Keeping the lights on in ERCOT

Aug 23, 2022
Reading Time: 3 minutes

If you live in Austin, Texas, you may have heard that this May 2022 was the hottest on record. So was June. And July. If you live anywhere in the United States, there’s a fair chance you’re one of the 100 million people facing heat advisories in over 28 states. Climate change arrived.


The heat is more than an oppressive backdrop to the Russian conflict in Ukraine: It is actually working in tandem with the conflict to create high electricity prices. Heat increases demand for electric cooling, pushing electricity markets to use the less efficient fossil-fired power plants. These fuel-guzzling plants are gulping down the most expensive fossil gas since 2008. Fossil gas is 2.5X more expensive than last year, and up to 7X more expensive since the start of COVID, thanks in part to Russian decisions to drastically cut the flow of gas to Europe, thereby raising global fuel prices. Fossil fuels are teaming up with climate change to create record-breaking wholesale electricity prices.

In ERCOT, there has been no reprieve from the heat. As a result, there have been 12 load records set just this year! Among the top 50 days for system load levels, 43 of these occurred this summer… and it’s only mid-August. Despite the strain, ERCOT’s grid has held strong, facing only one event that sent hourly prices to $5000, the (new) maximum price. 

So what has helped keep the lights on in ERCOT? 


It’s not hyperbole to say that newly-installed solar is saving Texas from blackouts.

Recorded solar generation in ERCOT has nearly tripled in the last three years, from 3.8GW in 2020, to 7GW in 2021 and 9.75GW in 2022. You can see the record setting solar traces in the figure below. Without the solar added since last summer, ERCOT would have had to shed 12.1GWh of load across 15 hours (assuming zero demand flexibility). 15 hours may still pale in comparison to the 105 hours of load shed during Uri, but Uri was an extraordinary weather outlier. This summer is neither one-off nor one event. It is the new climatic business as usual. If not for new solar, capacity shortfalls would have occurred in June, July, and August.


Solar isn’t the only energy asset getting attention in ERCOT. Storage capacity has also experienced substantial growth, increasing 140% YoY. At the moment, ERCOT’s storage is most active in ancillary service markets, meaning that it has yet to really flex its energy shifting emissions benefits. But this will change quickly as ERCOT is flooded with renewables.

Looking forward, the US$369 billion Inflation Reduction Act is expected to give a significant boost to solar, storage, and wind. Solar and wind are granted a Production Tax Credit (PTC) which offers a $26/MWh (and potentially higher) credit for all energy produced for 10 years. Storage will benefit from an investment tax credit (ITC) for standalone energy storage systems, bringing a reduction of about 30% to the capital cost of equipment. This bodes well for storage’s role in bringing additional stability to ERCOT in future years, especially given the relative speed with which storage systems can be built, compared to other grid-scale assets.