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June 11, 2013
Report Authored by Brattle Consultants Examines Relationship between Natural Gas and Renewables in Texas Electricity Market

Brattle consultants have authored a report released today that analyzes the short- and long-term relationship between natural gas and renewable resources in the Electric Reliability Council of Texas (ERCOT) electricity market. The authors find that the co-development and integration of both gas and renewable energy resources will likely be required in order to attain resource adequacy and low-carbon generation in the ERCOT market.

Sponsored by the Texas Clean Energy Coalition (TCEC), the report is the first of a two-part study that discusses how both gas and renewables can be utilized as complementary resources, depending on the time frame as well as additional factors, such as the long-term path of gas prices, renewable technology costs, electricity market rules, and policies affecting all power generation technologies.

According to the report, wind and solar technologies are almost always the lowest cost resource because of their lack of fuel costs. While the cost of natural gas generation remains significantly above zero even at low gas prices, the authors explain that in the long run, renewables are not necessarily the lowest cost resource due to their high capital costs. The authors point out that cheaper natural gas prices may also help renewable energy in a forward-looking political-economic sense. Combining the lower-cost gas generation investments with the higher costs of renewables will lower the total rate impact on consumers.

The report also cites several technical reasons for the complementary relationship between natural gas and renewables, primarily the ability for natural gas to level out the intermittent output of wind resources. Natural gas resources are more flexible, which allows it to complement wind output without incurring high costs, resulting in fewer spikes and dips in generation output.

The report, “Partnering Natural Gas and Renewables in ERCOT,” is authored by Brattle principals Peter Fox-Penner, Jürgen Weiss, and Ira Shavel, and Senior Policy and Marketing Analyst Heidi Bishop. To view the report, please visit the TCEC website.