TEXAS VIEW: Renewables supplied a third of Texas’ electricity in 1Q

THE POINT: Why that gives us hope for grid reliability.

The competitive electricity market is a powerful tool.

As the country turned to Texas in the past couple of months to boost oil and gas production to supply our allies against Russia, something else happened, something quiet and extraordinary.

In March, Texas oil and gas regulators issued a record number of drilling permits. That’s no surprise; Washington politicians have been calling on the Permian Basin to produce more fossil fuels to support European nations that are cutting off or being cut off from Russian oil and gas. High oil prices are a good signal to the industry to produce more.

Also in the first quarter, Texas hit an entirely different energy record. The state produced more renewable energy than ever before. According to the Electric Reliability Council of Texas, about a third of the power on the Texas grid came from wind and solar.

Some folks thought this kind of success for renewables could be best achieved by protesting outside of an Exxon shareholder meeting or climbing in trees scheduled to be bulldozed to build a pipeline. Turns out market forces are more powerful than bullhorns.

The Texas wholesale electricity market was designed to favor low-cost electricity, which at the time when the market was first established meant nuclear and coal power. Lawmakers added some incentives for renewables with modest expectations.

A competitive market plus incentives for renewables turned out to be a powerful combination. It also helps that Texas hardly ever rejects a wind or solar project, as regulators in many other states do. Soon renewables on the ERCOT grid became so plentiful, that they knocked many older, more expensive fossil fuel plants out of business. Great for consumers: cheaper, cleaner energy. At times, wind is so plentiful that market prices dip below zero, because of the way the renewable energy credit system is set up to subsidize investment in clean energy.

It all worked better than anyone could have anticipated. So well, that ERCOT has to change the way it manages the grid to make sure that when the wind stops blowing and the sun stops shining, there is enough back-up power to keep the lights on.

In fact, keeping the grid reliable is getting dicey, because investors do not want to build expensive fossil fuel plants, nor do they want to keep operating old coal and gas plants that don’t make money. Our electricity market that incentivizes cheap, clean energy has failed to incentivize reliability.

Regulators are on it, planning to buy back-up power and subsidize the cost. It’s a good start, but not nearly enough. The success of competitive markets in growing renewable energy in Texas should give us great hope that market forces can also be used to grow reliable energy, too.

There’s no need to give an advantage to certain fuel types or technology. Instead, by changing market rules, the Public Utility Commission can ensure that the Texas electricity market is fertile ground for investments in plants and equipment that can produce power on demand. That could be a new natural gas plant, an old coal plant outfitted to meet environmental standards, batteries, or some technology that, like wind and solar 20 years ago, we can hardly imagine will ever become reality in Texas.

Dallas Morning News