The results are in – flooding a market with renewables craters market prices and improves reliability

About 95% of all new power plants built in the US in 2024 were wind, solar and batteries. Wind and solar dominated not only 2024 construction but the planned construction forecast as well. How did adding massive renewables to markets work out? Texas makes a great case study relevant for the rest of the United States.

According to a study released by the Texas grid operator ERCOT in May 2025, from 2023 to 2024 largely driven by wind and solar, Texas wholesale power prices decreased approximately $18 Billion per year. There were 32 GWs of wind and solar in Texas in 2019 and as of end of 2024 there was 80 GW in approximately a 90 GW total market¹. And the renewable energy sector employs 400,000 (3%) Texans.

Renewable energy isn’t an environmental issue; it is an economic and jobs issue.

Go look for yourself: download the ERCOT App and the MISO app (MISO has a Texas node that reports on their app) and compare ERCOT real time summer to the MISO Texas node. Looking at a random sample: ERCOT average market price $19.44 vs. MISO node in Texas price of $39.70/MWHR. Wind and solar make up 54% of all power being generated in ERCOT; MISO was under 15% for this same sample period. It is really that simple: renewables are driving costs down and improving reliability as well; this entire “need for backup power” just isn’t the case as the numbers clearly show. 

Figure 1 ²: ERCOT and MISO App screenshots 4 pm CT July 22, 2025

Power market regulation in the US is fragmented and difficult to generalize; therefore, Texas forms an excellent case study given it is a large, market-based design where renewable energy comprises more than 30% of all power generated and over 50% of summer generation in 2025, and it has its own power grid.

Texas is not an outlier. Iowa, South Dakota, Kansas (all wind), and California (wind and solar) all get more than 50% of their power from wind and solar, and low wholesale power prices and high reliability. Even California’s wholesale prices are surprising low.

Asking another question, if there was not a flood of wind and solar in the Texas market over the past five years, would gas fired generation have been built in the alternative? No. In 2019, there was substantively zero gas units in interconnection planning in Texas (or anywhere else for that matter) – not in planning now, not five years ago. ERCOT had a real problem, and solar and wind saved the day.

The new build gas generation market died fifteen years ago. Stop building wind and solar means stop building power plants at scale, at least for the next decade. Gas generation being hard to bring to market in scale is an economically driven outcome, not an ideological one. Clearly some gas generation will get built but not on the time scale, volume and price needed; and transmission has historically been a constraint, but has not been for gas generation, and isn’t the constraint today. Furthermore, FERC Order 2023 and related interconnection changes are working. 

Historically, there was a lot of gas fired combined cycle construction in Texas – Enron, Energy Future Holdings/Reliant Resource, NRG Energy, Calpine, Mirant, Dynegy, Panda Power, etc.  What happened: the companies and projects ended up bankrupt or in distress.  Other than distress investors, gas generation was a financial disaster. On the other hand, renewable energy projects have substantively zero bankruptcy history. 

As a general matter, utilities in Texas do not procure long term power. The solar and wind explosion was not a product of utility contracting or preference as sometimes argued. 

A myth dispelled by looking at the Texas experiment: every MW of wind or solar does not require a conventional power plant in standby. Market volatility, cost of ancillary and contingency reserve services has dropped dramatically as wind, solar and batteries have dominated. These reliability services are INCLUDED in the market power prices. The variable that changes radically daily and over the year on the power grid isn’t generation, its load and customer demand. The grid operator matches generation to a changing load. On hot summer days where there is a lot of load, there is a lot of solar generation, for example. I am not discussing ERCOT’s complicated capacity adequacy programs, well outside the scope of this article, and don’t change the data’s outcome.

Drilling into the details, the experiment of flooding the market with renewable generation was conducted in Texas: in 2024 approximately 14 GW of new capacity entered operation in Texas including 7.5 GW solar (about $11 Billion), 1.1 GW wind (about $1 Billion) and 500 MW of gas turbines.  In addition, 5.0 GW (around $5 Billion) of batteries were built.  

The observable outcome:  power prices (including the reliability adders) in Texas were volatile and high prior to 2023 (almost $200/MWHR average in 2021 a large portion of this was emergency capacity purchases, and around $70/MWHR in 2022/23) and in 2024 wholesale power prices and reliability costs decreased by 52% from $70/MWHR in 2023 to $34/MWHR.  The primary driver of lower prices: the addition of new wind, solar and batteries.

Figure 2 ³: Average All In Real Time Market Power in ERCOT

The wholesale market price decrease from $70 to $34/MWHR multiplied by the approximately 500 million MWHRs sold per year in ERCOT means Texas is a savings of approximately $18 Billion per year.  Let’s estimate the cost of the federal tax credit subsidy around $5 Billion; this tax credit subsidy had a three-month simple payback. Your experience may vary as they say, but the federal tax credits reduce market power prices, result in American jobs as most of the labor is actually at the job sites, and create revenue for local municipalities and landowners. 

