewable power.

During 2000 wind generation was negligible but by 2014 had grown to 14,100 MW of installed capacity. That wind power generated nearly 10.6% of electricity making Texas the top state for wind. Wind capacity is set to grow to nearly 20,000 MW of capacity and will overtake Nuclear to become Texas’s third largest source of energy. The growth of wind has been a trend for several years and is the result of billions invested in transmission lines.

For the last couple of years utilities have been testing the next large trend in Texas energy. As of 2014, Texas has 387 MW of installed Utility grade Solar. This is different than residential and commercial solar which you might be more familiar with. You may have neighbor that has installed solar panels on their roof. Usually these systems capacity is somewhere between 2 and 10 kW which is about enough to power a home. Utility grade solar projects can cover 100s of acres with solar panels and power tens of thousands of homes.

2016 is set to be the breakout year for Texas solar with over 1,000 MW of capacity to be built in the following projects.

  • Austin Energy has signed for 450 MW of solar in a purchase agreement and has intent for an additional 150 MW by 2019.
  • Georgetown has signed for 150 MW of solar which adds to their recently completed 144 MW of wind energy. Georgetown has the goal of being powered by 100% renewables by the end of 2016.
  • San Antonio’s CPS Energy has deals for 500 MW of solar to be completed by the end of 2016. CPS Energy has been building its solar portfolio for several years. Their deals include buying their solar panels and equipment from manufacturing jobs created inside San Antonio.
  • The utility company Luminant which largely deals with coal power plants is building a 116 MW solar facility.

This sudden commitment to solar is in part because of San Antonio and Austin’s commitment to meeting their renewable standards. These large projects are made viable through a 30% federal tax credit which is set to expire at the end of 2016. There have been talks of extending the tax credit but it is unlikely to be brought up until next summer. Most forms of energy are given tax breaks and allowing the solar tax break to expire would put renewables at an unfair disadvantage.

If you’re unconvinced on extending the tax credit to solar then read this investopedia article that lists different tax breaks to oil and gas companies. For a briefer summary this quote will suffice - “No other investment category in America can compete with the smorgasbord of tax breaks that are available to the oil and gas industry.”

Natural gas prices have fallen in recent years with the shale oil boom which has made natural gas the most economical energy source. Solar’s prices have fallen as well since advances in technology have increased efficiency and economies of scale have decreased manufacturing costs. Once a solar plant is installed it requires very little maintenance and no fuel which means costs are mostly fixed at their rate when installed. The same cannot be said of natural gas where prices can fluctuate on the market. With less wells now being drilled and the completion of liquid natural gas export terminals in the next few years we could see increases in natural gas prices.

Solar does have its disadvantages which mainly stack up to say 100 MW of installed solar is not the same as 100 MW installed of coal power. The sun doesn’t shine every day and daylight during the winter is significantly less than that of the summer. Overall solar provides between 20 and 30% of its capacity factor. That is, on average 100 MW of installed solar capacity will result in 20 to 30 MW of power delivered to the grid if averaged out to 24/7 and 365 days a year. This disadvantage is not as bad as it seems since a solar plant is likely to deliver it’s full 100 MW of power in the early afternoon of a summer day. That time frame is when Texas reaches it’s peak capacity constraints and prices can spike to over 10 times their normal point on the ERCOT market.

Solar power also pairs well with wind energy since solar produces the most on a summer day and wind produces the most on a winter evening. That means that solar and wind can complement each other and use the same transmission line resources. When the sun isn’t shining and the wind is blowing Texas will continue to use its other power sources.