America’s Oil Country Increasingly Runs on Renewables

Texas, the biggest oil-producing state, has turned to solar power and battery storage to see it through extreme weather. But with demand rising, much more power will be needed.

During the scorching summer of 2023, the Texas energy grid wobbled as surging demand for electricity threatened to exceed supply. Several times, officials called on residents to conserve energy to avoid a grid failure.

This year it turned out much better — thanks in large part to more renewable energy.

The electrical grid in Texas has breezed through a summer in which, despite milder temperatures, the state again reached record levels of energy demand. It did so largely thanks to the substantial expansion of new solar farms.

And the grid held strong even during the critical early evening hours — when the sun goes down and the nighttime winds have yet to pick up — with the help of an even newer source of energy in Texas and around the country: batteries.

The federal government expects the amount of battery storage capacity across the country, almost nonexistent five years ago, to nearly double by the end of the year. Texas, which has already surpassed California in the amount of power coming from large-scale solar farms, was expected to gain on its West Coast rival in battery storage as well.

The swift growth of battery storage as a source of power for the electric grid, along with the continued expansion of large-scale solar farms, could not have come at a better time. Texas, like many other states, is facing a surge in its power needs from data centers, new manufacturing plants, cryptocurrency mines, growing residential demand and increasingly intense summer heat. Officials estimate that Texas, already the nation’s largest electricity consumer, could roughly double its demand in just a few years.

“Every state is going to go through this. Texas just happens to be the farthest along because we are growing our energy usage first,” said Michael Lee, the chief executive of Octopus Energy U.S., a subsidiary of the British electricity provider. “We’re seeing this in every other state, and all over the world.”

Renewable energy sources have taken off in Texas, the nation’s premier oil-and-gas state, in large part because of the relatively easy process for connecting to the state’s grid and its mostly deregulated market for energy, company leaders and energy experts said.

But some of those same advantages have also come under scrutiny since the grid’s catastrophic failure during a prolonged winter freeze that killed hundreds in the state in 2021.

Gov. Greg Abbott took steps to try to prevent a similar failure from happening again. Since then, leaders in the Texas Capitol, along with energy companies of all types, have been debating how to ensure there is always enough energy supply, while also preserving the state’s relatively free market.

Since the winter storm, Mr. Abbott, and the state’s lieutenant governor, Dan Patrick, have pushed for the construction of new gas-fired power plants, arguing that predictable, “dispatchable” energy is more reliable in an emergency than wind and solar.

In the energy market in Texas, mostly deregulated in the 2000s, generators are paid, with some exceptions, only for the energy they actually provide to the grid, rather than for having capacity to do so in the future. And in contrast to other states, the main electricity grid in Texas is contained entirely within the state.

In a somewhat unlikely turn, renewable energy companies have been arguing for keeping the market open and less regulated, while Republican leaders have pushed for increasing government intervention, including incentives to build additional gas-fired power plants.

“The abject irony is that the once-freewheeling power market is now on the precipice of becoming fully government-controlled,” said Aaron Zubaty, the chief executive of Eolian, which invests in energy projects. “New technologies have provided market solutions and scaled rapidly,” he said. The result, he added, is that legacy gas-fired power generators and their political backers are trying to increase barriers for the newcomers and “push the market to go all-in on natural gas.”

He pointed to the swift growth of batteries, even without any state mandates, as an example of why interventions were not necessary to bring innovation.

The increasing importance of batteries to the Texas electricity grid could be seen on a Tuesday in August when the state hit a new high for energy demand, a load that might have threatened the grid only a few years ago. But that day, the state produced near-record amounts of solar energy. When the sun went down, large-scale batteries put out more power than ever before.

Texans barely noticed the crunch. The air-conditioners hummed along.

Demand for power in Texas is growing at a rapid clip. A big part of the increase, experts said, has been from the electrification of the oil and gas fields of the Permian Basin — an expanse of oil-rich West Texas where fracking has boomed. In other words, oil and gas companies are increasingly turning to electricity to power their operations in Texas.

Despite few people living there, the region is expected to see energy demands rivaling those of major cities.

“The Permian Basin is forecasting to become about the size, electrically, of the Houston area,” said Pablo Vegas, the head of the Electric Reliability Council of Texas, the state’s market operator, known as ERCOT.

Texas, which is the nation’s second most populous state, already consumes far more energy than any other state. Officials recently changed how they calculate the potential growth in energy demand and now estimate that the state could nearly double its peak energy consumption by 2030.

The current record for demand at a single time (that Tuesday in August) was about 86 gigawatts. (By contrast, the demand record in California, set in 2022, is 52 gigawatts.)

In six years, ERCOT has said, Texas could see peak demand above 150 gigawatts. The forecast raised concern among some state leaders about the grid’s ability to meet such fast-rising demand. Mr. Patrick said in a social media post that the state should take “a close look” at the increased demand from data centers and crypto mines.

The state’s power needs are a big reason that efforts by some Republicans in the legislature to rein in renewables — sometimes called “unreliables” by critics — are unlikely to succeed, said Ed Hirs, an economist and energy fellow at the University of Houston.

“At this point the legislature can’t do anything to stop the growth of solar and wind and batteries,” Mr. Hirs said. “The state desperately needs it.”

Much like an external battery for a cellphone, batteries that connect to an electricity grid are meant to provide stored energy for a short time, running only for a few hours. They charge up when energy is plentiful, and prices are low, and they put out their power when energy supplies begin to flag, and prices rise. As a result, the growth in batteries complements the development of wind and especially solar power, whose ups and downs vary throughout the day.

The potential pricing windfall has led businesses to rush to build more battery facilities. The queue for new energy projects waiting to link to the Texas grid includes nearly as much power from batteries as from solar, according to ERCOT data.

“Texas is such a unique place,” said Matthew Boms, the executive director of the Texas Advanced Energy Business Alliance, which promotes renewable energy businesses. “You have a free market and a grid that’s all in one state. That’s attracted all this private investment in battery storage, and solar and wind.”

The result has been a lot of recent construction.

Not far from downtown Houston, by the site of a former gas-fired power plant, large containers filled with small lithium-ion battery cells — half a million cells in total — sit in neat rows. They were not doing much on a relatively cool and cloudy late summer day, but were ready to discharge power to the grid when needed.

The batteries, owned by Jupiter Power, began operating last month. “Two or three years ago there were barely any batteries anywhere,” Andy Bowman, the chief executive of Jupiter Power, said. “That’s capitalism working.”

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