How will ERCOT and Texas learn from the past on the grid?

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ENB Pub Note: This is an essential update from Doug Sheridan, a LinkedIn Author and knowledgeable leader in the energy sector. Doug is raising some significant concerns about the Texas grid and potential issues on the horizon. I have been discussing the land reclamation issues associated with the wind and solar industries, but Doug highlights some other financial concerns. The physics of the grid requires a dispatchable power supply on standby to cover the intermittent wind and solar energy. That cost can be catastrophic to consumers.

“The grid requires fiscal responsibility and physics, and anything less will result in failure” – Stu Turley.

1. Natural Gas:
   • Share: Approximately 44-50% of ERCOT’s total electricity generation.
   • Details: Natural gas is the largest contributor to ERCOT’s power supply, with a maximum capacity of around 57,792 MW. It includes gas steam, simple cycle, combined cycle, and reciprocating engine resources. Natural gas is critical for balancing daily and seasonal demand fluctuations, especially in the evening when solar generation declines. In 2023, natural gas-fired plants produced about half of ERCOT’s electricity, and its role remains dominant due to its reliability and dispatchability.
   • Trends: Despite the growth of renewables, natural gas usage remains high, particularly during peak demand periods like summer or extreme weather events. However, midday solar generation has reduced natural gas reliance during those hours.
2. Wind:
   • Share: Around 20-26% of annual electricity generation.
   • Details: Texas is the nation’s leader in wind power, producing about 108,000 GWh in 2023, accounting for 28% of U.S. wind-sourced electricity. Wind has a nameplate capacity of over 30,000 MW, with over 40 wind farms. It’s the largest renewable energy source in ERCOT, contributing significantly during evening hours and at night when wind speeds are often higher.
   • Trends: Wind generation remained stable from 2022 to 2023, but new capacity additions have slowed compared to solar. In 2018, wind briefly supplied over 54% of ERCOT’s demand at a peak moment, and in April 2025, wind and solar together hit a record 41,675 MW (65% of the fuel mix).
3. Coal:
   • Share: Approximately 15-20% of electricity generation.
   • Details: Coal-fired plants contributed about 20% of Texas’ electricity in 2019, but their share has declined due to retirements and competition from renewables and natural gas. In 2021, coal provided around 16% of ERCOT’s electricity.
   • Trends: Since 2009, coal’s share has dropped significantly (from 37% to around 15-20%), with three coal plants closing in recent years. Coal remains a dispatchable resource but is less competitive due to economic and environmental factors.
4. Nuclear:
   • Share: About 10-11% of electricity generation.
   • Details: Two nuclear power plants—South Texas Project near Bay City and Comanche Peak near Glen Rose—supply a steady 11% of ERCOT’s electricity. Nuclear provides reliable baseload power with minimal fluctuations.
   • Trends: Nuclear generation has remained consistent over the past decade, with no significant capacity additions planned. It plays a key role in carbon-free generation alongside renewables.
5. Solar:
   • Share: Approximately 6-8% of annual generation, but growing rapidly.
   • Details: Solar generation produced about 32,000 GWh in 2023, a 35% increase from 2022, with installed capacity reaching 16 GW. Solar is most active midday, reducing natural gas usage during those hours. In 2023, solar peaked at 5.3 GWh in summer and 3.8 GWh in winter.
   • Trends: Solar is the fastest-growing energy source in ERCOT, with 24 GW of new capacity planned for 2024-2025, compared to only 3 GW for wind and natural gas. Solar’s competitiveness in wholesale markets (often supplying cheaper energy) and co-location with battery storage are driving its expansion. In January 2024, solar supplied 23% of ERCOT’s power during a critical morning period.
6. Power Storage (Batteries):
   • Share: Less than 1% of generation, but significant for grid stability.
   • Details: Battery storage, included in ERCOT’s “Power Storage” category, discharges power to the grid during peak demand or when renewables are low. In 2022, ERCOT had 2 GW of grid batteries, with 6 GW under construction. Plans for 13 GW of additional battery storage by 2025 are in place.
   • Trends: Batteries are increasingly important for storing excess solar and wind energy and releasing it during high-demand periods, enhancing grid reliability. Their role is small but growing, especially with solar co-location.
7. Hydroelectric and Biomass:
   • Share: Less than 1% combined.
   • Details: Hydroelectric and biomass resources contribute a small fraction of ERCOT’s electricity, included in the “other” category. These sources are limited in Texas due to geographic and resource constraints.
   • Trends: No significant growth is expected in these areas, as Texas focuses on wind, solar, and natural gas for expansion.

