Texas Senators Vote to Overhaul State's Electric Grid: What Changes Are Coming?
The Texas Senate recently passed a package of energy reforms that includes a $10 billion “energy insurance program” to improve grid reliability by developing new gas-fired power plants capable of providing 10,000 MW. The plants could receive a regulated rate of return up to 10% per Bloomberg. SB 6 would establish the Texas Energy Insurance Program outside of the competitive market while another bill, SB 7, would create a new ancillary service for dispatchable generators while also imposing new fees.
The package seeks to establish the long-term runway of “dispatchable” electricity — likely gas-powered plants — over renewables. However, while blackouts have fallen in conjunction with the rise in renewable generation, Texas Republicans have largely blamed wind and solar energy for the state’s electric woes.
The state's robust renewables sector is a result of the state's favorable wind and solar resources as well as an incentive program dating back to the early 2000s that helped renewable energy grow to 39% of the state's electricity portfolio. In addition, rising electricity demand in Texas has been driven by the migration of new residents to the state. Still, the Senate bills focus on incentivizing the creation of new "dispatchable" resources.
The package has received mixed reactions, with some welcoming it as an effort to address the state's electricity problems while others see it as a move away from renewable energy. The package will face a tougher fight in the House, with its stronger caucuses of both Democrats and more independent Republicans. It remains to be seen how the package will ultimately impact Texas' energy landscape, which has shifted significantly in recent years with the rise of renewables.
