By: Nicholas Sakelaris |
New electric generation will come primarily from natural gas over the next several decades with coal playing an increasingly smaller role in the state’s electric grid, according to The Brattle Group’s new electric generation report.
Natural gas has been relatively cheap since late 2008 and it’s abundant in Texas because of the Barnett Shale and other gas plays that have been tapped in the last decade, leading more power producers to use it as a fuel source for generating electricity.
The Brattle Group is a consultancy that studies complex regulatory and financial issues for corporations, law firms and governments.
Not surprisingly, Texas leads the nation in natural gas production. The report predicts between 12 to 25 gigawatts of new combined cycle natural gas generation will be added by 2032.
Texas already leads the way in wind generation and that’s expected to increase significantly, too, the report says.
Natural gas and wind generation have a symbiotic relationship because wind power is intermittent and can drop off quickly if the wind stops blowing.
That’s why companies such as Panda Power Funds, based in Dallas, are building three natural gas plants in Texas totaling 2,250 megawatts that will be operational by 2015.
The idea is that when wind power drops off, quick-fire natural gas plants can be called on to quickly make up the difference, reaching 50-percent load in about 10 minutes and 100-percent load within an hour.
The study also found that existing coal plants will remain profitable as long as new federal carbon rules aren’t adopted.
The Environmental Protection Agency is considering new pollution control regulations that could threaten to shut down most Texas coal plants.
The coal war debate came to Dallas last month as the EPA hosted a hearing to get input on coal plant regulations. Environmentalists called for the EPA to impose strict regulations to curb harmful greenhouse gas pollution while representatives from small Texas towns with coal plants talked about the jobs the plants create for the community.
The EPA has passed strict regulations on new coal plants and Brattle says no new coal plants will be built under any scenario.
Brattle’s latest report assumes there is a mandatory reserve margin, which Texas Public Utility Commission Chairman Donna Nelson has advocated in favor of. The mandatory reserve margin would set an exact target of electric power that must be kept in reserve for peak summer days.
Commissioner Kenneth Anderson opposes it, saying this will lead to a capacity market, where power producers are paid not only for the energy they produce but the capacity they hold in reserve, which would give them incentive to build new power plants.
Opponents say it would add billions of dollars to electric bills in the form of a new charge.
