In Texas, natural gas and renewable resources are the energy industry’s peanut butter and jelly, according to a new report paid for by a foundation that bears the name of a shale gas patch pioneer. Free wind and solar need natural gas-fueled generators to back them up, and renewables are cheaper to dispatch than fossil-fueled power sources.
“Low-priced natural gas and clean renewable resources are complementary, not competing, resources to displace other fuels over the long term,” said Kip Averitt, chairman of the Texas Clean Energy Coalition, which commissioned the report. It was prepared by The Brattle Group and sponsored by the Cynthia and George Mitchell Foundation. Mitchell Energy & Development Corp. is credited with cracking the code to produce shale gas.
The report analyzes the short- and long-term relationship between gas and renewables in the Electric Reliability Council of Texas (ERCOT) electricity market, which covers 85% of the state’s electric load. The first of a two-part study, “Partnering Natural Gas and Renewables in ERCOT” explains how gas and renewables can be complements, depending on the time frame of analysis as factors such as the long-run trajectory of gas prices, renewable technology costs, electricity market rules and complementary policies affecting all power generation technologies.
“…[O]nce wind and solar power is built, renewable resources are always cheaper to dispatch [than gas], and will be chosen to sell all their power whenever the wind blows or the sun shines regardless of the current price of gas,” Averitt said. However, renewables are not necessarily the lowest cost resource because of their higher up-front capital costs.
Brattle principal Peter Fox-Penner, a co-author of the study, said cheap natural gas might help renewable energy in a forward-looking sense because blending lower-cost gas generation with the higher costs of new renewables lowers the total rate impact on consumers.
The report cites a number of technical reasons why gas and renewables complement each other; primarily the ability of natural gas to smooth the intermittent output of wind resources. An overwhelming 96% of Texas’ renewable capacity comes from wind resources whose output is uncontrollable and not well-matched with the time pattern of ERCOT’s load. Natural gas resources are more flexible than nuclear and coal plants and can ramp up and down to complement wind output without incurring high costs, resulting in fewer spikes and dips caused by the mismatch between wind generation and demand, researchers said.
According to Averitt, increasing demand for additional electric generation capacity makes Texas an ideal test bed for the development of natural gas and renewable energy technologies. Having ramped up wind generation faster than any other state, Texas’ ability to integrate this renewable resource into its existing power system has the potential to be a model for others as they see the share of wind in their electricity supply increase, he said.
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