Texas paved the way for a stronger local market for wind and solar power last Friday, when the Electric Reliability Council of Texas (ERCOT) reviewed the performance of wind and solar installations and resolved to increase their capacity values.

In order to quantify different electricity generation sources, public utility commissions or review boards often assign a “capacity value” to each type of resource. Simply put, the capacity value reflects the capability of a resource to provide capacity to the electricity system during peak demand times. Capacity value is calculated as the percent of a power plant’s rated capacity, but differs from “capacity factor”, which is a measure of the actual electricity output over the course of a year compared to what the output would be if it operated at full capacity for the entire year.

ERCOT concluded that its solar resources will now have a 100% capacity value, for up to 200 MW of installed capacity. SunEdison’s Direct of Government Affairs, Maura Yates, explained, “Solar has a high capacity value because solar peak production and system peak demand – which for ERCOT is the 20 highest load hours in the year – are often similar.” Coastal wind farms in Texas will also see a jump in capacity value, to 32.9%.

Because higher capacity values help energy projects to secure funding, ERCOT’s decisions bode well for advanced energy programs in Texas. “[These] increased capacity values move solar and wind further into ERCOT’s resource planning. They will get the credit they deserve now, and that essentially equates to a 16.1% reserve margin,” said Yates.

The Public Utility Commission of Texas is currently using ERCOT’s findings to debate new reserve margin targets and new energy projects across the state.