Green energy is taking over red Texas' power grid

It seems the Trumpian recession in U.S. green energy fails to apply to one of the more Trumpian areas of the country: Texas. Solar power and batteries are taking large bites out of America’s biggest state power grid in the U.S., and helping to suppress electricity prices in the process. 

What makes this all the more remarkable is that solar power barely registered in Texas’ power mix when President Donald Trump lost the 2020 election. This year it overtook coal, making wind and solar the second- and third-largest sources of power in a state that has been reliably "red" since 1980. (I use trailing 12 month figures to smooth out fluctuations).

The chart above doesn’t adequately convey the extent of Texas’ solar eclipse. For that, take a look at solar’s share of the change in power generation in Texas — which happens to be approximately all of it.

Where solar really has an impact is on prices. In Texas, wholesale electricity prices tend to spike, sometimes into the thousands of dollars per megawatt-hour, on particularly hot summer days as the grid strains to cover demand from all those air conditioners. That sends a signal to build new capacity. An expanding population and economic growth, including from new crypto-mines and data centers, have powered a big increase in peak electricity demand in Texas, which hit a new record in July of just over 91 gigawatts, the highest for any state.

Curiously, new peaks in power demand aren’t translating into peak power prices. When demand last peaked, in August 2023, that month’s day-ahead peak prices for the Texas grid operator’s south zone averaged about $360 per megawatt-hour. This July, which recorded the latest peak, saw an average price of less than $30. The reason, according to CreditSights utilities analyst Andy DeVries,  the surge in solar power twinned with a surge in batteries.

The narrative of growth in data centers has fed bullish sentiment around Texas-exposed generators such as Vistra Corp. and NRG Energy Inc., as well spiraling projections of natural gas demand to feed power plants in the state. On an episode of Bloomberg’s Odd Lots podcast in February, DeVries warned presciently that this thesis was missing the impact of solar and batteries.

Solar power, like all renewables, has effectively zero marginal cost: Once it’s built, it runs when the sun shines. The more solar power that is running, the further right the supply curve shifts, curbing demand for traditional power plants and suppressing prices. Whereas this previously teed up a sudden surge in prices at sunset as panels went dark, the arrival of batteries at scale, allowing surplus solar power generated in the afternoon to be deployed later, has extended price suppression into the evening. Texas added more battery capacity in the 12 months through July than any other state, accounting for roughly a third of total U.S. additions, according to data compiled by the Energy Information Administration.

Despite high temperatures and record demand, DeVries finds that scarcity pricing has become, well, scarce. The number of hours during this July and August when power prices jumped above $100 per megawatt-hour in the Texas grid’s south zone was 75% below the three-year average. When shares of Vistra and NRG fell in early August, some pointed to Gov. Greg Abbott’s surprising pause on new data centers in Texas as the cause. The real culprit was a structural shift down in the electricity prices that both predated Abbott’s announcement and extends out for several years.

Part of the dynamic here is that solar power is taking share from natural gas, with negative implications for that market. While gas-fired plants supplanted a lot of coal’s share of power production in Texas over the past decade, solar has now capped that by taking all the growth in generation itself. In July 2025, the Department of Energy was projecting gas-fired power generation in Texas to rise by 15% this year. It now projects a slight decline, marking an astounding swing in an industry that tends to move at a glacial pace.

Assuming data center developers find a way to appease the growing hostility of voters and construction picks up, more generating capacity will be needed and power prices in Texas may rise later in the decade. The phase out of federal subsidies for solar power, a casualty of the Republican Party’s backlash against renewable energy, will also likely start to curb installations within a year or so. Right now, however, as another hot summer winds down, the economic and reliability case for green energy is being proven at scale in the Republican heartland. 

This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners. Liam Denning is a Bloomberg Opinion columnist covering energy. A former banker, he edited The Wall Street Journal’s Heard on the Street column and wrote the Financial Times’s Lex column.