On July 8, 2024, Hurricane Beryl swept through Texas, leaving approximately 2.2 million Houston-area customers without power. Although CenterPoint Energy was able to restore power to 1 million customers within 48 hours, the process was not completed until a full two weeks later. The widespread outages underscore the need for a more resilient energy grid. As extreme weather events become more frequent, Texas must look toward smart technologies—specifically smart inverters—to protect its power infrastructure and mitigate the impact of hurricanes and other disasters.
Inverters are one of the most important pieces in a solar power system. Their task is to convert the direct current (DC) created by solar panels into an alternating current (AC) that can be used by homes, businesses, appliances, and the power grid. Smart inverters are a newer technology that performs the same basic function but goes beyond it by using “smart” technology to optimize its grid support capabilities, such as voltage regulation, frequency support, and ride-through capabilities, as well as enhance solar system efficiency. These features allow smart inverters to play a critical role in maintaining grid stability during extreme weather and ensuring that power systems remain functional, even during disruptions.
By incorporating these advanced functions, smart inverters can respond dynamically to grid disturbances caused by storms, preventing issues like voltage drops and blackouts. Their ability to regulate voltage and maintain grid frequency during a storm helps avoid cascading power failures. This makes them a vital tool not just for ensuring power during extreme weather, but also for aiding post-disaster recovery, allowing communities and critical infrastructure to restore power more efficiently.
Building a More Resilient Grid with Smart Inverters
Islanding capability is one of the primary features of smart inverters that will resonate most with individual homeowners. When the grid goes down, these inverters can shift into a grid-forming mode, allowing them to operate independently and create localized power islands within a home. This ensures that essential appliances, such as refrigerators and lights, can keep running even when the broader grid is offline. This capability is particularly beneficial for homeowners who want backup power without investing in an expensive battery system. By relying on solar energy alone during the day, smart inverters can keep these key systems operational without the need for additional storage.
For those looking to further enhance their home’s resilience, pairing smart inverters with battery storage systems can amplify their functionality, allowing homeowners to maintain power during both short and extended outages. This is a valuable option for families who need continuous power for essential services like medical equipment or communication devices.
Smart inverters can also support critical community services like hospitals and emergency response facilities. In events like Hurricane Beryl, where millions of Texans lost power, smart inverters on existing solar systems could have enabled neighborhoods and key services to maintain power independently while the rest of the grid was being repaired.
Smoother Transitions and Faster Recovery
In addition to keeping critical systems running, smart inverters ensure a seamless transition when the main grid goes offline. By managing energy flow from battery storage systems, smart inverters prioritize essential loads, allowing homes to keep running crucial systems like refrigeration, medical equipment, and lighting during blackouts.
This level of control could have significantly sped up recovery efforts after Hurricane Beryl. Instead of waiting for the entire grid to be restored, sections powered by smart inverters could have kept functioning, relieving stress on CenterPoint Energy and other utilities, while simultaneously protecting vulnerable populations from the harshest effects of the outage.
Enhancing Grid Stability and Microgrid Functionality
Smart inverters also provide frequency and voltage regulation during times of instability, such as those experienced during hurricanes and their aftermath. They prevent further grid complications, like cascading blackouts or brownouts, by balancing grid fluctuations. For example, after Hurricane Beryl, smart inverters could have stepped in to stabilize the grid and maintain energy flow as the utility worked to restore power
Furthermore, smart inverters support black-start capabilities, enabling sections of the grid, or microgrids, to restart independently. This capability is vital during disaster recovery, allowing utilities to restore service faster by rebooting isolated sections of the grid without relying on external power.
In areas like Houston, which is vulnerable to hurricanes, incorporating microgrid technology could provide a much-needed layer of protection against future storms.
Streamlining Policy for Widespread Adoption
Texas should streamline its energy regulations to promote the adoption of smart inverters across homes and businesses. Other states with high renewable energy penetration have already begun updating their interconnection standards to include smart inverters as a requirement, ensuring that new solar installations are capable of contributing to grid stability and resilience. Implementing similar policies in Texas will not only enhance the grid’s reliability but also make individual homeowners more self-sufficient during extreme weather events.
Conclusion: A Solution for Homeowners and Beyond
For individual homeowners, smart inverters offer an affordable way to maintain essential power during outages, even without a battery backup. For communities, they provide a robust tool for stabilizing the grid and speeding up recovery after storms. By updating regulations and encouraging the adoption of smart inverter technology, Texas can strengthen its energy infrastructure and make it easier for both individuals and neighborhoods to withstand future disasters.
