By Patrice “Pete” Parsons, TXSES Executive Director
As we near the end of the hottest October in Texas’s recorded history (since the 1890s), with new daily highs set across the state, and at least for us in Austin, the latest calendar date to ever hit 100 degrees—44 days later than the average date of Aug. 30th—it is becoming increasingly clear that the heat in Texas, and the ways we deal with it, are here to stay.
Weather-related disasters have cost Texans more than $100 billion just since 2000, and we continue to struggle with natural disaster recovery. As we all know, Texas is a large state with wide-ranging challenges: while some regions deal with drought and water shortages, others experience unseasonable heat waves; and still others find themselves hit by flooding and hurricanes. Homeowners insurance is increasingly hard to find in the state. Gas supply issues that caused the devastating Winter Storm Uri blackouts in 2021 continue to loom over the grid. And electricity is only getting more expensive for consumers.
The good news is that a significant amount of solar has been added to the Texas grid in the last few years, particularly after the painful summer of 2023—the second hottest summer in Texas history, after 2011—in which Texans suffered through 105-degree highs for over 61 days. From late 2022 until the beginning of summer 2024, 10,000 megawatts of solar has been added, and Texas continues to grow it’s solar input by 54% each year.
This summer, solar saved us from ERCOT’s forewarned conservation requests and the threat of brownouts, rolling or otherwise, and the price of energy dropped accordingly. It turns out that solar is the perfect match to meet high energy demand (& therefore expense) caused by hot, late afternoon AC use—traditionally the most challenging time of day for the Texas power grid. Wind and batteries can pick up the dropping demand overnight as winds pick up and temps cool off. Renewable resources not only power Texas through periods of peak demand, they also lower the price of wholesale power. The record summer heat of 2023, along with aging and failing gas & coal plants, led to the highest prices that year. This year, solar and storage, along with lower temperatures, helped keep costs lower.
Despite the success of solar and renewables in maintaining our grid and keeping the power on, not to mention their popularity amongst Texans (new polling from SEIA found that 73% of Texans believe that solar and battery storage make the grid more resilient & a majority oppose proposals that impose higher fees and more regulatory hurdles for solar projects), the state legislature continues to sideline them. Recent public hearings mentioning battery storage projects tended to focus on neighbors’ concerns (see Business and Commerce Committee), rather than the extremely vital job of keeping air conditioners on and lowering energy prices during hot summer nights.
In response, TXSES is continuing with plans advocating for legislation that should help the overall adoption of more rooftop solar. This includes new legislation on the adoption of SolarApp, free software that municipalities can use to make the solar permitting process much quicker; some consumer protection legislation; and new recommendations to the Public Utility Commission (PUC) on fair credit for distributed solar consumers from their energy providers. Additionally, we are working with the PUC to create a new interconnection rule that should ease the way for homeowners trying to get rooftop solar connected to the grid in a way that keeps some power at their home, regardless of the grid’s condition.
by Patrice “Pete” Parsons, TXSES Executive Director
The devastation caused by Hurricane Beryl this summer left millions of Texans reeling, including nearly 3 million in the Houston area who were without power in 100+ degree temperatures, with many still out weeks afterwards. Throughout the outage, one thing became crystal clear: localized distributed energy resources (DER), particularly solar with storage, saved the day—for those who had it.
Several of our Business Members who work in the Houston area have shared the experiences of their customers with solar and storage post-Beryl in the media. They were able to keep the power on, including AC, for the entire time the rest of the city was out. Many were able to help their neighbors, to boot. (See links to articles about them in the August 2024 Solar Report.)
The severity of the storm’s aftermath led Lt. Gov. Dan Patrick to quickly announce the creation of a Senate Special Committee on Hurricane and Tropical Storm Preparedness, Recovery, and Electricity in mid-July, to investigate why electric utility companies (mainly CenterPoint Energy) were unable to restore power in a timely manner following Beryl. In addition, the City of Houston is now adding the new post of Resiliency Director to its Resilience & Sustainability Office in order to focus on better storm response. We hope that solar and DER will be given their due in these responses.
