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The future of the Texas electric market will very likely include substantial amounts of both renewable energy and natural-gas-fired power, economists with The Brattle Group find in a new report prepared for the Texas Clean Energy Coalition (TCEC).

TCEC Chairman Kip Averitt, a former state senator and chairman of the Senate Natural Resources Committee, says the report uses state-of-the-art modeling in a series of scenarios - including a range of natural gas prices, a required reserve margin, and different wind and solar energy costs - to simulate the Electric Reliability Council of Texas (ERCOT) grid system through 2032.

"The objective of this report was to examine broad patterns of interaction between renewable resources and natural gas over the next two decades," explains Averitt. "The report illustrates the key drivers of gas and renewable development in ERCOT to better inform Texas policymakers and decision-makers about the range of possible outcomes."

With over 12 GW of installed capacity, Texas is the largest state producer of wind-powered electricity in the U.S., according to the report. At the same time, the report adds, Texas is the leading U.S. producer of natural gas, generating over 40% of its electricity from natural gas plants.

In June, The Brattle Group produced a preliminary study for TCEC that found the relationship between natural gas and renewables had aspects that were both complementary and, in some cases, substitutive. In this new report, the Brattle team examines the future of gas and renewable power in Texas analytically through the simulation of several grid-expansion scenarios.

http://www.nawindpower.com/e107_plugins/content/content.php?content.11635

Key findings include the following:

- 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. No new coal plants are built in any scenarios.

- Across the more likely scenarios, wind and solar grow from their current 10% generation share to levels between 25% and 43%. Natural-gas-fired generation provides all of the remaining incremental generation, adding 12 to 25 GW of new combined-cycle capacity - a 38% to 80% increase in the current installed base.

- 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 says changes in these three 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.

- The study says it found that the ERCOT system could accommodate all levels of variable renewables likely to occur during this period with no reliability problems. However, accommodating higher levels of renewables required the model to use an additional ancillary service - known as the intraday commitment option - and to adjust the levels of current ancillary services.

- The analysis shows that federal production tax credit and ERCOT ratepayer funding of new transmission lines remain important drivers of wind development.

- A reserve margin has a very small overall effect on the generation mix or emissions in ERCOT through 2032. However, the report says scenarios using higher gas prices and lower renewables costs reduce the growth of CO2, NOX and SO2 substantially. A stringent federal carbon policy reduces 2032 CO2 by 66% versus 2012, the report adds..

- Existing coal units in ERCOT remain profitable and are not retired unless a relatively stringent federal carbon policy is adopted. A federal carbon policy requiring 90% capture and storage of carbon, for example, would prompt the retirement of most ERCOT coal units.

- Under the strong federal carbon policy scenario, gas and renewable generation would together replace the energy formerly supplied by coal plants. In this case renewable energy could rise to become 43% of ERCOT generation by 2032.

The complete report can be found here.



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