• Daily and Seasonal Variations: The ERCOT fuel mix shifts throughout the day. Solar dominates midday, wind peaks in the evening, and natural gas fills gaps, especially during high-demand evenings or extreme weather. Summer demand (driven by air conditioning) is the highest, with a record peak of 85,931 MW on August 20, 2024.
• Renewable Growth: Renewables (wind, solar, hydro) accounted for over 30% of ERCOT’s generation capacity in 2019 and continue to grow, with wind and solar alone hitting 65% of the fuel mix at a record moment in April 2025. Texas leads the U.S. in wind and is second in solar production.
• Carbon-Free Energy: Wind, solar, and nuclear together can supply significant portions of ERCOT’s demand, with posts on X noting instances where they met ~80% of demand (e.g., February 2024). In January 2025, wind, solar, and nuclear reached 36 GW, surpassing California’s total load.
• Grid Reliability: Natural gas and coal remain critical for dispatchable power, especially during events like the 2021 winter storm, where frozen gas pipelines and offline renewables led to outages. Battery storage and demand response programs are being enhanced to improve reliability.
• Future Projections: ERCOT forecasts demand reaching 150 GW by 2030, driven by data centers, crypto mining, and electrification of oil and gas operations. Solar and battery storage are expected to see the most growth, while natural gas expansion is supported by the $10 billion Texas Energy Fund for new gas plants.

• The percentages and capacities are drawn from 2019-2023 data, with 2021 being the most recent year for comprehensive fuel mix statistics (e.g., Statista: 44% natural gas, 26% wind, 15% coal, 10% nuclear, 6% solar).
• Real-time and daily fuel mix data is available on ERCOT’s website, showing variations by hour and resource type.
• Renewable energy contributions are often highlighted in posts on X, but these reflect specific moments and not annual averages.
• ERCOT’s grid is unique as a stand-alone system (Texas Interconnection), avoiding federal regulation, which shapes its energy policies and market dynamics.

From Doug Sheridan: LinkedIn

Mario Loyola writes in the WSJ, Texas is facing a crunch in its electricity supply because of a massive build-out of heavily subsidized wind and solar energy. Renewables subsidies force reliable resources like natural gas, coal and nuclear to sit idle for hours on end, making it harder to recoup costs and stifling investment.

Meanwhile, more than $130B has flowed into renewable resources that can’t be counted on to produce electricity when needed. Texans found this out the hard way in 2021, when blackouts killed hundreds during Winter Storm Uri. Residential electricity prices are now higher in Texas than in Florida, a state that gets most of its electricity from natural gas produced in Texas and Louisiana.

The Texas Legislature has responded by requiring renewable energy plants to secure their own firm backup supply. HB 1500, a law passed in 2023, introduced a “firming” requirement, but that applies only to new power plants starting in 2027. It’s too little, too late, and does nothing to reduce the enormous costs and distortions that existing wind and solar impose on the grid.

So the Legislature is now considering a new bill, SB 715, which would apply the firming requirement to all sources, old and new, and accelerate implementation. It isn’t a moment too soon. Texas has dug a deep hole for itself, and every day the IRA subsidies are in effect, the hole gets deeper. Since 2000, Texas has added nearly 80 GW of intermittent renewable resources—wind and solar—largely due to federal renewable tax credits, about four times the fossil energy Texas has added since 2010.

Given the soaring demand forecasts, construction of new natural gas and coal plants should be booming. Instead, while the Texas grid has expanded greatly in nominal capacity, the dispatchable capacity required for affordable and reliable electricity has barely edged upward.

HB 1500 aims to alleviate these issues by requiring new power plants to meet strict reliability standards or incur financial penalties. HB 1500 also forces renewable projects—often located far from existing transmission infrastructure—to bear more of the costs of new transmission, instead of imposing those costs on Texas ratepayers as they’ve been doing for years.

Renewable investors will cry foul if SB 715 passes, but they knew that the lavish subsidies were controversial and could be eliminated at any time. They assumed the risk. After Senate passage, SB 715 now faces an uncertain path in the Texas House. The stakes are high.

Our Take 1: It’s amazing how many Texas leaders have gone along with the bizarre anti-dispatchables strategy that ERCOT and the PUCT appear to be so comfortable with. Our guess is growing numbers of Texas politicians are now beginning to regret they ever did.

Our Take 2: Either way, Texans will have to eventually pay up for the state’s unfortunate experiment with renewables. Exactly how much, who pays, and when the bill comes due remains to be seen.

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