Message from GENERAL MANAGER DARREN SCHAUER

Since many stories in past issues of The GVEC Review refer to the “ever-changing” electric industry, I thought you might like to know more about what this means to the Co-op. As the sources of generation have become more diverse over time, it has only affirmed GVEC’s decision to end its longtime all-requirements power supply arrangement with the Lower Colorado River Authority. That decision has led us to a new energy independence, and with it, the flexibility, as an active participant in the price-competitive ERCOT (Electric Reliability Council of Texas) energy market, to make decisions that will be current as well as in the best interest of you, our members.

Just to give you an idea of where the industry was a few decades ago, much of the generation of electricity came from traditional sources such as hydroelectric, natural gas and coal, with the latter seeing an increase after the energy crisis of the 1970s when power prices skyrocketed. While coal is still a significant part of the Texas energy profile, its future outlook is bleak for several reasons, including the fact that many of the power plants are aging and uncertain environmental regulations continue to create risk for further investment. As time went on, we saw some nuclear power here in Texas followed by a shift toward a greater dependency on combined cycle natural gas-fired resources. Technology, along with federal subsidies and tax credits, has also led to an increase in other forms of generation in the state, specifically renewable sources such as solar and wind generators. In fact, some of the largest wind farms are located in West Texas and the Panhandle.

Currently, the emphasis is on solar energy, and it’s expected to increase at a rapid rate as investors take advantage of available federal incentives before they expire. Not only is Texas a prime area for solar power plants or farms with its primarily sunny weather, but technology again is an influencer. In the past 10 years, the cost of utility scale solar has decreased by 70 percent and continues to drop to the point where it is competitive with more traditional sources of power. By utility scale, we are referring to large solar plants where electricity is sold to wholesale utility buyers. With the 30 percent Investment Tax Credit incentive only currently available through 2021, many industry experts are predicting massive expansion of solar production in the coming years by companies wanting to take advantage of it. ERCOT published a report this past November outlining what it believes would be the next wave of new generation.

According to this report, ERCOT estimated that between approximately 14,000 megawatts and 22,000 megawatts of additional solar will be built between now and 2031, with many believing this is a conservative estimate. To put this in perspective, Texas was producing only 15 megawatts of solar generation in 2010. Just six years later, by the end of 2016, that number increased to 554 megawatts.

At the same time, ERCOT anticipates that more than 6,000 megawatts of coal-power generation will be retired around 2022 due to EPA regulations. While there is still some uncertainty revolving around the extension of federal incentives, one thing is for certain: the electric industry is always changing.

GVEC is in a prime position to meet the challenges presented by the industry as we work to keep abreast of energy trends and technology. With the flexibility to adapt to changing conditions and having wholesale power costs directly in our control, the Co-op has the tools needed to help assure future affordability for GVEC members.

Thank you for your support and involvement in the business of GVEC. I am always interested in your comments and feedback. Contact me by phone at 830.857.1152, by email at dschauer@gvec.org or by mail at P.O. Box 118, Gonzales, Texas, 78629.

Respectfully,

Darren Schauer

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