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TCEC-led report finds renewable energy and natural gas both play substantial roles in future Texas electric market

Thursday, Dec 12, 2013

AUSTIN, Texas, Dec. 10, 2013 /PRNewswire-USNewswire/ -- The future of the Texas electric market will very likely include substantial amounts of renewable energy and gas-fired power, economists with The Brattle Group find in a new report prepared for the Texas Clean Energy Coalition (TCEC).

Released today, "Exploring Natural Gas and Renewables in ERCOT, Part II: Future Generation Scenarios for Texas" provides a 20-year outlook for natural gas and renewable power in Texas. It is the first examination of its kind to be conducted and shared publicly in Texas.

TCEC Chairman Kip Averitt, a former state senator and chairman of the Senate Natural Resources Committee, said the report funded by The Cynthia and George Mitchell Foundation (www.CGMF.org) uses state-of-the-art modeling in a series of scenarios – including a range of natural gas prices, a required reserve margin, and different wind and solar energy costs – to simulate the Electric Reliability Council of Texas (ERCOT) system through 2032.

"The objective of this report was to examine broad patterns of interaction between renewable resources and natural gas over the next two decades," Averitt said. "The report illustrates the key drivers of gas and renewable development in ERCOT to better inform Texas policymakers and decision makers about the range of possible outcomes."

With over 12,000 megawatts of installed capacity, Texas is the largest state producer of wind-powered electricity in the U.S., more than double the next two largest wind capacity states combined. At the same time, Texas is the leading U.S. producer of natural gas, and the state generates over 40 percent of its electricity from natural gas plants. Add to that the prospects for solar energy from the abundant sun and Texas is in a position to produce cleaner, more affordable and reliable electricity than ever before while helping improve economic well-being for Texans.

In June, The Brattle Group produced a white paper for TCEC exploring qualitatively the short- and long-term interaction between natural gas and renewables in Texas' energy future.

This preliminary review by the Brattle economists found the relationship between natural gas and renewables had aspects that were both complementary and, in some cases, substitutive. The research team also found that over the next two decades the degree to which natural gas or renewables "crowd out" the other source, as opposed to develop together, was a function of future policies and market design features, technological developments, and the price of electric fuels and resources of all types.

In the new report, the Brattle team examines the future of gas and renewable power in Texas analytically through the simulation of several grid expansion scenarios.

"In each scenario, our modeling system simulates both the market-driven additions and retirements of capacity by power generators and the operation of the system by ERCOT, down to the intra-hour time frame, once these additions are installed," Dr. Peter Fox-Penner, chairman of The Brattle Group, said.

"By combining the long-and short-term time frames, our approach ensures that the resource additions selected by the market result in a system that is able to provide grid power at the lowest total cost consistent with reliability standards."

Co-author Dr. Ira Shavel agreed: "Our modeling approach is guided by the assumption that as the amount of variable or intermittent renewable energy added to the electricity grid increases, so does the relevance of short-term dynamics such as the ability to quickly start and ramp power resources up and down to closely follow the fluctuating renewable supplies. Traditional approaches to analyzing the optimal addition and retirement of power plants over time tend to represent such dynamics in a very simplified form at best. Our approach allows us to model these shorter term operational constraints in a very detailed fashion."

About the Texas Clean Energy Coalition

The Texas Clean Energy Coalition is an alliance of business and economic development groups, faith-based organizations, the Latino and African-American communities, labor, and academia dedicated to building a clean energy economy that creates jobs and economic growth in the Lone Star State. Its goal is to educate Texans and support a state energy policy that promotes clean energy markets, job growth, energy security and Texas' energy leadership in the U.S. and around the world. For more information, visit the coalition Web site at www.texascleanenergy.org.

SOURCE Texas Clean Energy Coalition (TCEC)

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