Gov. Rick Perry said Monday he has received a $10 billion investment guarantee from wind energy developers in exchange for the state’s assurance that the necessary power transmission lines will be built.
Should the development come to fruition, the state would gain about 10,000 megawatts of power supplied by wind, enough to light up about 2.3 million homes.
“Private companies are putting up their money instead of taxpayers putting up their money,” Perry said while flanked by executives from wind developers at Southern Methodist University. “The state of Texas will ensure we build the transmission capacity needed to deliver zero emission power source.”
The agreement, though, is not formal and does not come with any binding contract between the state and energy companies touting plans to install more wind power generation, largely in West Texas.
Still, it’s a significant step, said Mike Sloan, an Austin wind energy consultant who tracks the industry.
“Basically wind companies have come forward and said ‘we are willing to spend sizable amounts of money’ and that is because they have seen strong enough signals that they can get the transmission lines built,” Sloan said. “That’s the key thing that has been holding back wind development across the country.”
The Public Utility Commission will approve the construction of the lines, which are built by transmission utility companies such as AEP, TXU Corp. or CenterPoint Energy.
The state backing comes because legislation from the 2005 session has enabled the PUC to fast-track transmission development.
“It’s allowed us to be ahead as opposed to being in the mode of responding,” said PUC Chairman Paul Hudson. “You can build wind generation much faster than any other type of energy and we have the tools to plan ahead.”
One of those companies is Airtricity, a Dublin, Ireland-based utility company. Airtricity plans to invest $3 billion in Texas projects over the next seven years, said Andy Bowman, Airtricity’s senior vice president.
“If Texas will invest in the infrastructure, we will invest in Texas,” Bowman said.
The news comes several months after Washington-based trade group American Wind Energy Associates announced that Texas overtook California as the nation’s top wind-generator.
According to the group’s latest report, Texas capacity stood at 2,370 megawatts, compared to California’s 2,323 megawatts of capacity.
“West Texas and the Gulf Coast are absolutely fertile sources of wind energy and the best thing is that the costs are very small once you pay for putting the turbines on the ground,” Perry said. “Unlike oil, you don’t run out at a certain location.”
To become an attractive investment, wind farm developers often rely on federal tax credits.
For the next 15 months, projects coming online receive these credits of 1.9 cents per kilowatt hour. Those incentives are good for 10 years thereafter.
But there is no guarantee that any projects completed after 2007 will receive those tax breaks and that discourages long-term development, energy officials said.
Tom “Smitty” Smith, director for the Texas office of Public Citizen, praised Monday’s announcement.
“What this means is we are going for the big time and declaring that Texas is open for the wind business,” said Smith, long a critic of some of Perry’s energy policies. “The message from Gov. Perry is if you promise to come, we promise to have the transmission you need.”
Perry made the announcement at SMU’s J. Lindsay Embrey Engineering Building because of the building’s environmentally friendly construction and use of renewable energy.
By Steve Quinn, Associated Press
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