POWER PLAYS
Big bets on renewables in Texasmay offer boost for sector as job losses, cuts decimate the fuel industry
Big bets on clean energy could help plug the hole in the oil patch.
Last week, Exxon Mobil said it would eliminate about 14,000 jobs, including 1,900 in the U.S. That follows big layoffs at Shell, BP, Chevron, Schlumberger and more in what a consulting firm described as a “great compression.”
Texas is feeling it in a big way: 1 in 4 oil and gas jobs have disappeared in the past 12 months, according to data from the U.S. Bureau of Labor Statistics.
The industry had been suffering from high supplies and low prices, and the pandemic made everything worse by hobbling the economy and depressing demand even more.
But outside the oil patch, there are some promising trends in energy. In Texas and elsewhere, investors have been making big bets on solar and wind power, storage batteries, energy efficiency and the like.
This so-called advanced energy sector had been growing jobs at twice the rate of the Texas labor market — at least before the pandemic.
Over 230,000 Texans were working in advanced energy this summer, according to industry estimates. That’s more workers than in real estate, trucking and grocery stores in the state.
Solar, wind and storage also account for the vast majority of proposed projects in the pipeline at ERCOT, the grid serving most of Texas.
“The trend is clear,” said Suzanne Bertin, managing director of the Texas Advanced Energy Business Alliance. “Investors are putting their money behind wind, solar and storage. And more customers, especially corporate buyers, are demanding these technologies.
“The transition is well underway,” she said, referring to the shift toward cleaner energy.
In 2009, wind accounted for 6 percent of electricity used on ERCOT. Last year, that share was 20 percent. Over the same time, coal’s portion of electricity generation fell by almost half.
In the past decade, wind capacity in Texas surged from 9,000 megawatts to almost 24,000 MW. That’s enough to power almost 5 million homes during peak demand.
Texas easily leads all states in wind power with roughly three times more capacity than Iowa and Oklahoma in 2018, according to the U.S. Energy Information Administration.
Texas ranks 4th in solar capacity, and it’s coming on fast. In the first half of 2020, Texas added more solar than any state, said the Solar Energy Industries Association.
Lots of storage batteries are also in the Texas pipeline, and their potential capacity far exceeds the proposals for new natural gas plants. Bertin calls storage a game-changer because it helps fill the gaps when wind and solar power are unreliable.
The pandemic has had a major impact on the energy business, including renewables. By June, the solar industry had lost over 100,000 jobs nationwide, erasing five years of gains, according to the solar association.
In Texas, the advanced energy segment lost 24,000 jobs by July, Bertin said. That’s a decline of 9.5 percent, but it’s far smaller than the drop in oil and gas jobs. And Bertin believes advanced energy can help drive the state’s economic recovery.
She pointed to Tesla’s new $1.1 billion factory under construction in Austin. Tesla will build electric vehicles and batteries and create at least 5,000 jobs.
Many other companies, especially in manufacturing, are drawn to Texas because it generates so much clean energy — and has more coming. Most Fortune 500 companies have adopted sustainability goals, and Texas often can provide 100 percent of their power from renewable sources.
“This is an opportunity for Texas to really continue its energy leadership,” Bertin said. “By investing more in advanced energy, we’ll be able to bring manufacturing to the state and export those technologies beyond Texas.”
Last year, corporations in the U.S. bought 13 gigawatts of electricity through power purchase agreements. That shattered the previous year’s record with Texas being the primary beneficiary, according to the 2020 Sustainable Energy in America Factbook.
“Companies are flocking to the Texas power market,” said the book, which is researched and produced by BloombergNEF.
Texas generators landed 40 percent of the purchase contracts last year, over twice the share of the PJM grid, which serves over a dozen states from Illinois to North Carolina. Nearly two thirds of the Texas deals were for solar power.
Texas has long been the nation’s largest producer of oil and gas, and the fracking revolution has driven production to new heights. But when lawmakers deregulated the electricity market in 1999, they also wanted to encourage renewable energy.
They set some modest minimum production goals and later boosted them, and Texas generators still blew past the mandates 15 years early. Texas became the leader in wind power, and now solar and batteries are on the rise.
Vistra Corp., the state’s largest power generator, recently announced plans to invest $850 million in seven solar and storage projects in Texas.
“This is the perfect state to be doing all that,” said Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University. “Texas has the renewable resources with the sun and wind. We have the natural gas plants to back ‘em up. We have plenty of land for batteries. And we have the transmission infrastructure to carry the power.”
There’s also a lot of interest from potential workers. In energy courses at SMU, students must evaluate solutions with both renewables and fossil fuels, he said. And they’re often enthusiastic about clean energy and companies like Vistra.
“They’re not just interested in Exxon Mobil and Chevron,” he said.
That’s good, especially when those companies are shrinking.