The Deregulation Revolution That Started It All
Something remarkable happened in the late 1990s that nobody saw coming. Texas Governor George Bush signed Senate Bill 7 in 1999, saying “Competition in the electric industry will benefit Texans by reducing rates and offering consumers more choices.” The wholesale generation market was deregulated in 1995 and the distribution market in 1999, completely changing how electricity worked in the state.
The old utilities, then monopolies on energy, were each “unbundled” and broken into three companies: generation (power plants), transmission (power lines) and retail (customer service and billing). HL&P split into Reliant Energy, CenterPoint Energy and Texas Genco, creating a competitive marketplace where renewable energy could finally compete on price.
ERCOT’s Unique Independent Structure
In 1935, the Federal Power Act was passed and gave the federal government the authority to regulate interstate transactions of electricity. As a result, the Texas Interconnection was eventually established to avoid selling or purchasing electricity from other states and to establish freedom from federal oversight. ERCOT was created in 1970 and is responsible for overseeing the reliable transmission of electricity to the power grid that serves more than 26 million Texans.
Texas has its own electricity grid, run by the Electric Reliability Council of Texas, and a market that requires owners of power plants to compete on price. This is different from most of the country, where power plants have guaranteed profits under state regulation. Texas also is friendly to developers in terms of obtaining permits to build projects and connect to the grid. This, too, is different from most of the country, where developers often need to work through years of obstacles from local governments, state regulators and regional grid operators.
Wind Power Takes Off Like a Rocket
For the past 17 years, Texas has led the U.S. in wind energy production. In 2022, Texas had 40,556 MW of installed capacity — more than a quarter of all wind-sourced electricity in the U.S. If Texas were a country, it would rank fifth in the world; the installed wind capacity in Texas exceeds installed wind capacity in all countries but China, Germany and India. Texas produces the most wind power of any U.S. state.
Between 2014 and 2023, the amount of electricity generated by Texas wind power increased from 40,005 thousand megawatt hours (MWH) to 119,836 thousand MWH. While Texas’ wind generation nearly tripled, total U.S. wind generation grew at a lesser rate, showing how Texas dominated this expansion. Texas led the way in electricity produced from wind, generating 28% of all U.S. wind power in 2024. Texas generated almost three times more wind power than the next biggest wind energy-producing state (Iowa).
The Solar Explosion That Nobody Expected
Here’s where things get really wild. Texas generated more solar energy in 2023 alone than all in-state solar generation before 2021 combined. Texas produced 31,739 GWh of solar energy last year, up from 446 GWh in 2014. Texas now generates 7,016% more solar power than it did in 2014.
In 2013, solar power generated 282 thousand MWH in Texas. Last year, Texas solar power generated 27,401 thousand MWH, a 9,705% increase from 2013. Texas installed more solar capacity than any other state last year, which likely contributed to a 25% increase in the state’s solar energy production between 2022 and 2023. That’s not just growth – that’s a complete transformation happening at breakneck speed.
Battery Storage Emerges from Zero to Hero
Battery storage did not exist in Texas until 2014, now we’re second in the country. As of 2023, Texas has installed 3.42 gigawatts of battery storage capacity. This ranks Texas second in the country. Currently, ERCOT has 5,242 MW of operational battery storage capacity; by the end of the year, the figure is expected to more than double to 10,923 MW. And more storage is on the way in 2025, with ERCOT data showing another 6,210 MW in the advanced development stage.
Storage is ideally suited for shifting solar generated during lower demand periods in the midday to hours of higher need, particularly during early morning hours in the winter and late afternoon/early evening peak periods in the summer. This technology is solving one of renewable energy’s biggest challenges – what happens when the wind isn’t blowing and the sun isn’t shining.
Breaking Records Like It’s Nobody’s Business
Over 70% of the energy Texans used Sunday came from wind and solar power — a record for the state power grid. Solar generation in ERCOT jumped 46% in January, rising to 2.2 million megawatt-hours (MWh) from 1.5 million MWh in 2023. The sharp increase was highlighted by three solar records during the month.
The first occurred Jan. 16 at the height of a strong winter cold snap. Output climbed to 14,837 megawatts (MW), accounting for 23% of total system demand. The second two records were set on Jan. 28, when solar hit new highs both for generation at 15,222 MW and for market share at 36.1%. These aren’t just numbers – they represent a fundamental shift in how Texas powers itself.
The Renewable Portfolio Standard That Made History
The Texas Renewable Portfolio Standard was originally created by Senate Bill 7 and signed by Governor Bush in 1999, which helped Texas eventually become the leading producer of wind powered electricity in the U.S. The RPS was part of new laws that restructured the electricity industry. The Texas RPS mandated that utility companies jointly create 2000 megawatts (MW) of new renewable energy by 2009.
