October 31, 2017 Read More →

A One-Two-Three Market Punch Against Texas Coal-Fired Generation

SNL:

The state supplied 25% of U.S. wind power in 2016, and wind capacity in the state is expected to reach 25,500 MW by 2019. Along with abundant supplies of low-priced natural gas, all that wind has helped depress energy prices in Texas: despite having, by far, the highest energy usage per capita in the nation, Texas enjoys energy prices per MWh among the lowest of any state.

As the Luminant retirements indicated, low wholesale power prices are driving coal generators out of the market. Exacerbating that trend, the wind boom is expected to be followed by a solar boom in the Lone Star state: In its most recent long-term scenario, ERCOT said between 14,500 MW and 28,100 MW of solar capacity could be added to the system by 2031. Through September, Texas had generated about 17% of its electricity from wind in 2017. Developers have already signed interconnection agreements for another 8,655 MW of new wind, plus 2,050 MW of new solar installations, in ERCOT.

For coal plant owners, low natural gas prices and high wind penetration “have been like a one-two punch,” says Chen-Hao Tsai, senior energy economist with the Jackson School of Geosciences at the University of Texas, Austin. “If solar really takes off as ERCOT predicts, that will replace a good amount of generation from conventional generators during the daytime. I would consider that the third punch.”

More ($): Wind booms, coal suffers, in oversupplied Texas grid

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