Renewables and battery storage leave coal in the dust as main Texas grid greens power mix

More than 93% of 223GW of power projects seeking interconnection in the main Texas electric grid are battery storage, solar and wind as more generators transition from fossil fuels to cleaner alternatives.

On 1 September, solar led all technologies in the ERCOT queue with 115.8GW, then battery energy storage (71.6GW), wind (22.1GW), natural gas (11.3GW), and the balance a mix of clean energy such as biomass, geothermal, and hydro, and fossil fuels such as fuel oil and petroleum coke.

There are no coal facilities in development, a remarkable change from a decade ago when it dominated the generation mix in ERCOT, which operates the grid and wholesale power market serving 90% of the electric load in Texas.

In 2021, coal produced 19% of electricity consumed in ERCOT, third behind natural gas (42%) and wind (24%), but ahead of nuclear (10%).

ERCOT has been the country’s – and western hemisphere’s – largest wind market for 15 years with 35.7GW of installed capacity on 1 March. The pace of development has slowed notably in the last several years, as developers increasingly favour solar and/or battery energy storage paired with solar.

While this partly reflected expiration of the federal production tax credit at the end of 2021, the increasing attractiveness of solar as an investment play is due to several factors.

Foremost is resource. Texas has more high-quality rural solar irradiation available for utility-scale development than any other US state and hardly any of it is tapped. ERCOT had 11.5GW of utility solar installed on 1 April.

Texas also has the most onshore wind resource but finding quality sites able to feed heavy-duty transmission lines to export power to urban consumers is increasingly difficult – and this adds to project cost. Even when available, grid congestion in areas of the interior is a growing problem, particularly in far West Texas and the northern Panhandle.

Second is “shape”. Solar’s much greater availability during the hot late-spring, summer and early autumn makes it more valuable than wind. By tracking the hours before and during peak demand, solar provides a very stable revenue stream, unlike wind.

That “bell” makes it possible for project owners to be more creative in developing products for a growing universe of potential buyers in ERCOT’s highly liquid electricity market. With present technology, pairing energy storage with solar also more economic sense in most cases than doing so with wind.

Battery energy storage projects with solar in ERCOT dwarf those with wind 150 to four, totaling 19.5GW to 182MW.

In contrast, most turbines are in West Texas where winds tend to blow strongest at night and in the early morning hours, often contributing little during peak periods. That was the case during the recent hot summer.

The grid operator’s status report on 1 September shows that about 38.2GW of projects have reached the final stage with an interconnection agreement in place. This includes solar (21.9GW), wind (8.4GW), energy storage (5.8GW), and natural gas (2GW).

How much of this capacity will get built is influenced by multiple factors including availability of labour and project financing, inflation, prices for electricity and natural gas, and supply chain bottlenecks.

Solar, more than wind, is reliant on foreign suppliers. More than 80% of panels installed by the US last year came from southeast Asia. The US lacks domestic solar ingot, wafer, and cell manufacturing capacity and has modest ability to produce solar modules.

While President Joe Biden has made creation of both a domestic solar manufacturing supply chain and one for batteries a national priority, there is no hard deadline for this to happen. That means supply considerations will likely dictate the pace of advancement for both sectors in Texas in the foreseeable future.