Bundles of energy
Solar and wind companies begin clustering together locally
MICHAEL Skelly seemed like thousands of other people when he arrived in Houston in the late 1990s to work for an energy company. But Skelly stood out for one obvious reason: He had come to nation’s oil and gas capital to help build a wind farm business.
“And it was a little bit lonely,” he said.
Two decades later, Houston’s renewable businesses are still overshadowed by the city’s lineup of oil, gas and chemical companies, but Skelly is far less lonely. Houston has become home to wind project developers, renewable energy transmission companies and residential solar firms that together employ thousands — solar companies alone employ more than 2,000 alone, according to industry estimates — and many in the renewables business only expect it to grow into a larger, more critical component of Houston’s energy industry.
Major oil companies such as Exxon Mobil Corp., Royal Dutch Shell and BP, looking at a future of declining oil demand and tougher greenhouse gas
“If renewables get as big as they could be, then that affects Houston. Silicon Valley is coming after us.” Michael Skelly, CEO of Clean Line Energy Partners
rules, are investing more in renewable energy technologies and projects. Last month, the Greater Houston Partnership, a nonprofit economic development group, convened executives of the renewable energy companies to help develop a strategy to expand the sector over concerns that Houston, the energy capital of the world, could miss out on a global energy transition.
“If renewables get as big as they could be, then that affects Houston,” said Skelly, CEO of Clean Line Energy Partners, a Houston company that builds transmission lines for wind and solar projects. “Silicon Valley is coming after us.”
Houston, while leading innovations in the oil and gas industry, has lagged in embracing wind, solar, batteries and other renewable technologies. The city has fewer local tax incentives to encourage rooftop solar systems than Austin and San Antonio, and few of its large energy companies do renewable energy research here, preferring tech hubs like Silicon Valley and Boston.
Austin is home to most of the state’s clean energy startups, and Lubbock is the location for most of the wind energy research done in Texas.
But Houston is finding a niche, attracting renewable energy companies with the region’s deep pools of talent skilled at putting together large energy projects and managing electricity supplies of the grid, the legacy of the region’s cluster of oil and power companies. The San Francisco wind energy company Pattern, for example, established its operating center on the 32nd floor of a downtown Houston skyscraper, from where it monitors electricity production at 17 wind farms from the Texas Panhandle to Santiago, Chile.
Portuguese company EDP Renewables, a wind and solar project developer, established its North American headquarters here in part because of access to workers adept at finding productive land, putting together parcels, negotiating with property owners and navigating permitting processes. EDP, which employs about 250 people in Houston, operates 45 wind and five solar farms in Canada, the U.S. and Mexico.
“California has lots of political support for renewables, and it has dot com-type talents, and Google and Facebook gobble up talent,” said Chris Shugart, Pattern’s senior vice president for operations. “But we’ve generally not found it to be a great source of talent.”
Houston’s renewable energy industry traces its heritage to oil and gas wildcatters. EDP, for example, set up in Houston after acquiring a company that has its roots in Houston-based Zilkha Renewable Energy, a venture founded in the 1990s by Houston’s Zilkha family after selling its oil and gas company. Pattern Energy, which employs around 100 in Houston, was co-founded in 2002 by John Calaway, a Houston oil and gas man who launched Edge Petroleum in the 1980s and later sold the company to the large Houston independent Apache Corp.
Other companies have grown from these early shoots. In 2009, Skelly founded Clean Line, which employs 30 workers in Houston. Another Houston firm, Quanta Services, founded 1997, helped build a network of transmission lines in West Texas designed to connect rural wind farms with cities. In 2012, John Berger, a former Enron energy trader, cofounded the solar power company Sunnova, which employs nearly 300 in Houston.
Today, more than 100 companies involved in some aspect of solar power have offices in Houston, according to the Solar Energy Industries Association, an industry trade group. Companies like Pattern have successfully recruited oil and gas workers, particularly after the oil bust, Shugart said. Since the last oil boom turned bust in 2014, Pattern has more than doubled its Houston workforce from 44 employees to more than 100 by the end of 2017.
Shugart recalled people with oil and gas backgrounds coming to interviews anxious about the future of their jobs and looking for an industry that had less of an impact on the environment. Shugart, who came to Pattern from the power company Calpine Corp. more than a decade ago, said his success in recruiting workers from oil, gas and power companies is an indicator that Houston is taking renewables seriously.
“There are still hardcore oil and gas people who kind of turn their noses up to it,” he said. “I’m seeing less and less of that. People are really impressed by the scale of the business — and how competitive it is.”