Solar versus Wind Power: The Gap Narrows?

True fact #1: Texas leads all other states for its development of wind power.

True fact #2: On a per capita basis, Texas trails almost all states for the development of solar power.

Wind power has raced ahead in Texas, while solar power has continued to sputter. But there are signs their relative fortunes may be changing. Because of advances in solar technology, but also because of regulatory developments and independent economic factors — the gap between wind and solar development in Texas may gradually begin to narrow.

The Fortunes of Solar

Texas is home to less than 220 megawatts of solar power, a pittance compared to other generation sources on the state grid. According to the organization that operates the grid, the Electric Reliability Council of Texas, less than one of half of one percent of the state’s generation capacity comes from solar power. More than 13 percent comes from wind.

But new solar technology has driven down solar costs, and dramatically so. According to an expert quoted by the Dallas Morning News, the price of solar power has declined between 60 and 70 percent during the last two years alone. At the same time, the price of natural gas — which has been at historically low levels — may be on the rise. That, in turn, should push up wholesale energy costs and make solar power more competitive.

John Fainter, president of the Association of Electric Companies of Texas, told the Morning News that the expected retirement of coal plants should lead to higher natural gas prices. “(And) if the price of the (solar) equipment keeps coming down, solar is going to be more and more attractive,” said Fainter.

Solar production has also begun to benefit from new environmental mandates from Texas cities like Austin and San Antonio that operate municipal utilities. That means that solar capacity, as meager as it is currently, likely will more than double in Texas by 2016. And if paperwork on file at ERCOT is any indication, the expansion could be wildly greater beyond that year.

The Texas Wind Rush

Now, contrast solar power’s difficult history but bright future with prospects for wind power in Texas. Wind power developers have reaped millions of dollars in federal tax credits and have especially benefitted from the construction of $7 billion in new power lines built to serve west Texas turbines. Taken together, these factors help explain the explosive 1,000 percent-plus growth of wind power in Texas over the last decade.

What could slow that growth? For one, regulatory push back.  Because of its intermittent nature, wind power requires the use of additional standby power to ensure grid stability. This standby power comes at a cost — a cost which has begun to raise questions from Public Utility Commission chairwoman Donna Nelson, the state’s top energy regulator.

In a recent memo, Ms. Nelson also noted that federal subsidies for wind power were distorting the competitive wholesale energy market in Texas and undermining other important generation sources, such as coal and nuclear power.  She suggested the continued expansion of wind power could require expensive transmission system upgrades — at ratepayer expense — and questioned whether generation developers should shoulder more of that cost.

“These potential grid stability issues raise fundamental policy questions. For example, should we ask electric customers to fund further investment in the transmission system to improve stability or should some of the risk be borne by generators?” she wrote. Chair Nelson called for the PUC to begin exploring these issues, especially as they relate to the expense of providing transmission services.

A wild card in all these considerations — and for the fortunes of both wind and solar power in Texas — is the impact of new environmental protection rules proposed by the Obama administration. How and when these rules will be implemented remain open questions.

To read more about wind power in Texas, check out the snapshot report from TCAP. It can be found here.

— R.A. Dyer

What is the Texas Coalition for Affordable Power?

TCAP is a coalition of more than 160 cities and other political subdivisions that purchase electricity in the deregulated market for their own governmental use. Because high energy costs can impact municipal budgets and the ability to fund essential services, TCAP, as part of its mission, actively promotes affordable energy policies. High energy prices also place a burden on local businesses and home consumers.