Many Texans have been led to believe that adding more wind and solar to the electric grid is the cheapest way to meet the state’s rising energy demand. However, this belief overlooks a crucial reality: the hidden costs of managing the variability of these resources. While wind and solar have low fuel costs, their intermittency forces Texas to rely on expensive backup measures to maintain grid stability. As a result, electricity prices have risen despite historically low natural gas prices. Texas must adopt firming standards that ensure reliability without shifting hidden costs onto consumers.
Key Points:
- The estimated cost of wind and solar variability in ERCOT, in the form of higher prices for energy and ancillary services, was $2.3 billion in 2023.
- Replacing wind and solar with gas generation not only reduced overall prices but also price volatility, reducing the maximum price from the $5,000 market cap to less than $500 and eliminating negative pricing.
- The Public Utility Commission of Texas estimates that wind and solar contributed to 42% of ancillary services procurements in 2023 at a cost of $788 million.
- Texas law requires that the cost of ancillary services be allocated on a “cost-causation” basis, yet the full cost is passed to ratepayers.