As Texas braces for predicted tighter electricity reserves and higher electricity rates in the state this summer, a new report shows that adding solar capacity to the Texas electricity grid would result in lower wholesale electricity prices for Texas customers.

Analysts at The Brattle Group energy consultancy reviewed Texas electricity market data from the summer of 2011 and analyzed how prices would have been impacted if solar photovoltaic (PV) systems had been added to the generation mix.

Their report concludes that adding photovoltaic solar to the Texas electricity grid in the summer of 2011 could have saved customers an average of $155 to $281 per megawatt hour (MWh) and that avoiding fuel, operations and maintenance costs associated with fossil fuels plans could have saved customers an additional $52 per MWh. Taken together, the total customer benefits of adding solar PV to the Texas grid was valued at more than $520 million.

Pat Wood, former chairman of the Public Utility Commission of Texas and of the Federal Energy Regulatory Commission, said solar is a natural fit for Texas' energy capacity problems because solar electricity production peaks during afternoon hours when summer electricity demand is highest.

"Texas needs more on-peak capacity," Wood said. "Solar delivers on peak, it doesn't use water and it doesn't create any smog pollution. It is increasingly affordable, competing favorably with other peak-of-the-day resources."

Kip Averitt, Chairman of the Texas Clean Energy Coalition, who formerly served in both the Texas State Senate and House of Representatives, said state legislators participating in forthcoming hearings on Texas grid issues should take note of the new data.

"Knowing the electricity grid in Texas is strained, I am relieved to see new data," Averitt said. "This report provides a simple yet important first look at detailed examples of solar's impacts. The forthcoming legislative hearings should take note."

During last year's unseasonably hot summer, the Electric Reliability Council of Texas (ERCOT), which operates the Texas electricity grid, was forced to issue six conservation alerts because of record electricity usage in the state, resulting in electricity shutoffs for customers who volunteered for cutbacks during emergency conditions.

Similar capacity issues could occur this summer. According to an analysis released May 30 by the North American Electric Reliability Corporation, Texas electricity reserves "will challenge operations this summer" because "resource adequacy levels have fallen below targets." The analysis also stated that if Texas experiences extreme and prolonged high temperatures, rotating outages are possible this summer.

Carrie Cullen Hitt, Vice President of State Affairs for the Solar Energy Industries Association, said the double benefit of lower electricity costs and increased reliability makes solar a clear choice for the state.

"This study shows that not only can solar energy help lower costs for Texans, but that adding solar capacity helps address the state's more urgent crisis of potential rolling blackouts during the hot summer months," Hitt said. "The state's electricity grid was pushed to the brink of failure last summer. As Texas leaders address ways to mitigate this risk and the state's energy future, solar should be an important part of their plans."

"The declining cost of solar increasingly makes it a more viable option in Texas, where there is plenty of sun, electricity demand and a looming water shortage," said Ben Paulos, renewable power program director of the Energy Foundation. "However, to accelerate deployment, solar needs to be compensated for the value it delivers, through fair market rules."

"Solar energy is clean, produces more peak power when demand is highest and can ensure Texas has a balanced energy portfolio with the least cost," said Hitt.

Former PUC Chairman Wood also emphasized that solar can be brought online more quickly and efficiently to the Texas electricity grid than other electricity sources, which require permitting and building of additional power plants.

"Importantly for us, it is quick to market," Wood said. "And in our open market, as this study shows, it drives down peak prices, saving money for all customers."

The report "The Potential Impact of Solar PV on Electricity Markets in Texas," was funded by the Energy Foundation and the Solar Energy Industries Association. The report findings are supported by the Texas Clean Energy Coalition.