The path to resource adequacy and low-carbon generation in the Texas electric power market will likely require the co-development and integration of both natural gas and renewable energy resources for years to come, according to a new report from The Brattle Group prepared for the Texas Clean Energy Coalition (TCEC).
The report analyzes the short- and long-term relationship between natural gas and renewable resources in the Electric Reliability Council of Texas (ERCOT) electricity market, which covers 85% of the state's electric load.
"Low-priced natural gas and clean renewable resources are complementary, not competing, resources to displace other fuels over the long term. Coordinated development of both will lead to a win-win for Texas and the environment," former state Sen. Kip Averitt and TCEC chairman said.
According to the report, wind and solar power are inexpensive to dispatch because they have no fuel cost. In comparison, natural-gas-fired generation is more expensive to dispatch even at very low $4/MMBTU gas prices, the report adds.
"As a consequence, once wind and solar power is built, renewable resources are always cheaper to dispatch, and will be chosen to sell all their power whenever the wind blows or the sun shines regardless of the current price of gas," Averitt said.
However, when utility planners must build new electric plants, the report says renewables are not necessarily the lowest-cost resource because of their higher upfront capital costs. Brattle principal Peter Fox-Penner, a co-author of the study, noted blending lower-cost gas generation with the higher costs of new renewables lowers the total rate impact on consumers.
The report also cites a number of technical reasons why gas and renewables complement each other, primarily the ability of natural gas to smooth the intermittent output of wind resources. Ninety-six percent of Texas' renewable capacity comes from wind resources whose output is uncontrollable and not well matched with the time pattern of ERCOT's load, the report says.