AUSTIN—Today, the Texas Public Policy Foundation published the paper ERCOT’s Growth and Adaptation to New Markets: Generation Capacity, Renewable Energy Subsidies, and the Operating Reserve Demand Curve.

“Renewable energy subsidies have brought increases in wind generation which lowered incentives to build the dispatchable generation that is needed to maintain reliability of the Texas electricity grid,” said Robert Michaels, senior fellow at the Texas Public Policy Foundation. “The most efficient and economical resolution to the problem of reliability is to eliminate subsidies for intermittent renewable energy.”

The limited reliability of renewables and decisions by the PUC are costing customers.

“Instead of directly addressing the reliability challenges caused by renewable energy subsidies, the PUC has chosen to increase electricity prices for Texas consumers by as much as $1.3 billion this year and perhaps more in the future,” said Bill Peacock, vice president of research at the Texas Public Policy Foundation. “The Legislature should direct the PUC to require the industries and entities that are imposing these costs on Texans to pay for the solution.”

Key Points:

  • Renewable energy subsidies have brought increases in wind generation which have lowered incentives to build the dispatchable generation that is needed to maintain reliability of the Texas electricity grid.
  • Instead of directly addressing renewable energy subsidies, the PUC has chosen to broaden the use of its Operating Reserve Demand Curve (ORDC) that could lead to a $1.3 billion increase in power costs for Texas consumers that could grow to $2.5 billion by 2020.
  • A more efficient and economical resolution than the ORDC is to eliminate subsidies for intermittent renewable energy.
  • If eliminating subsidies proves politically impossible, the PUC’s best option will be to reduce the scope of the ORDC by directly changing ERCOT’s rules to require that wind and solar operations rather than consumers bear the costs of their intermittency.

To read the paper in full, please visit:
https://www.texaspolicy.com/ercots-growth-and-adaptation-to-new-markets/