Texas moves forward with hybrid power despite coal’s staying power
Summary: The U.S. shift in power generation away from coal is accelerating just as renewable energy coupled with storage gains traction. While Texas is lagging on decommissioning coal generation compared to the rest of the country, the state leads in creating renewable energy base load power as its solar PV construction boom takes off. It remains to be seen if the state will also push for greater sustainability and resiliency in matters of energy and infrastructure.
About the author: Carlos St. James is a board member of Austin, Texas-based CleanTX, a non-profit that promotes advancement of clean energy solutions across the state of Texas, and a board member of the Washington, D.C.-based Latin American & Caribbean Council on Renewable Energy (LAC-CORE). In the last decade he has spoken in over three dozen countries across five continents on clean energy issues at international conferences, and publishes the Clean Energy Review to help generate debate on the industry’s issues. He will be at the annual GridNEXT (online) conference on August 19, 2020, where topics such as these will be discussed in greater depth. He works at Voltabox of Texas, Inc., which manufactures lithium-ion energy storage solutions. Note disclaimers at the end.
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A couple months ago there was a lot of press about how renewable energy power generation in the United States had — for the first time ever – surpassed coal power generation, and how that was a significant milestone, etc. Very heady stuff for those of us pushing for cleaner energy matrices.
In Texas, renewable energy power generation actually surpassed coal power generation last year, so there's reason to believe we’re on the right track (witness the evidence of that in the animated Bar Chart Race B towards the end of this analysis). But I was just the same left wondering how my home state of Texas is doing in comparative terms, and where it stands on incorporating hybrid renewable energy solutions (wind plus batteries and solar plus batteries). This is especially relevant since Texas is by far the country’s largest power generator, with more than twice as much as California — whose GDP is more than 50% higher than Texas’.
Diving into the deep well that is the U.S. Energy Information Administration’s (EIA) database is like swimming through an underwater cave. You can get lost in the maze and even get nervous, wondering if you’ll ever find your way out. But I survived the ordeal from that experience and came up with this first animated bar race (Bar Graph Race A) showing exactly how coal power generation has begun to plummet. It’s a 90-second clip.
Animated Bar Graph Race A: U.S. Power Generation by Fuel Source, 2001-2020. Sources: Texas Sustainability & EIA data
On that animated clip you see that in early 2020 coal pretty much gave up, allowing natural gas to take the lead; renewable energy took third place just behind nuclear. But it took a long time and a lot of regulation to finally get there.
"... in early 2020 coal generation pretty much gave up, allowing natural gas to take the lead..."
In 2001 — just twenty years ago — coal absolutely dominated the U.S. power sector. It wasn’t until as recently as 2015 that coal plants began getting decommissioned in big numbers (see red circle in Graph 1 here), while natural gas generation boomed.
Graph 1: Retired and Retiring Coal Power Generation in the United States. Source: EIA
But let’s compare states within the U.S. As of March this year, about 16% of electricity in the came from coal (see red bar in Graph 2 below). On a state-by-state basis, only a few states still generate more than half of their power from coal: West Virginia, Kentucky, Missouri, Utah, and North Dakota. At the other end of the spectrum there are many states with absolutely no coal generation.
Texas is at 14% power generation from coal — just below the national average — and that figure aligns with the one in the first bar chart race.
Graph 2: Power Generated with Coal by States, March 2020. Source: EIA
Texan Coal Power Generation
But is Texas decommissioning coal plants at the same pace as the rest of the country? Graph 3 below suggests that it is not. Back in 2001 Texas generated about a third of its power from coal (red); the U.S., half (blue). As we’ve seen in Graph 2 above, they’re now both at around the same level, but the dotted linear trend lines below show a little more clearly that the country as a whole is taking greater steps to reduce coal generation than Texas.
Graph 3: Comparison of U.S. and Texan Coal Power Generation as Percent of Total Generation. Source: EIA
The bump up in Texan coal generation in 2017 above reflects the base load nature of coal, whose plants cannot easily be shut down or ramped up. That was an unusually warm winter and as less power was needed to heat, coal was used more than other sources. But thereafter began Texas’ big coal decline, starting in 2018 with Vistra Energy’s decision to shut down four gigawatts of coal generation just as the shale revolution (and its access to less expensive natural gas) was peaking. Those 2018 Texas coal plant closures also appear in Graph 1 above from the EIA (see the blue circle).
