Solar and Storage Expansion Lowers Wholesale Electricity Prices in Texas and California
Increased solar generation and battery capacity significantly reduced wholesale costs between 2021 and 2026 despite rising electricity demand in both states.
Rapid expansion of solar power and energy storage capacity has significantly lowered wholesale electricity prices in Texas and California. According to an analysis by the Solar Energy Industries Association (SEIA), average wholesale prices dropped by 42% in Texas and 51% in California between the summer of 2021 and the summer of 2026.
This price reduction occurred even as electricity demand rose in both regions. Over the five-year period, solar generation grew by 421% in Texas and 90% in California. Simultaneously, battery storage capacity increased more than 26-fold in Texas and nearly sevenfold in California. These additions resulted in savings of approximately $3.55 billion for Texans and $2.5 billion for Californians during the summer months of 2026 compared to 2021.
In California, electricity demand increased by 2.5%, while the average wholesale price fell from $77.54 per megawatt-hour (MWh) to $38.32/MWh in inflation-adjusted 2026 dollars. Texas experienced a 30% surge in demand, yet average wholesale prices decreased from $54.97/MWh to $31.77/MWh. SEIA CEO Tim Pawlenty stated that the growth of solar and storage is a key factor in delivering affordable and reliable power.
The lower wholesale costs contributed to a reduction in generation expenses for residential customers, which fell by 4% in Texas and 10% in California. However, these savings were partially offset by rising transmission and distribution costs, which caused overall residential electricity bills to increase by 3% in Texas and 22% in California during the same timeframe. The analysis compared weighted average hourly wholesale prices across the Electric Reliability Council of Texas (ERCOT) and the California Independent System Operator (CAISO) markets.
