Texas turns to solar and wind as energy demand soars
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Texas, home to the fastest-growing electricity demand in the country, is turning increasingly to renewable energy sources to meet that surge. In the first nine months of 2025, wind and solar accounted for nearly 40 percent of all electricity produced in the state’s independent power market, according to the US Energy Information Administration.
The Electric Reliability Council of Texas, known as ERCOT, has seen a record increase in demand this year. With more than 200 gigawatts of interconnection requests from major electricity users, including hyperscale data centers and industrial facilities, Texas is on a trajectory to outpace all other U.S. grids in new energy capacity needs.
This sharp demand comes amid a wave of private and corporate investment in renewables. Utility-scale solar installations, in particular, have emerged as the backbone of ERCOT’s response to rapid demand. Solar generation in the state produced 45 terawatt-hours of electricity by September — a 50 percent jump from 2024 and nearly four times the output of 2021.
ERCOT ramps up renewable integration
The state’s deregulated electricity market has enabled developers to bring new capacity online faster than anywhere else in the country. Unlike other regions where interconnection timelines can stretch to five years or more, ERCOT offers a more agile environment. Projects that meet basic technical and environmental criteria are often up and running within two or three years.
Analysts say that this speed, combined with strong corporate interest in renewable power purchase agreements, has created ideal conditions for clean energy development. Companies are able to lock in power prices through these agreements, hedging against market volatility while supporting their sustainability goals.
“People are going to build solar and wind, and now battery storage, as quickly as they can,” said Dennis Wamsted, an energy analyst at the Institute for Energy Economics and Financial Analysis. “It’s economic — it’s what customers want.”
Notably, the availability of solar generation has already started to displace natural gas during midday hours. This trend has led to greater price stability and a reduced need for gas-fired peaker plants, which are typically more expensive to operate.
The role of storage and regulatory flexibility
Battery storage is increasingly supplementing renewables by addressing the intermittency of solar and wind generation. While still small relative to overall capacity, storage installations are scaling quickly. Developers are now designing solar farms with integrated storage by default, aligning with ERCOT’s broader push for reliability and price responsiveness.
Texas’ regulatory framework has further accelerated this trend. The state’s open market allows generators to sell power directly to the ERCOT market or to private buyers, often without the lengthy permitting processes seen in more regulated regions.
Despite some recent attempts by lawmakers to limit renewable development, project pipelines have remained strong. Both wind and solar installations have continued at pace, even as policy uncertainty looms at the federal level. President Donald Trump’s renewed push to block new wind development has created headwinds for the industry, though Texas has retained a leadership position in wind interconnection volumes, according to a recent report by Wood Mackenzie and the American Clean Power Association.
Can supply keep up with demand?
The central question now is whether the current rate of growth in renewable generation can continue to match ERCOT’s soaring demand. BloombergNEF forecasts that the state’s supply will keep pace over the next five years but could fall short within a decade if current trends continue. Much of that projected gap stems from the flattening of new thermal power capacity beyond 2030, even as electricity demand continues to rise.
Natural gas, while still the dominant source of generation in Texas at 43 percent, has stopped growing. In contrast, wind and solar have seen sustained gains. Wind generation reached 87 terawatt-hours by September — a 4 percent year-over-year increase and 36 percent growth since 2021.
While Texas remains ahead of most states in clean energy deployment, the looming imbalance between future demand and generation could pose risks if not addressed. Still, industry experts see reasons for optimism. Forecasts for solar and storage were revised upward over the last year as deployment outpaced expectations. And if ERCOT’s regulatory model remains stable, the state is likely to continue attracting investment in clean energy at a national-leading pace.
“The growth in renewables wouldn’t be happening if they weren’t also reliable and cost effective,” Wamsted said. “Nobody’s running out to build something that’s overpriced and can’t be counted on.”
Sources:
Inside Climate News