A cost-minimizing Texas electric grid would include 11 gigawatts (GW) of solar, according to an analysis by researchers at the University of Texas-Austin and a German colleague.
Texas only had around 2 GW of solar installed at the beginning of this year, despite strong solar resources. The study found that overall costs would be minimized with 11 GW of solar and 27 GW of wind (which compares to the state’s 23 GW of wind currently).
Although the study’s data and assumptions differ from the current financial and policy environment — it used early 2016 capital costs for solar, and modeled a $60 price per ton of CO2 emissions but not the current federal tax incentives for renewables — the results may approximately reflect current conditions. That’s because the dramatic decline in solar capital costs since early 2016, combined with extended federal tax incentives, have reduced the cost of solar generation, bringing solar’s cost-competitiveness closer to that of the scenario postulated in the study, in which a carbon price would increase the cost of fossil generation. In addition, the model did not consider storage as an option; adding storage would reduce modeled solar curtailment, improving solar’s cost-effectiveness.
The model includes a carbon price because it was developed to provide “a framework for balancing system costs, flexibility requirements, and CO2 emissions and for recommending a CO2 price.” The results are reported in the article Modeling the optimal mix and location of wind and solar with transmission and carbon pricing considerations, published in the journal Renewable Energy.
The analysis found the lowest-cost mix of solar, wind and thermal generation by considering solar and wind generation potential, and electricity consumption, in 30-minute intervals over a 12-month period. Of 18 regions of Texas defined by the study, the cost-minimizing result included 5.5 GW of solar in the Big Bend region of West Texas, 3.2 GW in the Wichita Falls region of north-central Texas, 1.3 GW in the South Central region and 1.1 GW in the Panhandle.
The model only added solar or wind where the total cost, including new transmission lines, was below the marginal cost of thermal generation, consisting of the fuel cost, adjusted for a CO2 price, plus other variable operating costs. The cost-optimizing solution included 27 GW of transmission capacity, primarily from the Wichita Falls, Big Bend, and Panhandle regions to the state’s population centers.
The model also constrained solar and wind to 75 percent of generation at peak demand, under ERCOT guidelines that 25 percent fossil generation would be needed to maintain frequency stability through spinning inertia. Subsequent research has shown that solar farms can also provide frequency regulation.
To identify the current cost-optimizing solar potential in Texas, the model could be re-run using current financial and policy conditions. In the absence of a new modeling run, here are some factors to consider:
- Solar costs for one-axis-tracking utility-scale systems have declined from $1.49/Wdc in Q1 2016 (the data used in the study) to $1.11/Wdc in Q1 2017, and have declined further since then.
- Solar in the Southwest in some cases costs less than coal-fired electricity. Arizona, for example, which has solar resources comparable to those of Texas, recently achieved the lowest public solar power contract in the U.S. at 2.49 cents per kilowatt-hour (kWh), helping to retire a coal plant that sold power at 5 cents per kWh. The fuel cost alone for coal-fired electricity in Texas is 1.7 cents per kWh (based on the delivered coal price to the Texas electric power sector of $1.74 per MMBTU in April 2018, and the number of BTUs of coal needed per kilowatt-hour). Additional variable operating costs include costs for labor, maintenance, and coal ash management.
- A solar installation that can help retire a coal plant can help eliminate the coal plant’s fixed costs, not just its variable costs.
- A solar plant that can use transmission lines that had been used by a newly retired coal plant can avoid the costs of new transmission lines.
The model used in this study provides a window into optimal solar generation at the state level. Other such models and recent uses include:
- The SWITCH model, which has been used to estimate the cost savings available to Hawaii from a fast solar ramp;
- The LEAP, SAM, and JEDI models, which have been used in Pennsylvania to evaluate options for meeting 10 percent of electricity demand with solar by 2030; and
- The JEDI and IMPLAN models, which have been used to estimate the job gains in Michigan from reaching 30% renewables by 2027.
The authors of the Texas modeling study are Thomas A. Deetjen, Henry Martin, Joshua D. Rhodes, and Michael E. Webber.