AUSTIN – Jeff Clark remembers driving through West Texas towns in the 1990s, seeing the shells that were left after oil booms had subsided.
Later in the decade, with rusty pumps still dotting the landscapes, wind towers went soaring above them, white along the horizon. He said they instilled new life in small communities around West Texas. That’s where the wind blows best and few people live, ideal for the gargantuan pinwheels.
“I think they’re beautiful,” said Clark, executive director of The Wind Coalition, a leading lobby for wind power based in Austin. “I see wind as a real blessing keeping farmers and ranchers farming and ranching.”
Now, drilling rigs once again overshadow wind turbine towers amid the fracking boom and shale rush throughout the state, providing billions in taxes and tens of thousands of jobs.
Yet while a glut of natural gas challenges renewable energy, its advocates look forward with hope and fight to keep legislative policy that helped set the monolithic turbines turning in West and South Texas.
New discoveries of natural gas compete directly with alternative energy, mostly in the realm of electricity production.
Most of the electric plants in Texas are powered with natural gas, and natural gas prices are low thanks to formations such as the Eagle Ford Shale in South Texas.
“With the natural gas boom and especially natural gas prices, (electricity is) going to stay very, very inexpensive to where it has been in the past,” said State Sen. Troy Fraser, R-Horseshoe Bay, chairman of the Senate Natural Resources Committee. “Gas is very cheap, which is good news for electric customers, but it is probably bad news for the renewables because they have a lot of trouble being competitive.”
Sustaining wind energy at the moment are federal production tax credits, which had been set to expire in December but were extended for a year at the last minute.
Fraser advocated a hands-off approach to renewable energy this year, not seeing much need for legislation and letting the market make decisions.
“In Texas, because we have an open, competitive market, we were looking for a mix of energy to offer,” Fraser said, noting that wind came about amid a need for diversification. “Without a sizable subsidy, all renewables have more of a challenge right now.”
Hydraulic fracturing has brought incredible activity to Texas, rejuvenating old wells and making formations produce that couldn’t before. In 2011 the Eagle Ford Shale made a $25 billion economic impact in a 20-county area, including providing more than 47,000 full-time jobs, according to a University of Texas at San Antonio study.
Academics and experts said recently at caucus and visitor meetings that the Eagle Ford Shale boom in South Texas may continue, possibly providing 117,000 full-time jobs and an economic impact of $90 billion by 2021. The Eagle Ford Shale is not as gas-heavy as the Barnett Shale, but the Eagle Ford still has about twice as many gas wells than oil wells.
Other developments such as the Cline Shale in West Texas could produce billions of barrels of oil, but these may not compete against wind and solar because they may not be gas-heavy wells.
Texas is still invested in renewable energy, however. The state has power lines coming from Creative Renewable Energy Zones, or CREZ lines. The lines, which cost about $5 billion, are meant to get the power from the wind-producing areas of West Texas to the population centers on I-35. Some of the lines are slated for completion by the end of this year.
“You’ll see an opportunity, see new investment coming to Texas” because of the power lines, Clark said.
On Thursday conservative representative State Rep. Scott Sanford, R-McKinney, filed legislation to remove a signature weapon from the wind energy arsenal.
In 2005, state lawmakers gave Texas the goal of producing 18,000 megawatts of clean, non-wind energy. This was meant to supplement a 1999 law that called for the wind industry to produce 5,880 megawatts of energy. Wind power already generates almost 10,000 megawatts, but taking away the mandate to create energy would hurt the renewable energy credit trading system in place, Clark said.
“That really sends the wrong message,” Clark said. “Like changing tax code after you made the deal with somebody.”
The conservative Texas Public Policy Foundation applauded the move, saying subsidies cost Texans $500 million from 2005-06.
“Concerns about the reliability of the Texas electricity market have highlighted the problems caused by renewable energy subsidies,” said Bill Peacock, the foundation’s vice president for Research and director of the Center for Economic Freedom, in a news release.
Wind generates power inconsistently. At peak hours on land, when times are hottest, the wind dies down. Over the sea, the situation is reversed. Either way, critics of renewable energy have pointed to the difficulty of managing the state’s grid when times are windy.
“They are also expensive. The renewable energy credits trading program will cost Texas consumers about $70 million this year. Ending the credits program will greatly benefit Texas consumers and improve the reliability of the electricity grid,” Peacock states.
Democratic lawmakers have also considered removing a tax credit from the oil and gas industry that began when fracking was experimental to encourage development. The “high-cost gas” tax exemption still remains and has been estimated to cost the state about $1 billion per year in tax money.
Another element that wind energy is trying to defend is Chapter 313. Chapter 313 is the state’s capital investment law, which allows a project to negotiate with a school district and receive a temporary tax abatement, Clark said. With that tool, the wind industry would like to be “just keeping the status quo,” Clark said.
Last week lawmakers also considered a bill that would change financing structures to let businesses and homes apply for long-term loans for efficiency improvements. A business could borrow millions for new chillers and efficient lighting, or solar panels and xeriscaping.
“It will jump-start other means of green technology,” State Sen. John Carona, R-Dallas, said in a hearing about his bill, Senate Bill 385.
That bill, still pending in committee, is listed among the priorities of the Texas Renewable Energy Industries Association.
“Solar has historically had less attention paid to it while wind was really taking off,” TREIA Executive Director Russel Smith said. The changes in financing, called the Property Assessed Clean Energy program, could help the industry, he said.
Shortages and droughts
At the moment low natural gas prices are giving Texas a challenge because corresponding low electricity prices make it hard for companies to pay for new power plants.
“It looks pretty dismal for just about everyone in electric energy right now,” Meehan said.
Fraser said he believes the Public Utility Commission, which regulates electricity and telecommunication, has enough authority to come up with solutions on its own, so he didn’t think he would be filing any new legislation.
The PUC itself recommended the repeal of a mandate to give natural gas preferential treatment and to repeal the mandates for wind, saying they are “no longer necessary” in a legislative update in January.
“I think the outlook for renewable will look comparable to natural gas” once Texas secures enough electricity, Meehan said. He cited the CREZ lines set to be complete at the end of the year, and a study from the Electric Reliability Council of Texas that suggested wind and solar energy will still be prominent players in the future.
Texas is a state that has been in a harsh drought cycle, and if that continues, wind and solar may look more attractive because they don’t require massive amounts of water for cooling, although natural gas plants may be able to do dry cooling at times. Fraser said several options surround water use for electric generation: the state can provide incentives or mandate use of brackish water for cooling plants, the state can call for water reuse, or wind and solar become more competitive.
“We’ve got a drought going on, which makes us think a lot more of” renewable energy, Fraser said.
For the time being, cheap energy in Texas continues to mean a slowdown in renewable energy development in Texas, said State Rep. Jim Keffer, R-Granbury, chairman for the House Energy Resources Committee.
“With natural gas prices the way they are, certainly for the foreseeable future, that makes all renewables have a tougher time,” Keffer said. Even so, he said, “They certainly have a place at the table.”
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