The federal Energy Information Administration ranks Texas third in the U.S. for small-scale solar electricity generation (less than 1 megawatt), after California and Arizona, however, Texas ranks 20th when considering per-capita. This means there is plenty of room for growth. As more homeowners consider adding energy backup services, such as solar batteries and generators, to their homes in response to weather-related grid instability, they may find that upfront costs are vastly different. However, once fuel, maintenance, and other considerations are taken into account, they become much more comparable in cost. SeeTXSES intern Mohammad Alkhatib’s report for more details.
TXSES has also just released, “Texas Grid Reliability: 2022 Interruption Cost Analysis,” a report that analyzes the economic impact of these grid service interruptions caused by the extreme weather we are having across Texas. Our research team found that in 2022, such interruptions cost the Texas economy an estimated $6.97 billion. Their findings are based on data from 68 Transmission and Distribution Utilities (TDUs) and aim to provide actionable insights and drive necessary grid reforms.
Our reports, and others, find that distributed solar has become increasingly vital in the last few years as these challenges arise more and more often, threatening the stability of the Texas grid. In fact, this month alone, solar has already contributed up to 25% of the daily power used by ERCOT and has so far prevented the rolling brownouts that ERCOT had warned could happen in August.
By Patrice ‘Pete’ Parsons, TXSES Executive Director
Until Hurricane Beryl, the biggest news in Texas energy this summer had stemmed from ERCOT Chief Executive Officer Pablo Vegas’s mid-June announcement to state legislators that demand for power in the ERCOT regions of Texas could nearly double by 2030—a number much higher than previously estimated. The news stunned the Senate Business and Commerce Committee he was presenting to and led to much speculation about why this was the first they had heard about it.
Mr. Vegas had already shared these numbers at ERCOT’s May Summit, however, which I had attended, and where he also dropped the bombshell that Texas is facing a $13.9bn price tag to add enough transmission capability to keep up with our overall power needs over the next ten years.
Summer net peak demand is expected to grow from its current 82 GW to about 163 GW by 2030 due to an increase in large power users coming online, such as data centers, crypto mining, electrification, and hydrogen production. This is approximately 40GW more than last year’s estimate. The bump is the result of a new law passed in the last legislative session requiring ERCOT to include companies’ grid connection requests before they are finalized, whereas before they were not allowed to be included.
Before Mr. Vegas’ announcement, I had joined with colleagues at Solar United Neighbors and Public Citizen to form the Texans for Local Energy Freedom Coalition and explore possible solutions for utilities to reimburse rooftop solar owners and offset the cost of solar being fed back into the grid. The coalition determined the need first for a study that would define the true costs and value of solar per kilowatt hour in ERCOT regions in order to prove we had the correct market signals for those that either already have solar or those considering adding rooftop solar.
We are proud to share that the Value of Residential Solar in Texas report was released this past week, on Tuesday, July 16th. TXSES was able to secure a grant from the Cynthia and George Mitchell Foundation and commission Dunsky Energy to prepare the study. The release was accompanied by an online press conference (click to see recorded video) and press release. You can read the full report on our website: Value of Residential Solar in Texas.
Value of Rooftop Solar Findings
The report points out that if “generation and transmission buildout does not keep up with the pace and magnitude needed to support the anticipated increase in electric demand, ERCOT could face a significant capacity shortfall and a threat to its system reliability.” Adding that, “Distributed Energy Resources (DERs), such as rooftop solar, will play a crucial role in meeting emerging system needs and can alleviate constraints on the generation and transmission system.”
Among the report’s important conclusions, it found that energy supplied by rooftop solar in Texas is much more valuable than the average kilowatt-hour sent to the ERCOT grid by other means. It notes that ERCOT’s total installed rooftop solar capacity is currently at less than 3% of its potential capacity, and that “this is primarily due to inconsistent solar compensation policies among non-competitive utilities,” which send the wrong market price signal to homeowners. “Utilities must provide fair compensation for the full electric system benefits these systems offer the grid to ensure that rooftop solar PV continues to contribute to system reliability.”
