A Red State Goes Green — Why Texas Is Adding So Much Solar

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In this article, I’ll talk about what Texas is doing with utility-scale solar and how the motivation is different than many other states. I was inspired to research and write about this subject after hearing Jigar Shah talk about the subject on the Energy Gang podcast, which I highly recommend.

We recently published an article on solar overtaking wind and sometimes even overtaking natural gas in new capacity, and I wanted to explain how Texas is different in this sector. Also relevant to this story, we summarized the conclusions of a study from 8 years ago that recommended overbuilding wind and solar plants to deal with the intermittency problems inherent in those forms of energy production, while also explaining why it makes more sense now than when it first came out. The key reason overproduction is a realistic option today is that costs have dropped more dramatically than the most optimistic forecasters could have hoped. But those are general solar energy topics; let’s dive into Texas now.

First, let’s talk a little about the Electric Reliability Council of Texas (ERCOT), which is a nonprofit tasked with matching demand and supply of electricity at all times. Although it is governed by the Public Utility Commission (PUC) of Texas, it uses price signals to allow free market forces to solve the technical issues needed to meet the ever-growing needs of the Texas market. This is consistent with the principles of representative democracy, that if the people believe in a free market, then the laws that govern electricity should reflect the will of the people. It has been very successful at both meeting the electricity needs of the state at a very low cost and providing the power needed to power its export engine. In 2017, Texas exports were greater than California and New York exports combined! The average cost of electricity is 11.65 cents per kWh, almost 40% less than in California. So, how has that free-market approach done at reducing emissions? Not as well. Let’s look a little more at the differences between the two states. Texas uses a lot more energy for 3 reasons:

1. It is hotter in the summer and colder in the winter in most parts of Texas than in most parts of California, so all else being equal, they need more energy to heat and cool their homes.
2. The state is much more friendly to manufacturing companies in the areas of regulation, taxation, and cost of living, prompting the famous outburst of Elon Musk earlier this year, in which he threatened to move manufacturing from California to Texas.
3. Texas citizens and the government that represents its citizens have been less concerned about climate change, so they have passed fewer rules requiring the retiring of fossil fuels and moving production to renewables.

I was certainly surprised when I saw this chart from the EIA’s report on emissions by state. Texas had more zero-carbon energy production in 2016 than California. Although, the sources are radically different. Texas has taken advantage of the federal incentives for wind and its natural wind resources to add a lot of wind capacity in the last 10 years, and it hasn’t shut down its nuclear plants. California has added a bit of wind and a lot of solar, but this just makes up for the reduction in the generation of nuclear and hydropower over those same 10 years.

2020 Plans to Add Solar in California & Texas

California has a lot more solar installed (27.9 GW versus 4.6 GW) and has to worry about the duck curve, while Texas has very little solar, so energy produced at midday on sunny days is still very valuable, because those sunny days also increase air conditioning demand, which means the increased power comes exactly when it is most needed. According to this report published 3 days ago by the Solar Energy Industries Association and Wood Mackenzie (sponsor of the Energy Gang Podcast that started me down this rabbit hole), while California added over twice as much solar PV as Texas in 2019, Texas is installing 50% more this year.

What Changed?

The thing that makes solar so appealing is that land and labor are cheap in Texas, and permits to turn on solar are easier to get in Texas. Reduced regulation in Texas means it is easier to build projects and get permission to sell power on the grid. It is easier to try new innovative things. Also, many of the prime commercial and residential locations don’t have solar yet. As mentioned above, Texas doesn’t have enough solar to worry about overproduction in the daytime hours (the duck curve), which will eventually cause the market price of electricity to go very low during daytime hours.

In California, they added solar to many of the prime locations many years ago when costs were higher. Although they mandate that all new construction have solar, the high costs of construction and land and the poor economy have limited new construction. Texas’ economy, which hasn’t been shut down by COVID by an overcautious government, is much healthier than California’s, with an unemployment rate of only 8% instead of 13.3% in California. Also, since California is losing so many residents, not a lot of new residential building is needed. COVID has also reduced demand for new commercial buildings. I don’t mean to be too down on the state, though — the rest of this country owes California a debt for pioneering new technology in solar and many other areas.

Conclusion

Texas looks like it will be a leader in the solar market over the next few years, and it has done that a very different way and for very different reasons than many other states. The good news for all of us who care about emissions is that prices are so low that even people that don’t believe in climate change are jumping to use solar just because it works and is inexpensive.

California may still lead on new rooftop solar tech. We recently published this article by an owner of a home in California with a Tesla Solar Roof that explains everything you need to know about the newest version of Tesla’s revolutionary roofing product. But Tesla also offers extremely cheap conventional rooftop solar panels, and Texas could be a good market for those.

If you decide to order Tesla solar panels or a Tesla Solar Roof, use a friend’s referral code for $100 off either solar panels or a solar roof! If you don’t have any friends with a Tesla, use mine: https://ts.la/paul92237