Maintain support for wind energy
The story of wind energy in Texas is a story of success. But a state government that embraced wind energy now threatens to end the story prematurely, eliminating a policy that has helped make Texas the nation’s top producer of wind energy.
The Texas Senate passed a bill on Tuesday that would repeal a state program known as the renewable portfolio standard, which requires utilities to buy a portion of their electricity from renewable energy sources. Senate Bill 931, by Republican state Sen. Troy Fraser of Horseshoe Bay, also would end the state’s support for the Competitive Renewable Energy Zone, a $7 billion investment in transmission lines to carry power from remote wind farms to Austin and other Texas cities. Funded by ratepayers, CREZ represents the kind of visionary, long-lasting infrastructure project too rarely seen anymore.
Fraser, a champion of the renewable portfolio standard when it was created in 1999 as part of a compromise to deregulate the state’s electric industry, said the Senate was “just declaring victory” by passing his bill. Updated in 2005, the standard required the installation of 5,880 megawatts of renewable energy by Jan. 1, 2015, and set a target of 10,000 megawatts by Jan. 1, 2025. Ten years later, here in 2015, the state has more than 14,000 megawatts of installed wind capacity, which provides at least 9 percent of the electricity powering Texas.
Thus the state has met its wind energy goals, Fraser says, and should end its commitment to wind. Of course the oil and gas industry also has been wildly successful in Texas but there is no similar serious move toward ending a state tax exemption that saved natural gas drillers more than $7 bil- lion between 2008 and 2013.
Ending the state’s renewable standard portfolio could stunt the wind industry despite its accelerated growth the past decade. Rather than declare victory and walk away, as the Senate voted to do Tuesday, it would be better for the Legislature to set a new target for 2025 and allow the wind industry to mature another decade.
A relevant lesson can be found in the federal government’s support for hydraulic fracturing. Fracking, which has made the state’s oil and gas boom possible, owes its development to $137 million or more in research contributions handed out by the federal government since the mid-1970s and to a 1980 tax break that has amounted to more than $10 billion over the past three-plus decades. Fracking once was not “market viable” but became so with government help.
A federal subsidy benefits wind. Renewal of the production tax credit in early 2013 allowed wind operators to finish projects that had languished for months in uncertainty. The result: Four times more capacity was added in 2014 than was added the year before, according to a report released Wednesday by the American Wind Energy Association, with most of the new construction occurring in Texas.
The association’s annual report on the state of the wind energy market says 1,811 megawatts of the 4,854 megawatts of new wind capacity in- stalled in the United States last year was installed in Texas. In addition, the report says about 7,000 megawatts of the 12,700 megawatts under construction nationwide is in Texas. Also, 17,000 of the nation’s 73,000 wind industry jobs are in Texas. Many of these jobs benefit rural Texas, as do the state’s wind projects.
Unlike federal subsidies for the oil and gas industry, the production tax credit, which costs about $1 billion annually, comes up for renewal every year, making it difficult for wind companies to make investment decisions. Congress should approve a multiple-year extension.
The production tax credit has been critical to Texas’ success with wind power, as has the state’s support for wind. The cost of wind power has fallen sharply, and wind power is now seen as a stably priced source of energy.
Utilities increasingly are drawn to wind. Georgetown’s utility plans to switch completely to renewable energy sources by 2017. Large corporations such as Microsoft, Google and WalMart also are investing in wind. The primary reasons: low costs and price stability. The fact that wind produces carbon-free energy without wasting water is attractive, too.
Fraser’s bill betrays the renewable energy foresight previously shown by state lawmakers and is contrary to the conservative mantra regarding regulatory certainty and policy consistency. Should the bill become law, it could seriously compromise investment in renewable energy in Texas and force developers of wind energy projects to look outside the state. We encourage the Texas House to step away from considering any similar legislation and maintain the state’s support for wind energy.