The report’s key findings:
Solar offers substantial benefits to Texas’s grid: With the anticipated increase in electric demand, Texas needs all available generation and demand response tools. Even with the forecasted rise of rooftop solar, a significant amount of additional energy will need to be generated. Rooftop solar will alleviate some of the burden on the utilities and the state by reducing the additional infrastructure needed. The analysis found that in 2025, the overall value of solar in ERCOT will be about 27¢/kWh. About 55% of the total value (15¢/kWh) is realized in the generation, transmission, and distribution system, while the remaining 45% (12¢/kWh) is realized through air pollutant and emission reduction benefits.
Among the grid benefits, the largest component is avoided energy costs (9¢/kWh), followed by (ii) wholesale price suppression benefits (1¢/kWh). These savings are substantial because solar panels generate energy at times when wholesale energy prices tend to be high.
In 2025, the benefits from reducing greenhouse gas pollution (10¢/kWh) make up 90% of the overall public benefits, followed by benefits from reducing air pollutants that are harmful to human health (2¢/kWh). However, this value is expected to decrease significantly over time as the overall energy supply in ERCOT becomes cleaner.
The current export credits may not accurately reflect the value of solar: Retail Electricity Providers offer a wide range of export credits for customers with solar, ranging from 3¢/kWh up to 19¢/kWh. This disparity exists because utilities have different ways of evaluating the grid benefits of solar. Typically, utilities do not consider solar’s additional benefits to the wholesale market, such as avoided risk premium costs, ancillary costs, and price suppression benefits, as well as its benefits to the T&D system in the form of avoided transmission and distribution capacity costs. As a result, these export credits may not accurately reflect the full value that solar provides to the system.
Solar PV provides several intangible benefits: In addition to the values listed above, distributed solar provides significant benefits to the Lone Star State.
Job and Local Economic Impacts: Distributed solar can stimulate local economies by providing employment opportunities. Construction of one MW of residential solar could result in 12 to 20 full-time equivalent direct jobs that year. In addition, solar can bring stable and predictable revenue streams to communities through employee wages and the local supply chain involved in installing and maintaining solar PV systems.
Poverty Alleviation and Energy Equity: Solar energy addresses environmental justice concerns and can promote poverty alleviation and energy equity through electricity bill savings and buffer against price volatility.
The study, Value of Residential Solar in Texas, assesses the technology’s benefits to this fast-growing state.
The study shows that the overall value of distributed solar in ERCOT will be about 27¢/kWh, with 15¢/kWh realized in the generation, transmission, and distribution system and 12¢/kWh realized through air pollutant and emission reduction benefits. Rooftop solar is valuable because it mitigates constraints on the generation and transmission system, reduces harmful emissions from air pollutants, and stimulates the economy through local job creation. Further, when paired with energy storage, it can improve grid resiliency and reliability during severe weather events.
The study details how rooftop solar:
Provides cost-savings to Texans within the ERCOT electric grid, including reducing the need for new costly infrastructure needed to meet electricity demand
Improves public health by reducing air pollution from combustion-fired electricity generation, and lowering greenhouse gas emissions
Additional benefits that are real, but not calculated, include job growth, boosts to local economies, alleviating poverty, and energy insecurity
“As Texas grows and the demand for electricity increases, our analysis demonstrates the value that customer-sited solar brings to Texas.” said Anirudh Kshemendranath, a Senior Consultant with Dunsky Energy + Climate Advisors, the firm commissioned by TXSES for the study. “Customer-sited solar has the potential to alleviate grid constraints and reduce costs for all ratepayers and if valued correctly, can be an important tool to support energy reliability and affordability for all Texans.”
Another recent study details how a patchwork of policies at municipal, cooperative and monopoly investor-owned electric utilities across the state chronically undervalues energy sent to the grid from rooftop solar installations. The same is true for competitive retail electric providers in Texas. Without a fair value of solar, homeowners may decide rooftop solar is not worth the investment, or decide against adopting the technology altogether.
