All over the world, electric power systems are experiencing the impacts of cheaper renewable energy, expanded unconventional natural gas and oil, new policies to address global climate change risk, and dramatic technical progress on the many facets of electricity control, efficiency, and pricing. These and other factors are prompting large changes in the expansion and management of the electric power grid.
In the electrically-independent power system of Texas known as ERCOT, the evolution of the power sector is especially related to the development path for renewable energy and natural gasfired power. With over 12,000 MW of installed capacity, Texas is the largest state producer of wind-powered electricity in the U.S.Wind resources in Texas are more than double the next two largest wind capacity states combined. At the same time, Texas is the leading U.S. producer of natural gas, and the state generates nearly half its electricity from natural gas plants, substantially more than it generates from coal or nuclear power. Texas also has abundant, highquality wind resources and solar energy potential.
In June of this year, we produced a white paper for the Texas Clean Energy Coalition (TCEC) exploring qualitatively the short- and long-run interaction between natural gas and renewables in Texas’ energy future.This preliminary review found that the relationship between natural gas and renewables had aspects that were both complementary and, in some cases, substitution. We found that over the next two decades the degree to which natural gas or renewables “crowd out” the other source, as opposed to develop together, was a function of future policies and market design features, technological developments, and the price of electric fuels and resources of all types.