Added Texas solar capacity may burn power companies
Solar power capacity in Texas is expected to nearly double this year, which would be the greatest increase ever for the renewable, according to the state’s grid manager. By the end of the decade, solar power is expected to triple here.
While solar represents just a tiny share of the state’s generating capacity — less than 1 percent — its rapid growth could further upset the state’s power mix and add to the downward pressures on prices that have buffeted merchant power companies. The massive amounts of wind energy that flow into the grid have undercut coal, nuclear and natural gas plants, and squeezed their profit margins, but solar has the potential to cause even more trouble for traditional power generators.
Wind energy, at least, tends to be strongest at night and during the cooler months, when Texas’ power demand tanks and prices are low anyway. But solar panels produce electricity when Texas needs it most and merchant power companies have made their money — the hottest parts of summer days. The added electricity could moderate price spikes during these peak demand periods, which is good for consumers, but not so good for the profit margins of traditional power generators.
The Electric Reliability Council of Texas, which oversees 90 percent of the state’s grid, expects solar power capacity to reach about 2,000 megawatts by the end of 2018, up from 1,100 megawatts last year and just 15 megawatts in 2010. Solar capacity is expected to reach 3,000 megawatts by 2020. (One megawatt is enough to power 200 homes on a hot Texas day.)
Texas was the fourthfastest-growing solar state in 2017 and is expected to rise to second over the next five years, according to the Solar Energy Industries Association, a national trade group. California and North Carolina added the most solar capacity last year.
Texas is considered a prime location for the solar industry because of its abundance of land and sunshine. More than half of the planned solar projects are in Pecos County, a West Texas hub for utility-scale solar power, or solar farms that have the capacity to generate at least 1 megawatt of electricity. Utility-scale projects are eligible for a state tax abatement — up to 80 percent for 10 years — but the real incentive for developers is the transmission that connects remote renewable energy projects to markets in the state’s populations centers. More transmission lines are expected to be added in 2019 and 2020.
Transmission helped make Texas the nation’s leading wind power state. In 2017, wind power capacity reached more than 20,000 megawatts — more than double the capacity of the next state, Oklahoma — surpassing coal and accounting for 17 percent of ERCOT’s power. By 2020, wind capacity is expected to hit nearly 30,000 megawatts, more wind capacity than most countries have.