http://blogs.edf.org/energyexchange/2017/11/09/how-clean-energy-is-set-to-overtake-coal-in-this-competitive-electricity-market/
[links in on-line article]
How clean energy is set to overtake coal in this competitive electricity
market
By John Hall | Bio | Published: November 9, 2017
Look around the U.S. and you’ll find plenty of examples of smart policy
that is driving the adoption of cleaner, more efficient energy
resources. In particular, California, New York, and Illinois are all
leveraging policy to reduce carbon pollution and transition to a 21st
century electric grid.
But in addition to those success stories, markets also are achieving
significant clean energy results – and nowhere is that more evident than
here in Texas.
In 2001, the Lone Star State transitioned to a competitive electricity
market that (for the most part) puts the cheapest energy resources on
the grid first. Since then, wind has grown from supplying less than 1
percent of the state’s electricity to over 20 percent for the first half
of 2017. And as cheap natural gas remains plentiful and renewable costs
keep falling, expensive coal is getting pushed out of Texas’ market. In
fact, wind is expected to overtake coal as soon as next year.
The market
About 90 percent of the state is part of the Electric Reliability
Council of Texas (ERCOT), which is a self-contained electricity market
(many other markets are regional and span across multiple states). As an
excellent Vox article by David Roberts recently put it, Texas is
“probably the closest thing the country has to a ‘free market’ in
electricity. Power is procured entirely through competitive bidding.”
This means the market typically gives preference to the lowest-cost
resources first. There are exceptions, though, for emergencies and other
abnormal scenarios.
Coal on its way out
Coal plant closures are the clearest sign of how Texas’ electricity
market is working. Running and maintaining coal plants is expensive
(without even considering the hidden costs), and the majority of plants
were built decades ago. Cheaper options – which often happen to be
cleaner – abound.
Recently the state’s largest power generator, Dallas-based Luminant,
made a splash when it announced it will close three major coal plant
complexes early next year. These plants have a combined seven units that
represent over half of the power generator’s total coal capacity, and
the state’s grid operator has officially given the green light to close
them. Why close them? According to Luminant, the decision is “a result
of challenging plant and market economics.”
And it’s not just Luminant that is struggling. Last year, a report from
the Institute for Energy Economics and Financial Analysis looked at
seven of Texas’ aging coal plants and “concluded that these plants’ days
are numbered simply because they cannot compete.”
The Vox article summarized it well: “The steady decline of coal in Texas
has […] everything to do with relentless market discipline.”
Meteoric rise of clean energy
As technology is consistently improved and refined, the cost of
generating electricity from renewables continues to come down. And
global forecasts show economics are on clean energy’s side: The
International Energy Agency recently declared, “The era of expensive
renewables is over." Moreover, solar and wind basically have zero fuel
costs since the sun shines and the wind blows for free.
These favorable economics have helped boost wind and solar in Texas’
market. According to Environment Texas, since 2007, Texas has seen a
remarkable 21,466 percent increase in the amount of electricity it gets
from the sun and a 639 percent increase in wind power production. There
are now more than 10,000 wind turbines in the state.
The transition to a clean energy economy is creating thousands of jobs,
slashing pollution, and saving water. It’s also bringing investment to
Texas: Big businesses – like Amazon – are investing in Texas wind left
and right.
All of these benefits should be enough to move decision-makers, and
policy is undeniably crucial to delivering a clean energy future. But if
state leaders won’t act, Texas is evidence that a well-designed
competitive market can push coal plants to close and clean energy to soar.