In 2005, Senate Bill 20, increased the state’s RPS requirement to 5,880 MW by 2015, of which, 500 MW must come from non-wind resources. The bill set a goal of 10,000 MW of renewable energy capacity for 2025, which was achieved 15 years early, in 2010. Texas exceeded the 2025 goal in 2009, mostly because of the state’s many wind farms. At the end of 2023, Texas had more than 57,000 megawatts of utility-scale generating capacity fueled from all renewable sources.
Economics Driving Everything Forward
There were times Sunday when renewable energy was also trading for free on the Texas grid thanks to federal tax incentives. That should, eventually, help bring electricity bills down for consumers. Coal-fired power plants continue to close, largely because they are more expensive to operate than alternatives.
The wind power industry has also created over 24,000 jobs for local communities and for the state. Texas is seen as a profit-driven leader of renewable energy commercialization in the United States. Wind power is a for-profit enterprise between land owners and wind farm operators, creating new revenue streams for rural communities across the state.
The Massive Scale Nobody Talks About
Texas generated 169,442 gigawatt-hours from wind, utility-scale solar and small-scale solar in 2024, which is significantly more than the runner-up, California, which generated 92,316 gigawatt-hours from those resources. Texas produced 172,915 thousand megawatt hours of electricity using renewable energy sources. That made up 30.0% of its total electricity, which ranked 14th.
In 2023, Texas led the nation in utility-scale wind-powered electricity generation, producing nearly three-tenths of the U.S. total. Total solar net summer generating capacity at the state’s large- and small-scale facilities rose to almost 18,500 megawatts at the end of 2023. Solar energy accounted for about 6% of the state’s total electricity generation in 2023. These numbers represent industrial-scale transformation happening in real time.
Solar Generation Overtaking Coal
This new capacity sets the stage for a momentous shift at ERCOT this year, when solar generation is likely to top coal-fired generation. In its latest short-term energy outlook, the Energy Information Administration (EIA) projected that solar generation in ERCOT will increase by 24 million MWh in 2024, while coal’s output will drop by 14 million MWh. Combining those forecasts puts solar generation at 56 million MWh by year’s end and coal-fired generation at a projected 48 million MWh.
The increase in solar power generation in Texas has come as solar capacity has been rapidly added to the grid. In 2023, installed solar capacity in Texas totaled about 16 gigawatts (GW). Power plant developers are planning to add around 24 GW of solar power net summer capacity to the grid in 2024 and 2025, compared with only minimal wind additions during the same period.
Natural Geography Meets Smart Policy
Several forces are driving the growth of wind power in Texas: favorable wind resources and land availability, State targets for renewable energy, cost efficiency of development and operation of wind farms, and a suitable electric transmission grid. The broad scope and geographical extent of wind farms in Texas is considerable.
The wind resource in many parts of Texas is very large. Farmers may lease their land to wind developers, creating a new revenue stream for the farm. Texas has abundant renewable energy resources and is first in the nation in wind-generated electricity. With a significant number of sunny days across vast distances, Texas is among the leading states in solar energy potential and generation.
The Future Pipeline Is Absolutely Massive
More records will be forthcoming, as massive amounts of new PV capacity are expected online in ERCOT over the next two years. As of January, 22,258 MW of PV capacity were operational. Half of Texas’ new generation capacity in 2024 will be solar, matching that of the U.S.’ Wind will only make up 10 percent of the state’s additions. Texas will also see the addition of 3.5 GW of natural-gas-fired turbines.
Solar power will be roughly half of all new electric-generation additions in both Texas in 2024, showing how the state continues to lead the renewable transition. ERCOT data shows that an additional 13,153 MW of solar capacity could be operational in 2025, so the gap between the two resources will only continue to widen.
What Started This Whole Thing
The transformation didn’t happen overnight. Wind power has a long history in Texas. West Texas A&M University began wind energy research in 1970 and led to the formation of the Alternative Energy Institute (AEI) in 1977. AEI has been a major information resource about wind energy for Texas.
Texas electricity regulation dates back to World War II. At that time, utility companies created the Texas Interconnected System (TIS), which provided power to factories aiding the war effort. The TIS quickly determined that a connected power supply system generated lower prices for customers and continued using the system after the war. What began as a wartime necessity became the foundation for America’s most innovative energy market.
The numbers tell an incredible story. Texas went from being just another state with some wind farms to generating nearly twice as much renewable energy as California, the state everyone thinks of as the green energy leader. This increase means that we can power an additional 10,297,840 households each year with clean energy. It happened because Texas did something different – they let the market decide, created the right incentives, and got out of the way. Did you expect a traditionally oil-and-gas state to become America’s renewable energy champion?
