The Texas electricity market within the Electric Reliabibilty Council of Texas or ERCOT, which covers 80 percent of Texas, is suffering from a deficit of peak power. Concerns are rising that the state will be short on power during the summer months. The Brattle Group was engaged to prepare a report for ERCOT on how to manage or address the power shortage issue. The Brattle Group also prepared a report entitled, The Impact on Solar PV on Electricity Markets in Texas, which discusses electricity cost savings Texas could produce if it built more solar farms--the price of solar power would be less than peak power plant prices.
The irony is that many believe that solar power is always more expensive than traditional power plants like natural gas plants. But electricity markets are complicated. Base load power is very inexpensive in Texas because of abundant natural gas that has arisen through the technology of horizontal drilling and hydraulic fracturing in the gas shales--which has unleashed a tremendous resource of cleaner burning fossil fuel.
However, peak power prices can be very expensive. In Texas, ERCOT raised the cap price from $3000 per MW to $4500 per MW, and the cap is going to rise to $9000. The hope is this will encourage more natural gas power plants to be built.
Solar can be one of the answers. With rapidly declining prices for solar PV panels and the short time to build solar farms, 90 or 120 days in some instances, solar is much less than $3000 per MW. A natural gas plant can take a couple of years to permit, finance, and build. We still need these plants, but solar can be a contributing factor to managing peak power--the sun shines most when peak power is needed to cool homes and businesses in the hot summers in Texas.
Solar PV can contribute to energy savings, if applied in the right way, in the right market, and at the right price. The Brattle Report shows how solar could contribute to enhancing the Texas electricity market. Unfortunately, the politics in the Texas legislature is likely to prevent any renewable bills from passing.
While Texas has the largest installed wind power base, it is unfortunate that we could not work to be the leader in solar, so that Texas is the all-of-the-above leader--wind, solar, and oil and gas. It would appear to all be good for the economy and good for the environment. Creative and empirical thinking is at a disadvantage if politics gets in the way--Democrats and Republicans both need to realize that we need at this time fossil fuels and alternative energy. Each has their own necessary role in today's economy and with today's technology.