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Texas Power Challenge: Getting the Most from Your Energy Dollars  

Author:  | Economics, Technology, Texas


Natural gas generation contributes the largest share of Texas electricity, particularly during peak demand. During off-peak times, when demand can be a half or two-thirds of the daily peak, many power plants stand idle; operating reserves are needed, however, when demand increases again, or to react to sudden losses of generation or transmission problems caused by equipment failure or bad weather.


On days when temperatures peak in the 60s, non-residential customers use more than two-thirds of the power generated in the ERCOT region. On the hottest Texas summer days, electricity demand by residential customers quadruples to more than half of the state’s total load, peaking in the late afternoon. This requires thousands of megawatts of natural gas generation to be fired up, a flexibility not available with wind generation that is dependent on weather conditions.

Renewables need conventional power backup

Diversifying Texas’ energy portfolio has put wind and solar generation on the grid but has created a new quandary for grid managers: where can power be obtained quickly when the wind stops or clouds reduce solar yields?

  • When wind turbines produce less electricity than predicted, grid operators must compensate by relying on dispatchable power plants that can ramp up production quickly to meet demand, and ramp down due to rapid increases in wind generation.
  • Daily forecasts can give a general expectation of renewable output, but quick-ramping gas turbines have to be on standby to backstop renewables that are expected to produce only a fraction of their full operational capacity.
  • For summer 2014, even though Texas had more than 11,000 MW of total wind capacity, ERCOT counted on just 963 MW of wind generation being available. The lack of wind generation during summer peak demand means that energy planners, such as ERCOT, have to ensure that a lot of flexible natural gas generation is available to meet the reserve margin.
  • Wind producers occasionally have to curtail their operations during high generation due to localized transmission infrastructure constraints; this could be alleviated if economical local energy storage technologies existed.
  • Although peak solar energy production tends to coincide with peak demand, Texas’ limited solar capacity leaves CREZ transmission lines underutilized when the West Texas wind typically is lowest in early afternoon.
  • The reserve margin ordinarily meets the needs of the electricity market because grid operators can dispatch flexible generation to meet higher- than-expected demand or unexpected supply loss. When the operating reserves are insufficient, customers are asked to reduce consumption through demand response programs that reduce the load. In a worst-case scenario, forced rolling outages would be implemented.


Wind generation is lowest during the summer months when energy demand is highest.


The proportion of electricity generated from wind during the hottest summer day of 2013:

  • 4 A.M. – Wind generation peaks when overall demand for electricity is lowest.
  • 4 P.M. – Wind generation is near its lowest when overall demand is at its highest.


Wind has reliability challenges

Renewable energy poses reliability challenges. The leading concern is whether it can provide electric power every second of every day. Major renewable energy sources are fundamentally limited in how, where and when they can be used; the sun doesn’t always shine and the wind doesn’t always blow, so natural gas backup generation is needed.

Variability and intermittency

Wind power is tied to weather and thus produces variable energy output. Wind variability creates complications for grid operators working to integrate wind power into a grid not historically designed for fluctuations.

Historical wind generation data reveal that the peak production for the majority of Texas wind generation is at night and does not align well with the peak electricity demand during summer afternoons.

  • Non-coastal wind turbines generated only about 20 percent of their installed capacity during summer peak-demand hours, while coastal wind production was more than 50 percent of capacity in 2013.
  • Non-coastal wind represents 85 percent of both total installed wind capacity and annual wind generation in the ERCOT region.

Transmission lines for wind

The 2005 Texas Legislature approved a major transmission project, the Competitive Renewable Energy Zones (CREZ), to carry mostly wind energy generated in West Texas and the Panhandle to high-demand cities. The project was forecast to cost less than $5 billion but ballooned to more than $6.9 billion to build nearly 3,600 miles of transmission lines and dozens of substations.

The completed project has capacity to transmit about 18,500 MW of electricity to major load centers in ERCOT – that would serve more than 4 million Texas homes.

Consumers will pay for CREZ lines carrying wind energy for 15 to 20 years. The PUC estimates residential customers will pay roughly $5 to $7 per 1,000 kWh used. Based on the average household’s electricity use, that will cost $70 to $100 per year. An ERCOT official told the PUC in August 2014 that further expansion of the West Texas transmission grid could cost an additional $2 billion.

An ERCOT study is under way to provide new and improved transmission from Panhandle wind generation that extends outside its service area. The Panhandle Renewable Energy Zone could provide transmission lines (expanded from the existing CREZ) that would transport electricity to the populated areas of Texas where demand is increasing. No price tag has been identified for these new transmission lines.

The PUC has begun to study whether future transmission infrastructure costs should continue to be paid by all ratepayers or whether electricity generators – specifically renewables that are located far from where the energy is used – should be required to fund any of the costs.


September 23, 2014
Susan Combs
Texas Comptroller of Public Accounts

Download original document: “Texas Power Challenge: Getting the Most from Your Energy Dollars

This material is the work of the author(s) indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

The copyright of this material resides with the author(s). As part of its noncommercial effort to present the environmental, social, scientific, and economic issues of large-scale wind power development to a global audience seeking such information, National Wind Watch endeavors to observe “fair use” as provided for in section 107 of U.S. Copyright Law and similar “fair dealing” provisions of the copyright laws of other nations. Queries e-mail.

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