TXSES’s new report analyzes the economic impact of grid service interruptions caused by extreme weather events in Texas.
Executive Summary
The Texas Solar Energy Society (TXSES) is dedicated to enhancing Texas’s energy infrastructure. This report presents an analysis of the economic impact of grid service interruptions across Texas, a project led by our research department. In 2022, these interruptions cost the Texas economy an estimated $6.97 billion. This analysis is based on data from 68 Transmission and Distribution Utilities (TDUs), utilizing refined methodologies and comprehensive data sources. The findings aim to provide actionable insights and drive necessary grid reforms.
Introduction
A reliable energy grid is vital for Texas, given its significant economic role and the essential services reliant on continuous electricity. Historically, grid interruptions have posed severe challenges, disrupting daily activities and economic operations. The objective of this report is to estimate the economic impact of grid interruptions in Texas for the year 2022. By understanding these impacts, TXSES aims to advocate for policy reforms and infrastructure improvements to enhance grid reliability.
In the United States, the need for reliable backup power solutions is increasing due to frequent power outages and natural disasters. Solar storage systems and traditional generators are two prominent options for ensuring continuous power supply during outages. This report provides a comprehensive comparison of these two solutions, analyzing their pros and cons, feasibility, and market trends to help homeowners and businesses make informed decisions.
Solar Storage Systems
Pros: Solar storage systems offer several advantages. Environmentally, they produce no emissions, significantly reducing the carbon footprint compared to traditional generators. Users can store excess solar energy generated during the day for use at night or during outages, enhancing energy independence. Over time, solar storage can lead to substantial cost savings on energy bills, and these systems generally require less maintenance compared to generators. Additionally, solar storage systems operate silently, avoiding noise pollution.
Cons: Despite these benefits, solar storage systems come with some drawbacks. The most notable is the high initial cost, as they require a significant upfront investment for solar panels and storage batteries. Their efficiency can also be affected by weather conditions and geographic location. Furthermore, the energy capacity of solar storage is limited, which may not be sufficient for extended outages.
Feasibility (Price Analysis): The initial investment for solar storage systems, including costs for solar panels, inverters, and batteries, ranges from $8,500 to $10,000 per unit for systems like the Tesla Powerwall 2. However, federal and state incentives, tax credits, and rebates are available for solar installations, which can significantly reduce the overall cost. Over the system’s lifespan, users can expect long-term savings due to reduced utility bills.
Market Trends: The market for solar storage is growing rapidly, driven by increasing adoption rates and technological advancements. Leading companies in the industry include Tesla, LG Chem, Sonnen, Panasonic, and Enphase.
Generators
Pros: Generators provide immediate power during outages and are capable of supplying power for longer periods and larger loads. They have lower initial costs compared to solar storage systems and are relatively easy to purchase and install. Many generators are portable, allowing for flexible usage in different locations.
Cons: However, generators have several disadvantages. They typically run on fossil fuels, producing emissions and contributing to environmental pollution. Generators require a continuous supply of fuel, which can be expensive and logistically challenging. They are also noisy and require regular maintenance and fuel management.
Feasibility (Price Analysis): Generators are generally more affordable upfront, with costs ranging from $1,000 for portable models to $7,000 for whole-house models. However, they involve ongoing operational expenses for fuel and maintenance. The reliability of generators can vary based on fuel availability, especially during extended outages.
Market Trends: The generator market is sizeable and expected to grow, with innovations focusing on improving efficiency and reducing environmental impact.
Comparison and Conclusion
Suitability: Solar storage systems are ideal for environmentally conscious users with long-term savings goals. They provide a sustainable energy solution but come with higher initial costs and limited energy capacity. Generators, on the other hand, are suitable for those needing immediate, high-output power regardless of environmental impact. They are more affordable upfront but have higher long-term operational costs due to fuel and maintenance needs.
Cost-Benefit Analysis: Over time, solar storage systems offer better long-term savings despite higher initial investments, thanks to reduced energy bills and available incentives. Generators, while cheaper initially, incur ongoing costs that can add up over time.
Future Outlook: The future of backup power solutions is likely to see a shift towards more sustainable options like solar storage, driven by increasing environmental awareness and technological advancements. This shift is expected to be bolstered by government incentives and the rising costs of fossil fuels.
