Don’t Worry About Coal Shutdowns, Texas -- Wind’s Got This

  • New wind, solar, gas plants to offset coal shutdowns: analysts
  • Texas set to add as much as 11 gigawatts of wind power alone

Texas stands to lose 6 gigawatts of coal-fired electricity generation, enough to supply as many as 3 million homes. And the power market may not even flinch.

In fact, electricity prices could fall with the Lone Star State set to add as much as 11 gigawatts of wind power from 2015 to 2018, more than making up for coal shutdowns, according to CreditSights Inc. analysts including Andy DeVries and Greg Jones. Texas has 2 gigawatts of solar and at least 1 gigawatt of new gas-fired generation coming online, they said in a report Wednesday.

“These coal retirements in Texas are the only glimmer of hope left in this sector that is plagued with weak power prices and negative headlines,” DeVries said by e-mail. “Unfortunately, we ran the numbers and just don’t see the bull case so many investors are hanging on to.”

The surge in Texas’s renewable power resources underscores how the power generation mix across the entire nation is shifting as wind and solar farms become cheaper to build and coal-fired plants grow more costly to keep in service. Renewable power made up about one-eighth of all electricity generated in the U.S. last year and accounted for two-thirds of all new capacity installed, based on government data.

Related: Coal’s Cruel Fortune: Its Biggest Market Is Also the Windiest

In Texas, “look at companies like NextEra,” Jones said. “They’re spending a lot of money along that wind corridor” stretching from the Texas panhandle up to North and South Dakota, he said.

Still, the authors cautioned that continued population growth, coal plant retirements beyond expectations or higher natural gas prices could potentially boost power prices.

Wind and solar projects are “putting downward pressure on wholesale prices and hurting all of the other generators in the market,” Nicholas Steckler, an analyst at Bloomberg New Energy Finance, said in an interview Wednesday. “Coal in particular looks to be the technology most likely to drop-off because of the costs of emissions requirements.”

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