Texas is scrambling to build renewables to meet demand and stabilize power prices in the far western part of the state, with grid load expected to double by 2040 as oil and gas companies electrify operations and the crypto mining sector expands, finds a new report.
After quantifying the potential electrification of oil and gas fracking operations in the Permian Basin, Enervus Intelligence Research (EIR) found that the load growth will support “significantly more renewable development without curtailments,” EIR senior associate Riley Prescott said in a release. Curtailment occurs when electricity production is reduced or stopped to balance grid supply and demand, and it’s been a persistent problem for renewables in the U.S.
“Within the next few years, the Far West (of Texas) will need a large power generation buildout to meet the forecast load growth,” Prescott added. “Without it, we expect power prices in the area will rise significantly.”
As oil and gas operations, which account for 15% of energy-related climate pollution worldwide, are targeted for decarbonization, fossil fuel companies have begun to electrify their facilities. Some of them are switching from fossil-fuelled drilling and refining equipment to electric alternatives, or using electric vehicles for transportation. This will result in a considerably larger grid load, says EIR, even though it won’t touch the climate impact of their actual product.
“Natural gas combustion, specifically compression, is the most practical emission source to electrify by connecting to the grid, as these emissions mostly come from stationary sites with long expected lives,” EIR writes, adding that a “fundamental shift” began in 2022, as load growth increased relative to wellhead gas production.
“This was due to early electrification efforts in the Permian Basin and a migration of cryptocurrency mining load to Texas following China’s crackdown on miners in mid-2021.”
Other digital energy consumers, like data centres, are adding to that load. “Historically, you’ve always been able to have years to contemplate a massive manufacturing facility coming online,” Electric Reliability Council of Texas (ERCOT) CEO Pablo Vegas recently said. “Now we’re seeing 500- and 700-megawatt data centres being built in a year.”
As grid load increases, EIR expects the region’s net power exports to “continue to decrease,” while electricity prices will “rise significantly” without additional generation capacity.
Low-cost renewable energy from West Texas’ ample wind and solar resources can help meet that anticipated load growth, the report says. “We see Far West Texas as a haven for wind and solar,” said Prescott.
The state’s deregulated energy market has also attracted battery developers, who have the advantage of a two- to three-year interconnection permitting process in Texas compared to five to seven years elsewhere. The industry has also benefited from the state’s pressing need for energy storage capacity, given its ample but intermittent renewable energy sources and its record of significant blackouts from extreme weather in recent years.
“That turbulence, plus the predictable swings from solar surplus to evening power deficit, produces ripe conditions for batteries to thrive,” writes Canary Media.
But while Texas’s free-market approach is a boon for battery developers, it might not elicit the same emissions reductions as other states with more regulation. Battery operators, when motivated only by profit, may store energy from fossil fuel sources rather than strictly from renewables, the New York Times reports.