Gas and renewables are natural partners in Texas, report finds

Natural gas and renewable power can work together well in the Electric Reliability Council of Texas (ERCOT), according to a new Brattle Group report prepared for the Texas Clean Energy Coalition.

“Partnering Natural Gas and Renewables in ERCOT,” is the title of a report released by Brattle Group June 11.

Texas is in the enviable position of being both the national leader in installed wind power generation while at the same time being a major natural gas producer.

New shale supplies and drilling techniques have doubled Texas’ natural gas supplies which are now projected to last through 2030 or even 2050, according to the report by Jurgen Weiss, Heidi Bishop, Peter Fox-Penner and Ira Shavel.

Today Texas has almost 69 GW of natural gas-fired power capacity, most of which came online between 2000 and 2005. After a period of investment in coal and then nuclear generation, capacity investments shifted toward new, efficient gas-fired combined-cycle plants. Texas had just deregulated its market and new combined-cycle plants provided significant cost savings over older less efficient plants.

Texas is now facing a new set of challenges in the face of rapidly changing economics for electricity generation and the need for more coordinated development of its resources, the authors note.

“Low natural gas prices have fueled concerns that natural gas will soon crowd out renewable resources, undermining Texas’ progress towards the development of a thriving wind industry and towards reducing emissions,” according to the Brattle report.

At the same time, recent ERCOT analysis found wind and solar resources to be competitive with natural gas over the next 20 years under a number of plausible scenarios, the Brattle authors add.

“The main conclusions of this white paper are that in the short run low gas prices are extremely unlikely to change the fact that existing renewables will nearly always have priority over gas-fired plants since, due to the absence of fuel costs, their variable costs are lower than those of essentially all other resources,” the Brattle authors say.

Over the long term, as new plants are planned and built, it is possible that new gas-fired plants will compete with new sources solar and wind generation, according to the Brattle document.

“Which source is cheaper will depend on the levels of gas prices, the existence (or lack thereof) of continued federal (and perhaps state) support and the technological progress of both wind and solar resources. In addition, it is possible that in the long run some combination of renewables and gas will displace existing coal-fired generation,” according to the report.

Gas-fired generation matches well with the intermittent nature of most renewable energy, according to the Brattle report.

“The path to low-carbon generation in Texas will therefore likely require the co-development and integration of both gas and renewable resources,” according to the Brattle report.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.