 Drilling more into this important chart: the ORDC adder is cost of operating reserves, the Reliability Adder is the cost of contracting for additional “emergency” measures taken, and ancillary services provide grid support and additional reliability. The All In Real Time Market price INCLUDES the cost of the “standby units”. Notice the following about the chart:

1. 2024 pricing is dramatically lower than the prior three years, recall 2020 was the COVID year and not representative of normal load,
2. The volatility has lowered – gone are the huge summer month price spikes,
3. The cost of “back up” units for ancillary services and reliability down significantly.

Perhaps the benefit of renewables to power prices and market behavior is why China is adding more wind and solar in 2025 than the US nationwide has added cumulatively over the past 20 years. “Green power” long ago transcend its origins in the environmental movement and has become the global leader in new generation driven by economics as is the case here in Texas. Wind and solar equipment prices have fallen dramatically over the past 10 years and renewable projects more than twice as efficient which is driving this global adoption.

Additionally, 3% of all Texas owe their jobs to alternative energy with an estimated 409,000 wind and solar jobs in Texas alone.

Retail rates grew an estimated 2.6% in Texas from 2023 to 2024. Realize most retail customers do not purchase their “Electric Charge” on the day ahead market price; furthermore, the retail price is dominated by the transmission, distribution and other charges and not the cost of the energy itself. Nevertheless, high wholesale prices are born by retail customers.  Lower wholesale prices result in lower retail rates over time and good for the retail consumer ⁴.

These low wholesale prices also get to the question of who benefited – the developers of the power plants or the market, clearly the tax credits lowered the market price; the market received the benefit – true in Texas as well as the other states with high renewable penetrations.

Without the federal tax credit, will solar still get built in Texas? It is unlikely at the scale needed to meet demand growth. Prior experience with gaps in the tax credits resulted in a virtual and immediate halt in new construction. Market conditions have changed certainly, but the tax credit driven market works. The underpinning of federal credit for some of the capital invested has been an important element of this renewable market success largely because capital costs are the main driver of investor return given wind and solar have no fuel costs. 

A hidden burden new generators bear is the cost of new transmission upgrades, many long overdue and having little to do with the specific generator project. It just is not the case that renewable generation has resulted in unjustified transmission costs that were then socialized.

I read the Resource Adequacy Report issued by the DOE in July 2025 ⁵. I do agree with the conclusion that if we do not build a lot of new generation, the country will have a generation shortage. I’ve been writing about that for years. But people need to realize the scheduled retirements are not ideologically driven: the units are all well over 30 years old, in some cases 70 years old and well past their design lives and are economically obsolete. For the next five or more years, the only plausible new generation is wind and solar.

I certainly have heard the negative sell pushed largely by the incumbent fossil generators and fuel suppliers so well-articulated by the Wall Street Journal Editorial Board ⁶ on July 20th for example, but the numbers tell an entirely different, definitive and positive story:

• one that saves Texas consumers tens of billions every year - $18 Billion in 2024 alone,
• increase market stability and reliability. Renewables DECREASED price spikes, and reduced backup generation and reliability related costs,
• It is NOT the case that in the absence of IRA (only enacted in 2022 after all) there would have been more gas generation built – just go look at the interconnection planning during the prior periods.
• Absent the federal tax credit, many solar and wind projects will get built anyway, but many will not and that is the problem – for the consumers and the millions working in the sector nationwide.
• employs hundreds of thousands of Texans, about the same as oil and gas, and millions nationwide, and
• provide hundreds of millions per year in direct landowner and local taxes in Texas and billions nationwide. 

The alternative without this renewable construction is likely a lack of sufficient power generation construction at least for the next five to ten years (and even then, at a higher price point) with the all too obvious outcome of increasing market prices to the benefit of the existing generation operators risking disaster for the retail consumers and growing the American economy.

I understand the results of the experiment could have been different and surprising to many including me, but the observations and results are crystal clear: flooding the market with renewables lowered market power prices and increased reliability.

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(1) 2024 State of the Market Report for the ERCOT Electricity Markets, Potomac Economics, May 2025

(2) Both ERCOT and MISO apps downloaded from Apple App Store, July 2025

(3) Potomac 2025

(4) https://www.puc.texas.gov/consumer/electricity/bill/#eletric-solution-a

(5) Resource Adequacy Report: Evaluating the Reliability and Security of the US Electric Grid, Department of Energy, July 2025

(6) The Real Risk to the Electric Grid: Power shortages are coming thanks to wind and solar subsidies and how they distort the market, Wall Street Journal, July 20, 2025