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Renewable energy and natural gas will continue to dominate Texas' electric supply additions over the next 20 years, while adoption of expanded demand response (DR) and energy efficiency (EE) programs could reduce 40% to 50% of projected peak demand growth across the grid system, economists with The Brattle Group find in a new report prepared for the Texas Clean Energy Coalition (TCEC).

TCEC Chairman Kip Averitt, a former state senator and chairman of the Senate Natural Resources Committee, says the report combines a model that simulates the decisions of market-driven developers of a wide range of new electric resources with a model that simulates the minute-by-minute operation and control of the grid by the Electric Reliability Council of Texas (ERCOT).

By combining these two perspectives, the modeling system finds future trajectories that represent, for any given scenario, a realistic set of resources the market is willing to build and that can be integrated and managed by ERCOT to yield adequate and reliable electric power for Texas electric customers, Averitt adds.

Key findings in the report include the following:

- Renewables and natural gas dominate the supply additions across all scenarios, with gas providing both low-cost base load energy and ancillary services that integrate wind and solar energy.

- Energy efficiency and demand response provide substantial opportunities to displace future capacity additions and lower overall electricity costs. The program portfolio was designed to be moderate in size and use well-established approaches primarily driven by ERCOT energy prices. Nonetheless, report says 3 GW of peak reduction could be achieved by new EE programs, and 2 GW to 4 GW of new DR programs are identified as economically achievable in the report's modeling scenarios.

- Large combined heat and power (CHP) units are very economical, but small CHP units are not, the report says. The simulation indicates that the full potential of new CHP at petrochemical facilities will be realized by 2032 in all scenarios. However, the high capital costs and rapid payback required of smaller CHP units prevent any further CHP adoptions in the scenarios.

Last year, TCEC released other Brattle studies that analyzed the complementary nature of renewable energy and natural gas and their potential to displace dirtier fuels, such as coal. This new report, titled "Exploring Natural Gas and Renewables in ERCOT, Part III: The Role of Demand Response, Energy Efficiency and Combined Heat and Power," builds on the previous studies.

For more information, click here.

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