The Lone Star State comfortably dominates the nation regarding oil and gas output, and Texas is also one of the most critical players in renewable energy.
Nonetheless, the legislative landscape for the two different industries is very different. The legislators in the state of Texas vigorously defend fossil fuels and propose billions of dollars in further public funding for natural gas plants, mainly to enhance the dependability of the state’s electrical system.
At the same time, they are going after renewable energy sources, suggesting caps on growth and pushing for new regulations that would make wind and solar power more expensive. As several detractors pointed out, elected officials appear determined to pick winners and losers in the most competitive energy market in the country.
Recently, Lieutenant Governor Dan Patrick stated that if Texas were a country, it would rank fifth in the world regarding renewables. Patrick also noted that the state shouldn’t overbuild.
“We have invested heavily in renewables, but now it’s time to focus on dispatchable” power, Patrick said at a March news conference unveiling a suite of Senate bills related to the electric grid.
A Talk About Natural Gas Plant
When politicians and regulators in Texas discuss the addition of dispatchable electricity, also known as supplies that can be dispatched at a moment’s notice, they are, in effect, talking about natural gas plants. Patrick and others believe that wind and solar farm operators are held to a lower standard. They feel this because under Texas’ “energy-only” market, they are not penalized if they do not produce the anticipated electricity.
If the wind isn’t blowing or it’s a gloomy day, wind and solar companies should be required to go into the state’s deregulated market and buy power to meet their promises. Presumably, they should buy this power from natural gas facilities. He wants this to change.
“They have to play on the same level playing field as dispatchable moving forward,” Patrick said. “That’s how you get incentives” to attract investment in new natural gas plants.
It is possible that it would be rational to encourage the construction of additional gas plants, which supplied more than 42 percent of Texas’s electricity in 2017. Despite significant increases in population and electric consumption, there was only a 3% increase in generation capacity from natural gas between 2017 and 2022.
During the same period, wind power increased by 46% while solar power increased rapidly from a lower base. According to the opinions of various experts, imposing restrictions on renewable energy sources with rapid growth would be detrimental to consumers and the economy.
“It’s misplaced blame,” said Joshua Rhodes, a research scientist at the University of Texas at Austin. “Wind and solar have been doing great things for Texas in terms of keeping prices lower and providing a lot of economic development in parts of the state that don’t get much of it.
Rhodes continued, saying, “It seems like we’re biting the hand that feeds us.” In the previous year, he researched the effects of renewables on the Electric Reliability Council of Texas, also abbreviated as ERCOT. The electric system that serves the majority of Texas’s demand for electricity is operated by a nonprofit organization.
Rhodes estimates that the general use of renewable energy sources will reduce roughly $28 billion in the cost of wholesale electricity between 2010 and 2022. Renewable energy sources saved consumers approximately $925 million per month for the first eight months of 2022.
Further, billions were saved thanks to decreased use of water and emissions. According to Rhodes wrote, “Summing it all up,” renewables contributed $38 billion to $106 billion in total benefits to Texas inhabitants between 2010 and 2022.
According to information from the Advanced Power Alliance, the industry is also responsible for more than 42,000 jobs in Texas. It will pay more than $11 billion to landowners for current wind, solar, and storage installations throughout their estimated lifetimes.
Almost forty companies are represented in this organization, including BP, Leeward Renewable Energy of Dallas, Google, NextEra, and Duke Energy. Although Patrick stated, “We have invested extensively in renewables,” that statement is not entirely accurate. In Texas’ highly competitive energy market, private players—not the state government—decide where to invest. According to the power alliance, these companies have invested $93 billion in the state’s wind, solar, and battery projects.
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Also, renewables are the most preferred choice for the future — by a significant margin. Renewable energy sources will provide 29,000 megawatts to the ERCOT grid between now and July 2024. This amount of power is sufficient to supply 5.8 million Texas homes with electricity at times of high demand.
Natural gas power providers propose adding 1,688 megawatts over the same period, which indicates that renewables account for approximately 95 percent of the anticipated generation in the ERCOT pipeline.
“If you think you’re helping oil and gas by hurting renewables, you don’t understand what the future looks like,” said Jeffrey Clark, CEO of the Advanced Power Alliance. “It’s like [lawmakers] want to go back to the 1980s. They’re just going to stop all progress in Texas and hope the world stops with us. And that’s just not going to happen.”
Renewables bring down the cost of electricity for both individual users and commercial enterprises, making them a vital tool for many organizations seeking to decrease their carbon footprint. Power purchase agreements for sustainable energy have been signed by dozens of well-known firms in Texas, including ExxonMobil, 3M, 7-Eleven, Walmart, and IKEA, to name just a few.
When General Motors announced an agreement with a 150-megawatt wind farm in Concho County, Texas, the company’s SUV assembly factory in Arlington, which is located in Arlington, Texas, stated that the plant “will have all of its electrical demands satisfied with green power.”
According to Clark, renewables will also be crucial in developing synthetic fuels and projects involving carbon capture and in the operation of plants that convert natural gas for export.
He said the threats posed by Senate efforts to target renewables are the “worst I’ve seen.” According to one bill, the new generation must derive at least fifty percent of its power from dispatchable sources, such as natural gas. One proposal includes a demand for reliability, resulting in increased expenses.
“These proposals are designed to punish renewable energy and to subsidize natural gas,” Clark said.
A significant portion of the justification is based on the catastrophic outages that occurred in February 2021. A severe winter storm that lasted for days and caused widespread power outages in Texas was responsible for more than 200 deaths and billions of dollars in damages.
Several Texas legislators were eager to point the finger at solar and wind power for the state’s electricity shortage. But this was the case for every source.
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According to a report compiled by the Federal Energy Regulatory Commission and other organizations, natural gas units were responsible for 58 percent of the decline in power generated. According to the report, the contribution of wind to the shortfall in a generation was 27%, coal contributed 6%, and solar contributed 2%. Even amid weather that is not very severe, the grid experiences regular outages.
“It’s not just that wind and solar doesn’t always show up,” said Alison Silverstein, an energy consultant who formerly worked with FERC and the Public Utility Commission of Texas. “It’s also the gas plants they’re claiming are more dependable.”
Most of the state’s electricity comes from gas plants, which also determine the price of electricity on the open market. Consumers can realize significant cost savings by switching to wind and solar power and helping the environment. Renewable energy sources lessen an organization’s reliance on natural gas markets, which are susceptible to volatility due to global events such as Russia’s invasion of Ukraine.
“This is the challenge of the energy transition,” Silverstein said. “We use different resources for different purposes, and they all play different roles. We need to use all these resources effectively — and in complementary ways.”
She believes that investing in demand-response and energy efficiency programs would result in significant positive outcomes.
“It would be the most useful thing to stabilize the grid and reduce risk and costs,” Silverstein said.
Nobody in Congress is discussing such potential courses of action. Instead, the leaders of the Senate have proposed building 10,000 megawatts of new natural gas plants, and they want to do it even if it means spending money that belongs to taxpayers.
Silverstein said this would discourage potential investors from participating in the Texas market, at least on the dispatchable side: “Because who would be stupid enough to build a new gas plant that wasn’t subsidized?”
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