Life:Powered Research Estimates that Reliability Standards for Wind and Solar Will Save Texas Ratepayers Billions and Make the Grid More Reliable

Life:Powered, a campaign of the Texas Public Policy Foundation to raise Texas’s and America’s energy IQ, recently released groundbreaking researchshowing that Texas electricity customers are paying at least $2 billion per year in hidden costs due to the volatility of wind and solar generation in the ERCOT market.

Now the campaign has released a follow-up paper, titled "Reliability Standards to Reduce the Cost of Wind and Solar Volatility in Texas," that shows how requiring variable resources to reduce their volatility can save ratepayers more than a billion dollars per year and make the Texas grid more reliable.

"Over $130 billion in private capital and nearly $30 billion in state and federal subsidies have poured into wind, solar, and energy storage infrastructure in Texas, yet Texans are only seeing higher costs and lower reliability," said Brent Bennett, Ph.D., Policy Director for Life:Powered and co-author of the study. “Redirecting just a fraction of those funds toward reliability and dispatchable generation would have prevented the failures that occurred during Winter Storm Uri in 2021 and set Texas on a path toward lower prices instead of the price increases that have occurred over the past several years.

HB 1500, passed during the 88th Texas Legislature in 2023, directed the Public Utility Commission of Texas (PUC) to establish a reliability standard for generators beginning operation in 2027 or later. Life:Powered's analysis shows that while this legislation was a step in the right direction, more changes are needed to fix the problem:

1.      Apply a Reliability Standard to ALL Generators Starting in 2027: Rather than exempting existing generators, apply the same reliability standards to all generators beginning in 2027. This creates a level playing field and provides immediate benefits to ratepayers instead of delaying meaningful impact for many years. Senate Bill 715 and House Bill 3357 will accomplish this goal.

2.       Base the Reliability Standard on Thermal Fleet Performance: The reliability standard should be benchmarked against the proven performance of Texas' gas, coal, and nuclear fleet, which maintain 85-96% availability during peak demand hours. This level of performance is what Texas ratepayers expect and what is needed to keep the lights on 24/7/365. Wind, by contrast, averaged just 18% availability during these critical periods in 2024, with minimums as low as 4%.

3.       Implement Meaningful Financial Penalties: For the reliability standard to drive real market improvements, underperforming generators should face financial consequences proportional to their impact on the system. Our research proposes capping the prices renewable generators can receive or assessing fees based on performance shortfalls.

"Following Winter Storm Uri, multiple reforms were implemented to improve grid reliability, but we've failed to address the fundamental market distortion that allows intermittent generators to receive the same price as reliable ones," said Carson Clayton, Campaign Director for Life:Powered. "This research provides a clear roadmap for correcting this imbalance.

Life:Powered urges the Texas Legislature to pass Senate Bill 715 and House Bill 3356 to direct the PUC to create a reliability standard for all generators, not just new ones, beginning in 2027. This measure will finally set Texas on the path to fixing the problems that have kept its competitive electricity market from reaching its full potential.

The full research paper is available at https://lifepowered.org/reliability-standards-to-reduce-the-cost-of-wind-and-solar-volatility-in-texas/.

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