Solar’s rise delayed
Cheaper natural gas among factors slowing the sun’s power in Texas
State may add only half of the capacity that was projected for end of 2017
LINCOLN — Clean Energy swooped into Texas last year with big plans to build the state’s largest solar farm, a $320 million project covering 2,400 acres in the Panhandle and capable of powering 40,000 homes — even on the hottest days.
But more than six months after construction was scheduled to begin, ceremonial shovels have yet to break ground on the Nazareth Solar project about 60 miles south of Amarillo. The problem: No one wants to buy the electricity.
The Texas solar rush was supposed to take off in 2016, but as Nazareth Solar shows, it remains far from achieving its promise. At least five major solar projects expected to come online in Texas by the end of 2017 have been delayed or canceled, while some industry giants, such as SunEdison, have filed for bankruptcy.
“You haven’t seen quite the liftoff with solar yet in Texas,” said Philip Moore, Lincoln’s vice president of development.
That liftoff was expected to come over the next couple years, but the string of delays and cancellations means the state may add only about half the anticipated 2,000 megawatts of installed solar energy by the end of 2017 (A megawatt can power about 200 homes). The roughly 300 megawatts of grid-scale solar power in Texas account for less than
1 percent of the state’s electricity generation, according to the Electric Reliability Council of Texas, which oversees about 90 percent of power grid.
Despite natural advantages such as nearly 300 sunny days a year and plenty of open spaces to locate projects, Texas only ranks 10th in solar installation, even behind coldweather states such as New York, New Jersey and Massachusetts.
Rock-bottom natural gas prices, which have lowered the cost of traditional power generation, and a lack of state incentives make it nearly impossible for solar to compete dollarfor-dollar in the Texas marketplace — even with federal tax breaks, said Travis Miller, director of utilities research at Morningstar.
Solar can’t even compete with wind, which had a big head start in Texas, and still costs roughly 15 percent less than solar, according to renewable energy developers. Texas leads the nation in wind power with an expected capacity by the end of the year of more than 20,000 megawatts — enough to power about 5 million homes when the wind is blowing.
In March, wind generated more than 20 percent of the state’s power for the first time in a month, more than coal or nuclear power.
“At the current costs for solar,” Miller said, “it’s going to struggle to be competitive in Texas given the low cost of gas and the huge amount of wind generation.”
Expanding solar, nonetheless, could prove critical for Texas as the combination of a growing population and the shuttering of older, dirtier coal plants in coming years could make it difficult to meet electricity demand. The state could lose as much as 9,000 megawatts of its generating capacity over the next few years as age and tougher pollution rules make it too costly to operate coal plants.
Dallas-based Luminant, the state’s largest power producer, has already warned that some of its coal plants could shut down.
The Electric Reliability Council of Texas has planned on the state adding some 15,000 megawatts of grid-scale solar capacity by 2030 to help replace coal plants and meet new demand, but it’s increasingly unclear how much of that will become reality. Hopes that costs would fall further, faster and make solar more competitive with other sources of electricity have yet to materialize.
Globally, funding for the solar industry has plunged to about $1.7 billion in the second quarter from nearly $6 billion during the same period in 2015, according to Mercom Capital Group, a clean energy consulting company. At least 100 solar companies have filed for bankruptcy or closed in the United States and Europe since 2009, including Austin-based HelioVolt, which shut down in 2014, according to Greentech Media, a market research firm.
One of the biggest setbacks for the industry came in April, when SunEdison, the world’s largest renewable energy developer, filed for Chapter 11 bankruptcy protection. SunEdison, headquartered in Missouri, took on $16 billion in debt as it kept adding massive projects before they became profitable. The company, which declined to comment, lost nearly $1 billion through the first nine months of 2015 alone.
SunEdison scheduled two major solar projects in Texas to begin operations this year, but both were delayed at least into 2017. One of them, Buckthorn solar farm in Pecos County, would, if completed, make Georgetown, a community of 60,000 people, the largest municipality in the nation powered solely by renewable sources. Solar cities
In Texas, solar power has mostly grown outside competitive electricity markets, supported by municipal utilities looking to diversify electricity supplies and expand their use of green power for social and environmental, as well as economic, benefits. San Antonio and Austin, both served by municipal utilities, have led the way.
San Antonio’s electric utility, CPS Energy, has teamed with OCI Solar Power, the Texas-based subsidiary of South Korea’s OCI Corp., which opened a solar panel manufacturing plant in the city in 2012. In April, San Antonio opened the 95-megawatt Alamo 5 solar farm in Uvalde County, west of the city, and later this year will bring its larger Alamo 6 and 7 projects online, which have a combined capacity of 216 megawatts.
These will allow San Antonio to get nearly 20 percent of its power from renewable sources by early next year, said Cris Eugster, executive vice president at CPS Energy.
“We believe and our community believes clean energy needs to play a part,” Eugster said. “You don’t have that same conversation going on in the deregulated markets (like Houston).”
Austin is projected to surpass San Antonio as the state’s solar leader by the end of 2017, although there is bit of buyer’s remorse at the Austin Energy utility.
Austin will obtain 277 megawatts of power from two West Texas solar farms at prices that are a record low for solar in Texas, but will help keep the city’s electricity rates above the state average.
“Solar is getting cheap,” said Austin Energy Vice President Debbie Kimberly, “but it’s still more expensive than what you’d see with gas-fired resources, so it’s a challenge.” Many sizes
While grid-scale solar projects are leading the way, solar power will need to come in other shapes and sizes to help meet growing electricity demand, including residential rooftop installations and distributed community solar farms.
In the Hill Country, Renewable Energy Systems, a British company, has launched a project to connect 15 different sites, each with installations of nearly a megawatt, to produce 15 megawatts of solar power. In Plano, Toyota Motor Corp. plans to build nearly 8 megawatts of rooftop and on-site solar at its new North American headquarters.
Houston developer Joey Romano recently completed a 1.5-megawatt solar project in Sealy because he was determined to build where Houstonians could come to see it.
The small solar farm is selling its power through MP2, a local retail electricity company, but, Romano admits, it’s more expensive than average electricity plans. He’s counting on people wanting to pay a little more to know they’re helping the environment and using locally generated energy — literally a farm-to-market approach to electricity.
“There’s a movement we’re trying to build of taking more control of the power we use,” he said. “The ‘if you build it, they will come’ strategy is kind of mydeal.” jordan.blum@chron.com twitter.com/jdblum23