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December 12, 2013

Report: Will Natural Gas or Renewable Energy Dominate the Texas Electric Market?



In a Texas Clean Energy (News - Alert) Coalition (TCEC) –led report that provides a 20-year outlook for natural gas and renewable power in Texas, economists of the Brattle team examine the future of gas and renewable power in Texas with reference to the Texas electric market.

In June, the same economists had produced a white paper for TCEC in which they concluded that gas and renewable energy complemented each other, but in some cases competed. The extent to which this would happen would be determined by future policies, price of electric fuels, market design and development of technology.

The current report examines future electric generation scenarios for Texas, uses using state-of-the-art modeling in a series of scenarios that ranged from gas prices and reserve margins to varying wind and solar energy costs.

Various scenarios depicted that both natural gas and renewables play substantial roles in ERCOT and will continue to do so. Wind and solar would grow from their current 10 percent generation share to levels between 25 and 43 percent, while natural gas-fired generation would provide the remaining incremental generation.

The mix of new gas and renewables generation would be determined by the price of natural gas and cost declines in wind and solar power.  Higher gas prices and lower renewables costs would reduce the growth of harmful emissions and a stringent federal carbon policy would reduce CO2 emissions by 66 percent. Wind development would depend on the funding of new transmission lines and the federal tax credit.

If gas and renewable generation together are to replace the energy formerly supplied by coal plants, a tough federal carbon policy would ensure that most ERCOT coal units are retired. In such a scenario, renewable energy would rise to become 43 percent of ERCOT generation by 2032.

According to Kip Averitt, chairman of TCEC, the objective of the report was to examine broad patterns of interaction between renewable resources and natural gas over the next two decades and inform Texas policymakers about the range of possible outcomes.

Considering that Texas is the largest state producer of wind-powered electricity in the U.S. as well as the leading U.S. producer of natural gas, generating over 40 percent of its electricity from natural gas plants with abundant solar energy waiting in the sidelines, it is well positioned to produce cleaner, more affordable and reliable electricity than ever before.




Edited by Cassandra Tucker

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