Texas and Hybrid Renewable Power
While there is a somewhat weak argument that Texas is lethargic on coal decommissioning, you cannot say the same for what is taking place on the renewable energy front — especially when coupled with batteries. Here Texas leads the nation.
Pairing renewable energy generation with storage, particularly batteries, is increasingly common as the cost of energy storage continues to decrease. Batteries serve several applications on a grid scale and so the pairing becomes an increasingly valuable asset play for investors.
Texas already dominates the U.S. on straight wind energy generation (i.e., without storage attached); but on the left half of Graph 4 below, you can see it also has far more installed wind+battery hybrid power than solar+battery hybrid. It leads the U.S. in this combo, too.
Graph 4: Existing and Planned Hybrid Power in Texas through 2023. Source: EIA
Texas’s solar photovoltaic construction boom is just taking off and it is increasingly being paired with batteries. According to EIA data, virtually all of planned renewable hybrid power plants to be completed by end of 2023 will be of the solar+battery variety (the big yellow bar above on the right), which may spell trouble for the continued growth of the wind sector, as hybridization becomes the norm.
But if you add up all the existing hybrid generation in each state coupled with those plans, Texas will continue to be the largest in overall installed capacity. See Graph 5 below showing total renewable energy plus storage facilities through 2023. While Nevada and California have enormous proposed new capacity in the offing – and a lot of straight-up stand-alone battery storage (see light blue), they are still getting beaten by Texas. Who’s doing the investing? A mix of Texan firms like Houston’s Broad Reach Power as well as Scandinavian firms like GreenGo Energy Group and Orsted.
Graph 5: Operating and Planned Renewable plus Storage Capacity through 2023. Source: EIA
"... if you add up all the hybrid generation in each state, Texas will continue to be the largest in overall installed capacity."
But herein lies one of the many values of organizations like CleanTX, which promotes clean energy solutions in Texas. Years ago, when it seemed an impossibility, the organization’s members decided to establish a goal of reaching 50% renewable energy power generation in Texas by year 2030 — and have been promoting that vision ever since. And it'll actually become a reality. How? See Bar Chart Race B below, showing how renewable energy surpassed nuclear energy in 2015, how last year it already beat coal, and is primed to beat natural gas power generation — no small feat in Texas — around 2025 as it gathers momentum to reach that 50% target in 2030. Companies like Voltabox (full disclosure: my employer) are the ones manufacturing lithium-ion batteries here in Texas for all kinds of applications and will benefit greatly from this growing trend.
Animated Bar Race Graph B: How Texas Will Get to 50% Renewable Energy Mix by Year 2030. Sources: CleanTX, ERCOT, Texas Sustainability
Conclusion
The shift towards a greener energy matrix in Texas is well on its way and cannot be stopped, especially when you see how coal is fading away. Institutions like CleanTX have helped create sufficient inertia and we are all indebted to them — as well as to the investors and bankers who make the commitments and create the jobs.
But there is a growing hole in the process, the next logical step that has yet to be addressed adequately: sustainability and resiliency of all this infrastructure. Graph 6 below shows the increasing losses affecting the insurance industry tied to various disasters including energy related. Fukushima appears clearly in 2011. The growing trends represents the increased losses, both insured and not. The next big wave of opportunity in Texas lies in making sure that assets – energy generation as well as any other – are all built and maintained to international resiliency standards. It makes financial sense, and I’ve little doubt it will become a rapidly growing sector in the coming years. Wind and solar projects have already become ho-hum commodities, energy storage brings new value to those assets – and the next wave will be sustainability.
Graph 6: Trends in Insured and Uninsured Infrastructure Losses, 1970-2017. Source: Swiss Re Institute
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This report has been prepared by Carlos St. James for the Clean Energy Review. The views expressed on this site are his own and do not necessarily reflect the views of Voltabox of Texas, Inc., its affiliates or business partners, nor of CleanTX, its affiliates or members. This report has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. It is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. The report is based on information obtained from sources believed to be reliable but is not guaranteed as being accurate, nor is it a complete statement or summary of the securities, markets or developments referred to in the report. The report should not be regarded by recipients as a substitute for the exercise of their own judgment. Any opinions expressed herewith are subject to change without notice and the Clean Energy Review is not under any obligation to update or keep current the information contained herein. The Clean Energy Review accepts no liability whatsoever for any loss or damage of any kind arising out of the use of all or any part of this report. Additional information will be made available upon request.