Texas Study: Clean Energy Saving Ratepayers Billions

October 21, 2022

Dallas Morning News:

Solar and wind energy saved Texans nearly $1 billion a month this year in electricity costs, according to a recent clean energy study from energy system analysis group IdeaSmiths LLC.

In the first eight months of 2022, renewables wholesale electricity market costs on the grid operated by the Electric Reliability Council of Texas by about $7.4 billion, the report shows, or about $925 million per month. Renewables are on track to save Texans $11 billion total this year.

“With a coal or natural gas power plant, you have to both build a power plant and continuously buy fuel to burn in that power plant, and so there’s higher ongoing costs,” said University of Texas Austin research scientist and IdeaSmiths executive Joshua Rhodes, who led the research. “Wind and solar generally produce very cheap electricity because they don’t have fuel costs … after you’ve built the plant there’s no fuel costs associated with generating electricity.”

The report comes as renewables come under fire as electricity regulators and lawmakers consider how to boost electric reliability, after the deadly outages in February last year and calls for conservation this summer to keep the grid stable. About one-fourth of Texas electricity comes from renewables, according to the Energy Information Administration, and Texas is the No. 1 state in wind production and a leader in solar. Some experts say renewables put grid reliability at risk because operators cannot control the wind and the sun.

The report doesn’t address the impact of renewables on grid reliability. The report quantifies economic benefit of renewables in terms of electricity cost, water usage and pollution.

Scientists found that over a span of almost 12 years, from 2010 to August 2021, Texas consumers saved up to $27.8 billion from the grid’s adoption of solar and wind energy sources. Researchers compared ERCOT’s actual market performance, which has adapted such renewables, to a market that relied solely on natural gas, coal and nuclear power. These numbers indicate that consumers were able to save “significantly.”

“Texans would have had to pay 27.8 billion more dollars over that period of time because eventually the customer always pays,” head researcher Rhodes said.

One of the main ways renewable energy cuts costs is by “providing energy at zero or near-zero prices,” which results in lower overall market prices for the consumer, he said. In the free market bidding system, the most expensive power plant sets the price for everyone else, Rhodes explained.

“What renewables do is that they push the power plants further to the right in that bid stack, so the power plant that’s setting the price for everybody is a lower cost power plant,” he said. “That’s generally how the savings happen.”

This year in particular saw the greatest price reduction by renewables because of natural gas prices spiking. The report also calculates the average wholesale electricity market price would have been up to $18 higher per megawatt-hour without renewable energy driving costs down. The average household consumes about one megawatt-hour of electricity each month.

Renewables also temper costs by acting as a buffer against volatile natural gas prices, which have roughly doubled since mid 2022. Even as natural gas and coal prices fluctuate, Texas customers are able to save some money from the adoption of renewable energy sources.

Electricity costs escalated this year for North Texans, especially after a historically hot summer that saw triple-digit temperatures, with some customers saying their bills were frustratingly high.

It still costs money to build renewable energy power sources, such as the money for installing solar panels and building wind turbines; however, “they’re much cheaper to operate” than fossil fuel and nuclear plants, Rhodes said.

But in addition to cutting wholesale prices, widespread adoption of renewable energy also reaps environmental and public health benefits, the report shows.

For example, solar and wind plants, don’t use water to generate electricity, and that saved ERCOT power plants from consuming 244 billion gallons of water over 12 years, researchers calculated.

“For reference, 244 billion gallons is enough to hydraulically fracture between 70,000 to 200,000 natural gas wells, depending on well type and formation,” the study says.

Renewable energy adopted into the grid also contributes to reductions in air pollution.

“One of the benefits of renewables is we’re not emitting as many pollutants into the air, so people are able to breathe cleaner air and live healthier lives,” Rhodes said.

Elevated amounts of nitrogen dioxide from fossil fuel plants can result in respiratory complications, while exposure to sulfur dioxide can cause severe nose and throat irritation. Carbon dioxide contributes to climate change.

And as Texans prepare for the winter, which often puts the state’s electric grid to trial, electricity costs may be higher than they have been in the past, Rhodes said, adding:

“We estimate they would be quite a bit higher if we didn’t have renewables on the system.”

I’ve interviewed study author Josh Rhodes for stories on energy before. Widely respected expert in Texas and nationally.

The Impact of Renewables in ERCOT:

  • The widespread adoption of renewables reduced wholesale electricity costs by about $27.8 billion between 2010 and August 2022, saving consumers significantly from what they might otherwise have had to pay.
  • In the first eight months of 2022, renewables reduced ERCOT wholesale electricity market costs by about $7.4B (~$925M per month) and are on-track to exceed $11B in cost savings by the end of the year.
  • Renewables have reduced wholesale electricity market prices on average between $1.17/MWh (in 2012) and $20.60/MWh (in 2022) by offsetting more expensive power plants.
  • This analysis also indicates that renewables can provide a price hedge against the volatility of natural gas and coal prices in ERCOT, both of which were significantly more expensive in 2022 than the preceding years.
  • Without renewables, power plants would have consumed an additional 244 billion gallons of water from 2010 to August 2022, adding water stress to regions that are often in drought. At typical wholesale water rates of $3 to $7 per thousand gallons, 244 billion gallons of water is worth between $0.7B and $1.7B.
  • Emissions reductions have saved Texans between $10.2B and $76.4B in total in lower healthcare and other environmentally related costs.
  • Summing up all benefit streams, we estimate that, between 2010 and August 2022, renewables provided between $38.7B and $106B (about $48.2B using median values for water and emissions) in total benefits to Texas residents in the ERCOT service territory.

One Response to “Texas Study: Clean Energy Saving Ratepayers Billions”

  1. rhymeswithgoalie Says:

    Solar and wind energy saved Texans nearly $1 billion a month this year in electricity costs…

    Money that would have gone to fossil fuel companies. I can live with that.

    [BTW, it was a much hotter than average summer for most of Texas.]

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