Solar, battery capacity saved the grid; an uncertain future awaits

DALLAS — There is a growing risk that the solar power and utility-scale batteries the Texas power grid relied on last summer may be inadequate to meet an expected surge in electricity demand in coming years. Additionally, extreme cold poses different challenges for solar and battery output to overcome than extreme heat, according to a new study published by the Federal Reserve Bank of Dallas.

As the Electric Reliability Council of Texas (ERCOT) forecasts accelerated load growth due to anticipated data center construction and electrification trends, the current generation mix and market design should garner increased scrutiny, wrote the study’s author Garrett Golding, assistant vice president for energy programs at the Dallas Fed.

“Rising solar and battery output in ERCOT clearly enabled a summer of triple-digit heat without the close calls of previous summers and with lower prices to boot,” Golding wrote. “However, the ground is beginning to shift as load is poised for a long climb higher and expected generation installation gets pushed to its limits.”

Other key points in the post include:

Between 11a.m. and 2 p.m. in summer 2024, solar output averaged nearly 17,000 megawatts (MW) compared with 12,000 MW during those hours in 2023. Between 6 p.m. and 9 p.m., discharge from battery facilities averaged 714 MW in 2024 after averaging 238 MW for those hours in 2023.

On Aug. 20, when a new load record was set, battery discharge also set a record of 3,927 MW at 7:35 p.m. that evening. ERCOT avoided sending a conservation appeal on that day. Solar and battery output have continued to grow since then.

972 MW of new thermal power plant capacity is expected to enter service within the ERCOT area by summer 2026 versus an additional 22,991 MW of new solar generation.

Peak load can occur early in the morning before the sun rises on cold winter days (when solar can’t contribute any output). Peak load can last for a longer period, too, straining the typical one- to two-hour discharge capacity of the current battery storage fleet within the ERCOT service area.

Market signals are required for development of adequate generating capacity to meet the highest load scenario, even if that scenario is just for one hour over the course of an entire year—or longer, Golding wrote.

“ERCOT’s energy-only market design and new incentive structures such as the Texas Energy Fund do not appear adequate for the magnitude and speed of load growth ERCOT forecasts,” Golding wrote.