WIND

Texas threatens to end long wind boom

Republicans in Texas are pushing for wide-ranging legislative changes that could undermine the investment credentials of wind farms and end the US state’s long wind boom. The impacts for the industry could be far-reaching.

RICHARD HEAP

May 11, 2023

  • New laws planned in Texas would boost fossil fuels and hit wind
  • Texas far exceeds other US states for installed wind, solar and storage
  • Harming wind in Texas could undermine emerging ‘green’ technologies

Texas is known as the Lone Star State, and nowhere is this name more appropriate than in the green energy sector. For onshore renewables, it stands alone.

The US state has over 54.5GW of installed wind, solar and energy storage capacity, according to the American Clean Power Association’s 2022 market report. That is the same as combining the 35 states with the least installed renewables capacity, and is almost double the 28.7GW in second-placed California. Texas is often cited as the example of how renewables in the US enjoys strong bipartisan support at state level.

There are just two problems with that analysis.

First, it ignores the large number of US states where the buildout of renewables is either disappointing or woeful: there are 26 with under 3GW of installed wind, solar and storage each. That should remind us that states aren’t universally supportive of renewables or diligently working to remove barriers to investment.

And second, Texas legislators are proposing new laws that threaten to bring the state’s booming renewable energy sector to an abrupt halt. Lawyers have warned of ten bills in the Texas Senate that could harm investment in wind, either because they impose direct obligations on owners or damage the competitiveness of projects.

The Republicans’ rationale for this legislative package is to help the Texas grid avoid the type of blackout it experienced following extreme blizzards in February 2021. It believes that bringing new natural has plants online as soon as possible would help protect Texans from similar disasters, and ‘level the playing field’ between renewable energy and fossil fuels. In other words, it wants to clobber investors in sectors including wind to help the fossil fuels industry.

End of an era

The most controversial of the bills is Senate Bill 624, which clearly shows how Texas legislators want to treat renewables differently to other generation sources.

This would require wind and solar owners to apply for extra environmental permits for projects; would give property owners within 25 miles of a project wide powers to object; and applies to existing projects as well as new schemes, making it a new administrative burden and cost that undermines the economics of operational projects.

There is also Senate Bill 2014, which ends subsidies for wind and solar farms, and removes obligations for the state to upgrade the electricity grid to help renewables; and Senate Bill 2015, which sets a goal that 50% of new generating capacity in the state from January 2024 should be from ‘dispatchable’ natural gas and fossil fuels.

And there are Senate Bills 6 and 7, which would direct more money to natural gas production and impose an extra credit on renewables operators to guarantee they can deliver power. These were both approved by the Texas Senate on 5th April.

You can read more about these bills in this analysis from law firm Latham & Watkins.

Taken together, these would damage the economics of new and existing wind and solar developments, and undermine the support that developers receive following the passage into law of the Inflation Reduction Act last August. Changing the rules for operational projects would also undermine the confidence of renewables investors to build new schemes in Texas, although this is unlikely to bother policymakers.

Wide ramifications

Our other big concern is the impact this would have on the wider wind and cleantech industry. If new laws make Texas less attractive for renewable energy investors, it would also undermine an area that can be a vital testbed for new technologies and project structures.

For example, Texas is already a hotbed for the utility-scale storage projects that provide vital support to get more wind and solar on the grid; has attracted headline-grabbing green hydrogen projects that need large amounts of green power; and is set to benefit as the Bureau of Ocean Energy Management’s seeks to unlock the Gulf of Mexico for offshore wind development. Any moves that undermine the growth of onshore wind risk making Texas less attractive for these associated sectors too, and mean the industry as a whole loses out on vital knowledge and experience to take new technologies to commercial maturity.

Finally, these changes would appear to vindicate the spurious arguments that blamed 2021 blackouts on the fallibility of renewables.

The Texas grid failed in 2021 due to a range of factors, including under-investment in the grid, mechanical failures at natural gas plants, and the fact that wind turbines in the state were not specified with de-icing technology. Wind farms were not the main cause of those historic blackouts, and yet punishing the sector now makes it look like they were. The fact Texas is taking these steps now can only empower the critics sector’s and increase the obstacles for wind developers elsewhere in the US.

As the leading US state for installed renewables, Texas has a unique position in terms of its influence on the sector. Where it goes, other states follow. If regulators in the Lone Star State have chosen to stifle wind, the impacts could be far-reaching.

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