The Texas Senate just passed a bill to incentivize new
dispatchable generation, mainly natural gas. This involves a dispatchable power
credits trading program that requires utilities, generation companies, and
electric cooperatives in the Electric Reliability Council of Texas (ERCOT)
territory to offset new renewables and battery capacity — with an equal amount
of new dispatchable capacity beginning as early as next year. The bill excludes
batteries as a dispatchable source of power. Detractors argue that due to long wait times for gas turbines which I
wrote about earlier this month. Projected power demand increases due to AI,
onshoring of manufacturing, and electrification are the main reasons for the
supply chain delays for gas turbines. According to Utility Dive’s Brian
Martucci:
“S.B. 388 requires the Texas Public Utilities Commission
to establish a program through which covered utilities and power generation
companies would buy dispatchable power credits to cover any deficit in
dispatchable generation capacity under the companies’ ownership or control.
Each megawatt of qualifying dispatchable capacity would qualify for one credit,
the bill says.”
“The PUC must activate the credit trading program if it
“determines that dispatchable generation may provide less than 55 percent of
all new generating capacity installed in the ERCOT power region after January
1, 2026,” the bill says.”
The gas turbine wait times
issue means that even with a goal of incentivizing gas resources to meet rising
demand, it may not happen in time to meet that demand if non-dispatchable
resources like wind, solar, and batteries are stifled in favor of gas. Texas
power-sector analyst Doug Lewin wrote:
“The bill is “the most heavy-handed, anti-market kind of
legislation … [that] would bring economic growth in Texas to a screeching halt”
amid supply chain issues that have pushed gas turbine deliveries out to 2030 or
beyond.”
“The bill would bring economic growth in Texas to a
screeching halt. Supply chain issues are making it historically difficult to
build gas plants — however one feels about clean energy vs. fossil fuels, we
should ALL agree that the state needs to bulk up on renewables and storage at
least long enough for the gas-turbine supply chain to get replenished. Gas
turbines, unless already booked, can’t be had until 2030 or beyond. Renewables
and batteries have become, ironically, a bridge to gas.”
Clearly, with demand set to skyrocket, Texas needs both dispatchable gas generation, renewables, and batteries. The state has already incentivized natural gas generation through the Texas Energy Fund (TEF) which I wrote about in August 2024. The bottom line is perhaps that gas is desperately needed but in the near term so are renewables.
References:
Texas
Senate passes bill to establish ‘dispatchable’ power credits trading program.
Brian Martucci. Utility Dive. March 24, 2025. Texas
Senate passes bill to establish ‘dispatchable’ power credits trading program |
Utility Dive
The
Texas Senate Is a Threat to U.S. Energy Security. Doug Lewin. The Texas Energy
and Power Newsletter. March 19, 2025. The Texas
Senate Is a Threat to U.S. Energy Security
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