Since the electric grid does not store electrical energy, the demand for electric power must be matched by the production almost instantaneously. The supply-demand balance imposes a severe constraint on the penetration of renewable energy sources – especially wind and solar – in the power production markets of all nations, because solar irradiance and wind energy are not available at all hours of the day and exhibit daily and seasonal variabilities. Using the hourly data of the electric power demand in the Electric Reliability Council of Texas, we calculate the implications of this constraint on the substitution of fossil fuel power plants with renewable energy sources. When the market penetration of renewables increases and the utilization of solar and wind energy sources expands to approximately 25%–30% of the annual electricity production, significant energy storage capacity is needed. Simulations of the entire electric grid are performed to determine the power ratings of the renewable sources and the necessary storage capacity to substitute part or all of the fossil fuel power capacity in Texas with renewable energy sources.