Coal is on it's way out in Texas! Period!

How do I know this?

I have worked as an electrical engineer in the belly of the beast for ten years now. Although I deal with many fossil assets, my office is located at a coal plant. I have personally benefited from the deregulated ERCOT market for quite a while. A lot of money was made in ERCOT during the buying and selling of power plants during the early days of deregulation. Of course non of it for the benefit of consumers, the environment, or the facilities themselves. The whole system was set up for profit of the cheapest power producer. When governor GWB approved the deregulation of the ERCOT market, wind and solar were not even an economic player in this scheme. Now they are. Rick Perry loves big projects. He pushed the Trans-Texas Corridor, Coal Plant Fast Track, CREZ wind development, etc... The only one that has proven to be economically viable is the CREZ wind development project. I know he would like to take credit for the Fracking boom in Texas as well. But I am not going to give him that much credit.

So here we are in Texas. Almost 18,000 MW of wind installed. As the CREZ lines max out, we will see a 15% average (40% peak) wind contribution to the ERCOT market. Now solar is about to take off. ERCOT is forecasting a 5-15% average solar contribution in the next 5-10 years. Natural Gas producers are licking their chops. As coal plants shutdown, renewables and gas plants take there place. I am sure that a push will occur to keep coal plants operational in Texas, but the natural gas industry is very strong in Texas. Natural Gas will make sure any potential fossil subsidies are "fair" to them and coal will still lose.

ERCOT has requested a lot of data from us in recent years. It has definitely kept me busy. They have requested specifics on our voltage regulators, tougher VAR testing, turbine frequency response testing,power system stabilizers, turbine/generator inertia data, etc. They are solidifying the models. The models have to be very accurate in a deregulated market with this much change occurring. They know what is coming.

Meanwhile, I am doing my year-end fuel reports. The last two years have been dismal for the coal assets. In addition, the renewing rail contracts are increasing because of a lack of demand. It is a bad feedback loop for coal.

It is actually an interesting thing to witness. Meanwhile, the folks that approved all of this are fighting regional haze and the clean power plan. Good luck with that. It gives them something to do.

In a nutshell. Happy Holidays!