“I first installed solar at my home in 2012,” said Larry Howe, a Plano homeowner. “It was a great decision then, but honestly, it’s harder and harder for folks to justify today given how solar policies vary depending on where you live and which utility covers your area. What a homeowner can get back for the electricity they don’t use is a big factor in their decision to make the financial investment in rooftop solar. Homeowners like me need more certainty that solar compensation rates will be fair the day their panels are installed and 10 or 20 years from now.”
As ERCOT faces challenges maintaining reliability and as market prices increase, many Texas utilities and retail electric providers have slashed the rates they pay customers for energy from rooftop solar, and some have adopted additional monthly fees for customers with rooftop solar. These changes provide a financial disincentive for customers considering rooftop solar.
“If state leaders are serious about keeping the grid stable and affordable, it’s time for them to step in and adopt statewide policies to ensure fair compensation for homeowners and businesses that supply energy from solar installations to the distribution grid,” said Alison Silverstein, a former advisor for the Public Utilities Commission of Texas. “This state had a deadly power outage during Winter Storm Uri and several close calls that we will continue to have for the foreseeable future. Rooftop solar is a key part of avoiding an energy crisis. We just need some regulatory certainty coming from Austin.”
In addition to rising demand, Texans have faced increasing costs to power their homes and an electric grid vulnerable to extreme weather events. Winter Storm Uri in February 2021 and the recent Hurricane Beryl left millions without power. The possibility of targeted blackouts has become a yearly occurrence during the summer months of dangerous heat. Supporting rooftop solar can lower some risks and keep Texas powered and running.
About the Texans for Local Energy Freedom Coalition
The Coalition was created by a group of non-partisan organizations — Texas Solar Energy Society, Solar United Neighbors and Public Citizen — to explore possible solutions to what utilities need to reimburse rooftop solar owners to offset the cost of solar being fed back into the grid. The discrepancy and unfairness that homeowners are being paid is sending the wrong market signal for homeowners to adopt solar and the possibility of adding storage to their homes. This discourages homeowners and commercial applications when the state needs ALL options and the grid needs power.
SEIN seeks to overcome barriers to solar adoption by connecting teams of stakeholders that are pioneering new ideas with the resources they need to succeed. SEIN is funded by the U.S. Department of Energy Solar Energy Technologies Office and is led by the National Renewable Energy Laboratory (NREL).
Abstract: As part of the SEIN Round 3 program, a diverse group of energy stakeholders in Texas set out to develop and pilot new pathways to increase rooftop solar adoption at no upfront cost to low income households. One potentially promising pathway we identified involved combining funding from existing utility and federal programs promoting weatherization and energy efficiency. Our objective was to demonstrate pilot projects that equitably deployed rooftop solar to properties owned or rented by families in disadvantaged communities. Our goal was to create a clear path for low income households to achieve electricity bill relief and to access clean energy by leveraging existing utility energy efficiency programs with existing federal resources, such as the U.S. Department of Health and Human Services (HHS) Low-Income Home Energy Assistance Program (LIHEAP) and/or U.S. Department of Energy (DOE) Weatherization Assistance Program (WAP) funding in Texas. This has been attempted in a few other states with varying degrees of success, but not yet in Texas.
Texas Solar Energy Society (TXSES): Austin Lead
TXSES is a nonprofit, statewide organization that provides education on the critical importance of solar. TXSES advocates for policies that will grow a diverse and equitable solar industry, build healthy and resilient communities, support well-paying jobs, and lay the foundation for a 100% clean energy future.
Role: TXSES coordinated the project in the Austin area and provided educational materials to the stakeholders.
Austin Area Urban League (AAUL)
AAUL is a nonprofit community-based organization that works to build a foundation for social and economic equity and equality. They provide a myriad of services, including weatherization, workforce development, health, and education programs.
Role: AAUL identified households that met both income eligibility and home structure requirements for the rooftop solar funding sources. They are also working with TXSES to provide education to community members about the benefits of solar.
Austin Energy
Austin Energy is the municipally owned electric utility that serves the City of Austin. Role: Austin Energy is providing funding for the Austin pilot PV systems through its solar rebate program.
