June 7, 2014

Wind power on tap to help Texas meet carbon reduction goals

The state is expected to see big jumps in wind capacity over the next two years, which should be complemented by natural gas-fired power plants to help reduce overall carbon emissions, analysts say

You might say Texas has a running start in the race to slash carbon emissions in electricity generation, a pursuit spurred by last week’s proposed EPA regulations aimed at reducing greenhouse gases.

Already the No. 1 wind power state, Texas is on pace to increase wind capacity by close to 70 percent in just two years. Between that and the continued additions of natural gas-fired generation, several energy analysts say they expect the state to be able to meet the Environmental Protection Agency’s proposed goal of cutting its rate of carbon dioxide emissions by 39 percent by the year 2030.

“It’s a wind and gas future. Which means it’s a Texas energy future,” said Jeff Clark, executive director of The Wind Coalition, an industry group.

Clark obviously has self-interest at stake, but he’s not the only one to share that view.

“We have an abundance of low-carbon resources — natural gas, wind, solar when it comes,” said Michael Webber, deputy director of the Energy Institute at the University of Texas at Austin. “I think, in the end, this is not going to be that challenging.”

Still, the state is by far the largest emitter of carbon dioxide for power generation, though it’s better than most in its rate of emissions — measured by pounds of carbon dioxide emitted for each megawatt of power generated. Texas would need to make 14 percent of all the carbon reductions required nationwide, or about 87 million metric tons. A metric ton is about 2,200 pounds.

According to the EPA, electricity from natural gas-fired generators provided about half the state’s power in 2012. Coal was the fuel source for about a third, nuclear about 9 percent and wind about 8 percent.

Under most scenarios, many of the state’s coal-fired plants would remain in use but be needed less and emit less carbon as energy-efficiency programs dampen demand growth, which would increasingly be met with renewables and gas. The EPA’s plan also calls for existing coal plants to become at least 6 percent more efficient.

Planning for wind

The foundation for Texas’ big growth in wind capacity in 2014 and 2015 was laid in 2008. That year, the Public Utility Commission of Texas, responding to legislative action, approved the construction of 3,600 miles of new transmission lines to carry electricity from West Texas wind farms to population centers, including Dallas-Fort Worth.

Originally pitched as a $5 billion effort, the cost of the Competitive Renewable Energy Zone project grew to about $6.8 billion by the time it was completed late last year.

But the result is apparent: This year the state’s largest power grid, the Electric Reliability Council of Texas, plans to add 3,110 megawatts of wind power. Next year it expects to add 4,195 megawatts, the biggest one-year jump ever in the state.

A megawatt is about enough electricity to supply 200 Texas homes during a peak demand time, typically a hot summer day when air conditioners are running flat out.

In just this year and next, wind power capacity in ERCOT will rise by 66.9 percent, according to the grid operator’s schedule of projects that have connection agreements. That follows four years of incremental growth, none of which amounted to 1,000 megawatts.

“To succeed, a wind developer needs wind, a market, and transmission to carry it,” said Clark. “That’s where the rub was. People stopped building when they ran out of transmission lines,” he said of those relatively low-growth years.

At times there was so much wind-generated electricity in ERCOT’s Western region that wind farms offered their power at negative prices — paying to put electricity on the grid and making up some of the loss with a federal tax credit, which this year stands at 2.3 cents per kilowatt-hour.

Robbie Searcy, a spokeswoman at ERCOT, said the grid operator expects the new transmission lines to accommodate all the new wind projects currently scheduled.

“There may be a need to make improvements” in the areas where the most wind farms are added, typically in the Texas Panhandle, Searcy said. But any problems should be local and not significantly restrict the transmission of power to population centers around the state, she said.

Role of natural gas

The drawback to wind power is that it is intermittent. It’s especially ill-suited for meeting peak demand, which in Texas comes during the summer when temperatures soar but West Texas winds tend to fall off sharply. So it can’t serve as “base load,” or electricity supply that’s available to meet constant demand.

Today, electricity base load is generally met with nuclear power and coal. Both those sources are designed to start up and run 24/7. Wind, because it has no fuel cost, also feeds into the grid whenever it is available. Natural gas makes up the rest of needed supply.

The low-carbon solution, analysts say, is to have natural gas-fired power plants that complement wind. Natural gas-fired combustion turbines, basically jet engines connected to a generator, can come up to speed within minutes but are relatively pricey to run. Older gas-fired plants boil water to make steam to drive a generator, which take much longer to come up to speed but can provide steady power at a lower cost, although not as cheaply as coal.

Most of the state’s gas-fired capacity is a decades-old design called combined cycle gas turbine plants. They combine a combustion turbine, which starts fast, then direct the turbine’s hot exhaust to a boiler to drive another generator. Depending on the cost of natural gas, it can be competitive with coal and is expected to account for just about all the new gas-fired generation.

“Our modeling shows that even in the face of these carbon limitations, we don’t see that in and of itself retiring any coal plants,” said Kip Averitt✔, a former Texas state senator who is now chairman of the Texas Clean Energy Coalition.

In fact, a bigger challenge to coal plants’ viability is likely the federal Cross-State Air Pollution Rule, which was upheld by the U.S. Supreme Court in April, said Ed Hirs✔, an energy economist at the University of Houston. That measure calls for cuts in sulfur dioxide and nitrogen dioxide emissions, rather than CO2, and is considered a risk to the oldest coal plants that will be the most expensive to retrofit.

The gas/renewables combo that pushes coal into the background is the model proposed by the TCEC in a report last year prepared by The Brattle Group, a consultant that has also done work for ERCOT and the Public Utility Commission of Texas.

“Any of the combined cycle units, if the economics support it, can run as base load,” said Ira Shavel✔, a principal at Brattle Group. With natural gas costing less than $3 per 1,000 cubic feet, “it competes with coal, even in Texas,” he said, and at higher prices it’s still affordable.

Gas is currently selling for about $4.70 per 1,000 cubic feet.

Averitt said last week that even under a worse-case scenario the price of electricity in Texas would rise only about 5-10 percent in real terms by 2032. He views that as “a modest price effect” over nearly two decades.

“I don’t think it puts us at a competitive disadvantage” as a state, said Hirs, who also has an oil and gas company. It’s important to remember that the state has “a tremendous cost advantage” in its crude oil and natural gas production outside of the electricity market, which is all the EPA proposal directly addresses.

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