You’re probably aware that renewable energy is the future, but did you know that solar energy is set to lead the charge in the next few years? According to the latest Short-Term Energy Outlook from the U.S. Energy Information Administration (EIA), solar power generation in the U.S. is projected to skyrocket by 75% from 163 billion kilowatt-hours (kWh) in 2023 to an impressive 286 billion kWh by 2025. This explosive growth is driven by numerous new solar projects coming online.
In contrast, wind power is expected to grow more modestly by 11%, from 430 billion kWh in 2023 to 476 billion kWh in 2025. It’s a significant jump but pales in comparison to the solar sector’s growth.
The U.S. electric power sector generated 4,017 billion kWh of electricity in 2023, with renewable sources accounting for 22% or 874 billion kWh, according to research and analytics firm Ohm Analytics. This figure includes wind, solar, hydro, biomass, and geothermal energy. Interestingly, renewable power generation surpassed nuclear generation for the first time in 2021 and coal generation in 2022, highlighting the rapid shift towards cleaner energy.
However, not all news is rosy for other energy sources. Coal power generation is forecasted to decline by 18%, from 665 billion kWh in 2023 to 548 billion kWh in 2025. On the other hand, natural gas will remain the largest source of U.S. electricity generation, maintaining about 1,700 billion kWh annually. Nuclear power generation will stay relatively flat, with a slight increase from 776 billion kWh in 2023 to 797 billion kWh in 2025.
Current Market Analysis
Trends in the Solar Energy Market
Over the past few years, interest rates have significantly influenced the solar market. The market benefited from lower interest rates in 2021-2022, but faced a slowdown in 2023-2024 due to rising rates. Despite these challenges, demand trends have stabilized and shown signs of improvement in 2024, and fundamentals support a positive long-term outlook for distributed generation (DG) solar.
Regional Leaders
Permit trends in some East Coast markets including Massachusetts and Washington, D.C. have been more positive than the rest of the U.S. due to higher energy costs and incentives.
Key Sun Belt markets Texas, Florida, and Arizona YoY (year-over-year) permit issuance improved from a low of -38% YoY in January to -24% YoY in May. Observance of the typical seasonal ramp from January through late summer is a key indicator that the residential solar market is on a path to recovery, transitioning away from an adjustment year in 2024, and setting the foundation for long term growth in 2025 and beyond. A potential risk to sustained recovery in 2024, is a flattening trend through peak summer months, highlighting the importance of the continued monitoring of leading indicators that allow for the tracking of real time market trends.
In the long term, emerging regions on the East Coast and Midwest, such as Pennsylvania, Illinois, and Ohio, show significant growth potential due to reasonable payback periods, rising electricity prices, and supportive incentives.
Forecast for 2025
Predicted Growth
The forecast for 2025 is underpinned by rising residential electricity rates, which increased by 5% year-over-year as of March 2024, and by 30% over the past five years. Utility investments to address load growth and grid safety further support this trend. Installer financing product diversification and federal incentives are expected to drive growth, with 2025 likely rebounding from the low points of early 2024. Long-term projections anticipate a 4% compound annual growth rate (CAGR), driven by federal incentives like the Investment Tax Credit (ITC) and various state-specific rebates and grants, which make solar installations more financially attractive.
Rationale
Key drivers include rising utility rates, new rate cases, and increasing utility investments. Federal incentives such as the domestic content bonus and other ITC adders also play a crucial role. Additionally, consumer interest in sustainability and energy independence, coupled with increasing electricity rates and time-of-use pricing models, enhance the economic benefits of solar adoption. Technological advancements in solar panel efficiency and energy storage, along with innovative financing models, are expected to lower costs and improve the return on investment for solar systems.
Comparative Analysis
Compared to other analysts, the optimistic outlook for 2025 aligns with broader industry expectations. The EIA also forecasts significant growth in solar power generation, further validating the positive long-term prospects for the solar market. The upside scenario envisions a 6% CAGR, with interest rate reductions driving a faster recovery in Southern Belt states like Texas and Florida. The development of smart grids and virtual power plants (VPPs) will further enhance the appeal of solar installations by efficiently managing distributed energy resources and providing additional revenue streams for solar and storage system owners.
A Closer Look at Texas Solar Energy Market Predictions
Texas, a key player in the U.S. solar energy market, has experienced some notable fluctuations. In the first quarter of 2024, Texas saw an increase of 71 MW in residential solar capacity. However, this represents a 52% year-over-year decline. Several factors contribute to this downturn, including low electricity costs and challenges in the loan market, which have weakened market performance. Additionally, the exit of distressed players has also played a significant role in this decline.
