Solar is on track to make up the largest share of new capacity additions in Texas between 2020 and 2022. Almost 50% of the additions during this time period will be solar, surpassing wind (35%) and natural gas (13%) additions, according to the Energy Department’s Energy Information Administration (EIA).
EIA said that California currently has the most installed utility-scale solar capacity of any state. But Texas is expected to add 10 GW of utility-scale solar capacity by the end of 2022, compared with 3.2 GW in California. One-third of the utility-scale solar capacity planned to come online in the United States in the next two years (30 GW) will be in the Lone Star State.
EIA said that the installation of 2.5 GW of solar capacity in 2020 marked the beginning of the Texas solar boom. The state is expected to add another 4.6 GW of solar capacity this year and 5.4 GW in 2022, which will bring total installed solar capacity in Texas to 14.9 GW.
Utility-scale solar projects that start construction in 2021 or 2022 are eligible for a 26% tax credit. The tax credit drops to 22% for projects that start in 2023 and to 10% for projects that start in 2024 or later.
Other factors driving solar investment in Texas include lower solar technology costs and plentiful sunlight, particularly in West Texas’s Permian Basin, where about 30% of the state’s planned solar capacity will be built.
In addition, because solar generation is greatest in the middle of the day, when wind generation is typically lower, available transmission lines that already handle the large amount of wind power in the state will help solar capacity additions.
Despite recent solar capacity growth in Texas, utility-scale solar only made up 4% of the state’s generating capacity in 2020 and 2% of in-state electricity generation. In comparison, natural gas made up 53% of Texas’s capacity in 2020 and 52% of in-state generation; wind made up 23% of capacity and 20% of in-state generation.
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