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Can the Yellow Rose of Texas be Solar Power?

June 14, 2011

Besides being my home state and a large consumer and producer of electric power, Texas was chosen as the focal point for this discussion because of its Ying Yang behavior between oil & gas and renewable energy.

This is underscored by the fact that:

• Texas produces and consumes more electricity than any other State, and per capita residential use is significantly higher than the national average.

• Approximately three-tenths of total U.S. natural gas production occurs in Texas, making it the Nation’s leading natural gas producer.

• Texas is the leading crude oil-producing State in the Nation (excluding Federal offshore areas, which produce more than any single State).

• The State’s signature type of crude oil, known as West Texas Intermediate (WTI), remains the major benchmark of crude oil in the Americas.

• Texas’s 27 petroleum refineries can process more than 4.7 million barrels of crude oil per day, and they account for more than one-fourth of total U.S. refining capacity.

• Texas was an early adopter of Renewable Portfolio Standards; enacted in 1999.

• Texas is one of leaders in implementing and meeting their individual RPS goals.

• Texas renewable energy mandate requires load service entities (competitive retailers, municipal electric utilities, and electric cooperatives) to acquire 5,880 megawatts (MW) of generating capacity from renewable technologies by 2015; increasing to a target of 10,000 MW by 2025 and a target of 500 MW non-wind renewable energy technologies including solar, wind, geothermal, hydroelectric, wave or tidal energy, and biomass or biomass-based waste products including landfill gas.

• Texas also leads the Nation in wind-powered generation capacity; there are over 2,000 wind turbines in West Texas alone.

In today’s economic and environmental landscape, the installed capacity of an electric power generation plant is a delicate balance between cost, federal and state incentives and state programs such as Renewable Portfolio Standard (“RPS”) Alternative Compliance Payments (“ACP”) and Renewable Energy Certificates (“REC”). For a brief review of these programs, please visit “A Dummy’s Guide on RPS, RECs and ACP!”

CoolerPlanet, crafted the following informative illustration showing the current state of renewable energy in America. Texas is shown as the 5th largest renewable energy electric generator. If conventional hydropower (dams) is taken out of the equation, Texas would be in the Top-2, behind California,

There is growing debate whether conventional hydropower should be considered a renewable source of energy. The use of water for electric generation frequently imposes high social and environmental costs and long-term economic tradeoffs. Nevertheless, The United States takes nearly ten percent of its total power from hydroelectric energy producing plants, making it one of the world leaders in the creation and use of hydroelectric power.

The State of Renewable Energy in the United States

Source: Cooler Planet

Taking a closer look at Texas’s renewable energy electric generation, the American Council On Renewable Energy (“ACORE”) reported: “Texas has the largest wind market in the nation, responsible for 7.8% of electricity generation in 2010. Another 12,700 MW of wind power projects are being considered by various developers. The reason is clear (see following chart), Texas has the second best wind resource in the country, with 136,100 MW of potential capacity.”

Texas Wind Resources

Source: American Council On Renewable Energy (ACORE), February 2011

However, Robert Bryce in “Slate” indicated that Texas’ the “grid operator, the Electric Reliability Council of Texas (“ERCOT”), the state’s wind turbines provided only about 500 megawatts of power when demand was peaking and the value of electricity was at its highest.  In 2007, ERCOT determined that just “8.7 percent of the installed wind capability can be counted on as dependable capacity during the peak demand period for the next year.” And in 2009, the grid operator reiterated that it could depend on only 8.7 percent of Texas’ wind capacity.”

Mr. Bryce goes on to explain, “Why does Texas get so little juice from the wind when it really needs it? Well, one of the reasons Texas gets so hot in the summer is that the wind isn’t blowing. Pressure gradients—differences in air pressure between two locations in the atmosphere—are largely responsible for the speed of the wind near the Earth’s surface. The greater the differences in pressure, the harder the wind blows. During times of extreme heat these pressure gradients often are minimal. The result: wind turbines that don’t turn.”

Turning our attention to solar, ACORE points out that: “Texas is a leader in solar resource potential, with high levels of direct solar radiation suitable to support large-scale solar power plants. West Texas has 75% more direct solar radiation than East Texas, and is an ideal location for utility scale CSP projects.”

Texas Solar Resources

Source: American Council On Renewable Energy (ACORE), February 2011

Then why does solar only account for 0.25% (25.4 MW) of its renewable energy, while wind accounts for 98.89% (10,085 MW) of its renewable energy production?

Since both wind and solar distributed generation rely on transmission lines, the lack of transmission lines in Texas’ renewable resource zones tends to affect both equally and cannot be the primary obstacle to the growth of solar energy.

The answer resides in the Levelized Cost of Electric Generation (“LCOE”).  LCOE is explained at the end of this article. As shown in the graph, Wind is one of the lowest cost generators of electricity. On the other hand, Solar PV and Thermal are the highest cost producers of electricity.

Incentives may be a bad word, but incentives (direct and indirect) drive the use of fossil fuels as much if not more than any renewable energy resource. If society want to realized the true benefits of the renewable electricity (positive environmental, social, and other non-power qualities of renewable electricity generation), then incentives are a prerequisite.

Kate Galbraith of The Texas Tribune recently reported:

“….. unlike California, Texas has no statewide solar incentive. This means that for most Texans, solar technology remains out of reach”

“….. some large solar projects are emerging in Texas. Last month a developer started building a 30-megawatt solar facility”

“….. San Antonio, began getting power from a 14-megawatt solar farm last November.”

“….. A 60-megawatt solar farm has been proposed for the outskirts of Pflugerville”

“….. the best solar potential lies in West Texas, which has little cloud cover.”

“….. transmission lines being built by the state to aid wind power could also benefit solar.

“….. large and small projects, incentives can make a big difference. Hilliard’s installer quoted her a total cost of $19,190, before fees and taxes. But an Austin Energy rebate reduced that amount by nearly $11,000”

“….. getting solar panels installed in Texas is cheaper than in any other state, scattered solar incentives that do exist in Texas are unusually generous.

“….. Two solar bills did pass this session and await action by the governor.”

“….. A proposal to require Texas to add 500 megawatts of non-wind renewable energy is pending at the Public Utility Commission (“PUC”),”

“….. Perry “expects the PUC to act in the best interest of Texans, and he continues to support a diverse energy portfolio that allows all types of energy providers to compete in the marketplace without imposing burdensome and costly mandates.”

In closing, the framework exists in Texas for solar to takeoff. The costs to develop and construct solar farms are dropping. A year ago, a solar plant went for $4.00 per watt. Today, plants $3.00 per watt are not unheard of. At $2.00 or less per watt for a Wind Farm, solar needs a helping hand to be competitive. Its coexistence with wind is certainly a strong possibility. While the wind turbine’s rotor blades stand idle due to lack of wind, the solar rays pouring down can pump out electrons unmercifully.

What about night time? Should the promising technology on the horizon, which claims to harvest infrared radiation as well as visible light, become marketable, solar energy will finally see the light. http://tinyurl.com/barry-stevens236

Levelized Cost of Electricity (“LCOE”)
The cost of this energy generation is usually represented by an estimated LCOE”. LCOE is expressed in cents per kilowatt hour (kWh), takes into account not only the capital cost of building a project, but also all the operating and maintenance expenses over time (such as the length of a power purchase agreement). It doesn’t include the profit a plant owner wants to make.

The basic formula to determine your LCOE starts with equating your costs and revenues.
This can be represented in the simple formula below.
• Cost structure = electricity output * cost of electricity
• Therefore the cost of the electricity of your LCOE can be defined as
• LCOE = (Cost Structure / Electricity Output)

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