Solar leaders hopeful on Texas incentives

HOUSTON -- Texas' solar power industry may be getting closer to its moment in the sun.

Across the state, solar companies and backers are increasingly optimistic that the state Legislature will adopt an incentive structure next year. With anxiety over the reliability of the power grid growing, leaders this week said the state must act.

"I believe it's more important now than ever," said Laura Spanjian, sustainability director for the city of Houston. "We have a growing population; more and more people are moving to Texas. There's huge demand on the grid."

Officials at the Electric Reliability Council of Texas (ERCOT) and public utility regulators have warned for months that, as the population and economy boom, the growth of new generating capacity on the grid is not keeping up with the growth in demand.

Already paying some of the highest electricity prices in the nation, most businesses and households in ERCOT are loath to pay more. But they are about to. The Public Utility Commission is preparing to authorize higher prices, likely this summer, with the hope that companies will react to the increased profit incentive to build more power plants.

But those price increases may still not be enough. And anticipated federal regulations of carbon emissions to address concerns over climate change are limiting the state's options in building new generation, in particular making coal-fired generation less attractive to investors.

Mindful that renewable power -- mainly wind towers along the coast -- saved ERCOT from implementing rolling blackouts or brownouts last summer, Spanjian and others now plan to press Austin lawmakers to create a program for the solar industry to thrive in sunny Texas when they meet for regular session next year.

Could solar have saved Texas $520M?


Any changes to state utility regulations must include a solar incentive program, something the Texas Renewable Energy Industries Association (TREIA) has lobbied for in two prior legislative sessions, failing both times. Odds for success next year are improving by the day, supporters say.

"We're very supportive of a statewide incentive, and so we definitely are going to be working as a legislator to try and support an incentive," Spanjian confirmed. "We're also hoping that the renewable energy portfolio will be changed to allow a portion of that to require solar."

The proponents of solar power in Texas have another ace up their sleeves -- the Brattle Group, an independent economic consultancy that is advising state regulators on its power woes and options to address it.

At the behest of the Solar Energy Industries Association (SEIA), Brattle Group analysts conducted a study to determine what Texas' power market would have looked like last summer had the state hosted higher levels of solar photovoltaic (PV) generation. Currently, Texas ranks low in terms of installed solar capacity, behind smaller states like Colorado, Arizona and New Jersey.

The Brattle Group study confirmed what most expected: Costs to Texas consumers would have been lower during the record summer heat of 2011 had the state held more solar PV capacity.

Based on their calculations, analysts concluded that the additional benefit to ERCOT customers had Texas held 1,000 megawatts of solar PV would have come to $333 per megawatt-hour, or $167.9 million total.

About 5,000 MW worth of capacity would have contributed to a net savings of $206 per megawatt-hour, but a total benefit of $520.3 million.

"There are essentially savings that result from lower wholesale energy prices," Jürgen Weiss, head of the Brattle Group's climate change practice, said at the report's release. "Solar PV may well have provided a cost-effective alternative to other options to increase the capacity in the system."

An 'obvious solution' for Texas

Report co-author Onur Aydin said the savings come from reduced demand drawn from other energy sources, as well as from anticipating savings gained from lower maintenance and operations costs associated with existing generating facilities that had to work overtime during the 2011 summer. Temperatures soared across Texas last summer, especially in August, as most of the state recorded weeks of consecutive 100-degree Fahrenheit days and the worst single year of drought on record added further pressure to the grid.

"As the system has more and more solar PV generation, what happens is the net demand that needs to be satisfied by other resources goes down," Aydin explained. "As a result, the energy prices would be lower than what you'd see without the solar PV resources."

SEIA officials said the Brattle Report's conclusions should push lawmakers to put a system in place that takes advantage of the state's abundance of summer sunshine.

The state's renewable portfolio standard has been met with wind, so one possible proposal sees increasing the minimum required amount of renewable generation and mandating a certain proportion of solar generation alone. Officials may also push for tax incentives or rebates to complement federal incentives and encourage homeowners facing higher energy bills to supplement their needs with solar systems.

"Just at a very fundamental and a basic level, solar is an obvious solution for Texas," said Carrie Cullen, vice president of state affairs at SEIA.

"We recognize that solar is a critical cog in the wheel," said Texas Clean Energy Coalition Chairman Kip Averitt. "Solar is uniquely positioned to supply power at affordable rates when demand is highest and other energy sources are either expensive, nonexistent or slow to market."

A former state public utility commissioner has also come out in favor of boosting the state's solar capacity through new rules. But most observers agree it will be up to state legislators to really kick things off, and there are several months to go before they return to regular session in Austin.

Beating the Legislature to the punch

Meanwhile, cities' leaders are hoping to get the state's business community and residents more interested in making their own investments before state lawmakers agree on something.

San Antonio and Austin, two municipalities that own and control their own power companies, are explicitly pushing them to build new solar power plants. Meanwhile, Houston was recently awarded a $1 million grant to install a system atop a new permitting center.

All three cities also won grants for a joint publicity blitz they are planning to get Texas residents more interested in the topic. Spanjian said that program will be key to communicating to Houstonians how much more affordable solar power systems have become in the past two years.

Ikea, meanwhile, is making a nationwide push to have PV panels on its rooftops. Earlier this week, the furniture giant switched on this city's largest solar power plant, a net-metered installation of 3,388 panels covering the roof of its Houston retail center. The installation makes the retailer the single biggest private owner of solar power generation in the state.

Spanjian agreed that fears of power shortages this summer will further strengthen their cause as she, other city leaders, TREIA and state environmentalists prepare to try again for a solar power law next year. In the meantime, she hopes highlighted individual examples like the Ikea effort will bring more businesses and homeowners on board.

"It shows that the private sector is actually taking an interest and really kind of walking the talk," Spanjian said. "Anything we can do to help promote that and tell people how cheap it is now to put on solar, the better it is for everybody."

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