Texas data center dash creates solar price uncertainty
November 14 – The impact of new data centers and computing facilities on the solar and storage market is exemplified in Texas.
Power demand from AI and cryptocurrency groups, is soaring and the Dallas-Fort Worth conurbation is the second biggest data center market in the U.S. after Virginia. Data centers require large amounts of power for operations and cooling and more than 150 have been developed around Dallas-Fort Worth by companies such as Google, Facebook and Verizon.
Between 2019 and 2023, annual commercial sector power demand increased by 13 TWh in Texas on the back of data center growth, figures from the U.S. Energy Information Administration (EIA) shows.
Gabe Messercola, Associate Director, Capital Improvements Portfolio Management at clean power developer EDF, told Reuters Events,
According to various demand projections, data center load growth is particularly high over the next 10 to 15 years,
Data center operators, favor sites with renewable energy supply, transmission availability and low development costs and many have been lured to Texas by a thriving solar sector and low real estate prices.
Texas is the U.S.’ fastest growing, solar and storage market and by August the state had 18.8 GW of solar capacity, second behind California, (21 GW) and well ahead of third-place Florida (9.7 GW).
While rising demand from data centers and other large flexible load (LFL) customers creates opportunities for clean power developers, there is major uncertainty over the pace of demand growth. Grid connection queues are delaying new facilities, resulting in wide differences in wholesale power price forecasts that underpin revenue predictions for clean power projects.
In its base forecast, the EIA predicts average wholesale prices at the ERCOT North Hub to be $34.64/MWh in 2024 and drop to $27.17/MWh in 2025 due to lower gas feedstock prices and rising solar penetration. Under a high demand scenario, the EIA predicts a 2025 price of $31.69/MWh, compared with $24.26/MWh under a low demand scenario.
This price uncertainty is important as data centers play a growing role in power system balances nationwide. The share of total U.S. power demand represented by data centers is forecast to soar from 3 to 4% this year to 11 to 12% by 2030, analysts at McKinsey said in September.
Growing demand from data centers is
A net positive for solar developers as it places upward pressure on energy prices and, ultimately, revenue capture,
a spokesperson for developer Leeward Renewable Energy (LRE) said. However, the rate at which prices rise could be impacted by fluctuations in natural gas prices and the pace at which new consumers, generators and power lines, can be commissioned.
The spokesperson said,
While the exact pace and duration of data center growth are difficult to predict with certainty, current trends indicate a strong upward trajectory,
AI boom
Recent deals between power-hungry tech groups and solar developers include a long-term power purchase agreement (PPA) between Google and X-Elio in September for a 128 MW solar/100 MW storage plant in Bell County, Texas, due online in late 2025.
Last month, Google signed a PPA for 90 MW from Engie’s 350 MW Chillingham solar project in Bell County, under the LEAP program, which was co-developed by Google and pricing platform LevelTen Energy to streamline the sourcing of PPAs.
In March, Leeward Renewable Energy (LRE) signed PPAs with Microsoft for two 200 MW Texan projects – Morrow Lake Solar in Frio County and Cradle Solar in Brazoria County, by the end of 2024 and 2025 respectively.
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Texas data center dash creates solar price uncertainty, source
