WIND AND SOLAR SUBSIDIES INCREASE TEXAS ELECTRICITY COSTS

Bill Peacock

Executive Summary

Lower natural gas prices in 2019 led to declines in wholesale electricity prices in most areas of the country. This was not the case in Texas, where day-ahead, around-the-clock wholesale electricity prices averaged $38 per megawatt-hour (MWh), up 13% from their 2018 average.

The root cause of this cost increase were the massive distortions in Texas’ wholesale electricity market caused by renewable energy subsidies. Since 2006, wind- and solar-power generators in Texas have received about $19.4 billion in subsidies from federal, state, and local governments. In 2019, renewable subsidies totaled almost $2.4 billion.

Not only did Texans have to pay $3.1 billion for the electricity generated from renewable sources last year, they had to cover most of the cost of $2.4 billion in renewable energy subsidies that generators received. That equals about $67.9 per MWh for the 81.1 million MWhs generated by wind and solar generators last year. These costs show up on tax bills as well as electricity bills. 

Key Points

• Texas wholesale electricity prices jumped 13% in 2019, compared to drops from 15% to 30% in other markets

• Retail electric prices in Texas increased by 6.8% last year, more than the 1.3% increase in U.S. retail prices

• Renewable energy subsides in Texas last year cost $2.4 billion, and have totaled $19.4 billion since 2006

• Wind and solar generation have increased this year by 5,432,001 MWh. Natural gas, which has increased only 2,352,049, and coal has decreased by 7,351,523 Meh

• The all-in cost of wind and solar generation in Texas was $67.9 per MWh