Why Texas Remains a Clean Energy Leader
Texas has built an unlikely reputation in recent years as a leader in clean energy. Its open electricity market has created the most wind generation production and utility-scale solar of any state, yet not everyone is happy with these developments—and political efforts are underway to hobble renewable energy use in Texas. These efforts have gotten a lot of attention and have led some to wonder whether clean energy has a future in Texas. However, Texas’ market-based electric model retains plenty of support in the state, and efforts to intervene in the market to stop renewable energy are not succeeding.
The secret of clean energy’s success in Texas
Texas did not become a leader in wind and solar power due to government favoritism of those energy sources. State-based subsidies for wind and solar in Texas have historically been small compared to other states and have probably not had a huge impact on the amount of renewable energy deployed. Federal subsidies have been a bigger deal; however, federal subsidies are available to all 50 states and cannot explain why Texas outpaces other states like California when it comes to renewable energy.
The most critical factor in Texas’ rise to clean energy dominance is its open energy market. In most states, decisions about what type of electric generation to build require government approval or are made by monopoly utilities as part of a centralized planning process. By contrast, Texas leaves it up to investors to determine what types of energy generation to build. In recent years, companies have opted to build a lot of wind in Texas and now are investing heavily in solar and battery storage resources in the state. Texas also has the best regulatory environment for energy permitting of any state. While other states require wind and solar projects to go through some form of laborious state or local permitting process, energy developers in Texas who can reach agreements with landowners can build and connect to the grid easily.
A backlash against renewables in Texas is growing …
As previously mentioned, the rise of renewable energy in Texas has not been without its detractors. A variety of complaints and objections have been raised regarding the growth of renewable energy in Texas, ranging from worries about the effect on grid reliability to aesthetic complaints about the supposed unsightliness of the wind turbines themselves.
Several bills were filed this year in the Texas Legislature that, if enacted, would seriously impair the growth—and even the existence—of large-scale renewable energy use in the state.
SB 819 sought to establish a statewide permitting system for wind and solar projects. Versions of the bill included provisions, such as a half-mile setback requirement for wind turbines, that would move Texas from the freest to among the most restrictive jurisdictions in the nation when it comes to permitting for wind and solar projects.
Another bill, SB 388, would have attempted to ensure that half of new generation capacity in Texas was so-called “dispatchable” power, defined to exclude wind and solar. The bill would not only have imposed unfair restrictions on renewable development, but because it did not substantially increase the incentives for investment in dispatchable power, its likely result would have been a reduction in overall investment in new generation capacity rather than increased investment for dispatchable sources.
Possibly the wildest bill of all, HB 3374 sought to “offset” federal subsidies for wind and solar and would have mandated that electricity prices not be based on scarcity, fundamentally upending the nature of the electric market.
… But Texas’ commitment to an open electricity market remains strong
However, a funny thing happened on the way to the bill signing. All of these pieces of legislation died without becoming law. Instead, Texas enacted legislation that makes it easier to install clean energy, especially for home-based use. For example, SB 1202 and SB 1252 make it easier for homeowners to automate and speed up the permitting process for home backup power systems, including solar and storage. Similarly, SB 879 and SB 1762 removed regulatory barriers to home-based geothermal systems. The state also enacted HB 14, which creates a state office to help coordinate and streamline the permitting of advanced nuclear plants.
Energy has become a highly polarized political issue, with lots of rhetoric in favor of or opposed to different fuel types. But beneath the rhetoric, Texas conservatives retain a strong commitment to the market system and have shown a reluctance to interfere in market outcomes as much as is common in some other parts of the country. Therefore, it should not be surprising that Texas was the only state to receive an A grade in R Street’s recent scorecard on state electricity policy. While hardly laissez-faire, Texas’ political leaders still recognize the important role that markets play in generation decisions and have proven themselves unwilling to deviate too far from market outcomes.