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The future of the Texas electric market will very likely include substantial amounts of renewable energy and gas-fired power, according to a new report by economists with The Brattle Group.

The report, "Exploring Natural Gas and Renewables in ERCOT, Part II: Future Generation Scenarios for Texas," was prepared for the Texas Clean Energy Coalition (TCEC) and provides a 20-year outlook for natural gas and renewable power in the state.

The TCEC says the report examines the future of gas and renewable power in Texas analytically through the simulation of several grid expansion scenarios.

"Our modeling approach is guided by the assumption that as the amount of variable or intermittent renewable energy added to the electricity grid increases, so does the relevance of short-term dynamics, such as the ability to quickly start and ramp power resources up and down to closely follow the fluctuating renewable supplies," comments Ira Shavel, the report's co-author. "Traditional approaches to analyzing the optimal addition and retirement of power plants over time tend to represent such dynamics in a very simplified form at best. Our approach allows us to model these shorter-term operational constraints in a very detailed fashion."

Key findings in the report include the following:

- Under the range of scenarios, natural gas and renewables both play substantial roles in the Electric Reliability Council of Texas (ERCOT) grid and provide all new generation needed to respond to growth in the state's population. No new coal plants are built in any scenarios.

- Across the more likely scenarios, wind and solar grow from their current 10% generation share to levels between 25% and 43%. Natural gas-fired generation provides all of the remaining incremental generation, adding 12 GW to 25 GW of new combined-cycle capacity - a 38% to 80% increase over the current installed base.

- The mix of new gas and renewables generation is sensitive to the price of natural gas and cost declines in wind and solar power. Changes in these three factors can cause significant shifts in the mix of future installations, leading to a wide range of plausible generation shares for wind, solar and natural gas.

- Among gas-fired power plants, nearly all future additions are combined-cycle gas turbine (CCGT) plants rather than traditional gas turbines due to the fact that CCGTs are more efficient and expected to be more flexible than other turbines.

- The ERCOT system could accommodate all levels of variable renewables likely to occur during this period with no reliability problems. However, accommodating higher levels of renewables required the model to use an additional ancillary service - known as the intraday commitment option - and adjust the levels of current ancillary services.

- The federal production tax credit and ERCOT ratepayer funding of new transmission lines remain important drivers of wind development.

- A reserve margin has a very small overall effect on the generation mix or emissions in ERCOT through 2032. However, scenarios using higher gas prices and lower renewables costs reduce the growth of CO2, NOX and SO2 substantially. A stringent federal carbon policy reduces 2032 CO2 by 66% versus 2012.

- Existing coal units in ERCOT remain profitable and are not retired unless a relatively stringent federal carbon policy is adopted. A federal carbon policy requiring 90% capture and storage of carbon, for example, would prompt the retirement of most ERCOT coal units.

- Under the strong federal carbon policy scenario, gas and renewable generation would together replace the energy formerly supplied by coal plants. In this case, renewable energy could rise to become 43% of ERCOT generation by 2032.

The complete report is available here.

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