Interestingly, despite these challenges, there are signs of optimism. The adoption of third-party ownership (TPO) has stabilized after rising in the second half of 2023, maintaining a market share of around 16% in the first quarter of 2024. More encouragingly, installers in Texas have reported sequential growth improvements throughout Q1. Leading indicator trends have shown a significant rebound, improving from a low of -52% year-over-year in December to -16% year-over-year in April.
One of the key strategies contributing to this positive trend is the ability of installers to offer lower costs, thanks to decreasing equipment prices. Additionally, utilizing a broader range of financing options has helped attract more customers. Despite the initial negative start to the year, these factors suggest potential for recovery.
Given the challenging start to 2024, we have slightly adjusted our forecast for the Texas residential solar market to a -29% year-over-year decline. However, the improving trends and strategic adjustments by installers provide a basis for cautious optimism as the year progresses.
Conclusion
The solar energy market is poised for significant growth in the coming years, driven by supportive policies, rising utility rates, and technological advancements. By leveraging detailed insights from Ohm Analytics, stakeholders can make informed decisions to navigate this dynamic market landscape. The growth of the solar energy market holds immense potential for the future of global energy, and stakeholders should consider these predictions in their strategic planning and decision-making processes.
References
U.S. Energy Information Administration. (2024). Short-Term Energy Outlook. Retrieved fromEIA.
Ohm Analytics. (2024). Solar Data Platform. Retrieved fromOhm Analytics.
Ohm Analytics Methodology
Ohm Analytics is a leading research and analytics firm specializing in the energy transition, providing a comprehensive data platform that tracks market volume, growth, pricing, and equipment trends across over 50 major metro areas in the U.S. Utilized by utility clean energy teams, solar financing companies, equipment manufacturers, technology firms, and service companies for strategic planning and business development, Ohm Analytics aggregates data from thousands of sources, including public records and proprietary partnerships, to build a robust database of solar projects. Their platform incorporates data at multiple points within the sales and installation pipeline, including contractors lead volume, sales activity, permitting, interconnection data, and industry commentary to offer a real-time view of the market. The analytical techniques and models employed by Ohm Analytics ensure high accuracy and reliability, supported by rigorous quality assurance and external channel checks.
In our ongoing commitment to strengthen Texas’s energy infrastructure, the Texas Solar Energy Society is proud to update our members on a crucial initiative. Spearheaded by our research team, we have embarked on a project to estimate the economic impact of grid service interruptions across the state due to the extreme weather events our state has been experiencing.
In our initial estimate, we encountered the problem of drawing on data from multiple sources, introducing the challenge of instrumentation bias if each source calculated the reliability indexes different. However, we have refined our methods and adjusted our focus to EIA-only, in order to take advantage of the more comprehensive data available. This change allows us to provide a more accurate and actionable analysis as we advocate for necessary grid reforms.
A significant hurdle was choosing the right data sources to accurately capture the frequency and duration of power outages. The PUCT’s Annual Service Quality Reports provided some insights but were limited to private TDUs and lacked comprehensive customer data. Thus, we opted for the broader and more detailed EIA 861 dataset, which aligns with the standards set by the Institute of Electrical and Electronics Engineers for 2022. This decision has enhanced the reliability of our preliminary estimates.
To date, we have completed estimates for 42 out of the 71 utilities, suggesting a potential cost of $2.065 billion in 2022 alone. We continue to seek IEEE-compliant data from other utilities and will update our findings accordingly.
The insights garnered from our detailed analysis not only quantify the financial impacts of grid interruptions but also illuminate the path forward for enhancing grid reliability. The Texas Solar Energy Society is committed to using this crucial data to advocate for comprehensive grid maintenance strategies that are not only responsive but also proactive. By presenting our findings to decision-makers, we aim to underline the economic necessity of investing in our grid infrastructure. This initiative will support the development of well-informed policies and funding allocations, ensuring that future grid interruptions are fewer and less severe. Our goal is to equip Texas with a robust and resilient energy system that can withstand the challenges of tomorrow, safeguarding our economy and enhancing the quality of life for all Texans.
As we proceed, your insights and inquiries are invaluable. For further information or to engage in this discussion, please contact Ethan Miller at ethan@txses.org, or Mohammad Alkhatib at mohammed@txses.org. Together, we can pave the way for more resilient energy solutions in Texas.
