Friday, June 1, 2012

Birthplace of Shale Gas (Texas) Meets Renewable Standards 13 Years Ahead Of Schedule

This is no "Oops" moment.

In 2005, Governor Perry signed into law Texas's second renewable energy portfolio standard, since the 1999 standard championed by George W. Bush had been met years ahead of schedule.

The 2005 Texas RPS required that 5,800 megawatts of renewable energy be operating in Texas by 2015 and 10,000 megawatts by 2025.  Back in 2005, talking about requiring 10,000 megawatts of renewable energy in any one state was pushing the envelope at the least.  It is a lot of power of any type.

Yet, a full 13 years ahead of schedule, Texas in 2012 surpassed its 2025 renewable energy requirement.  Harvesting the world class wind resource in West Texas and on the Gulf Coast, wind farms provide the overwhelming majority of Texas' renewable energy.  At this point, wind alone accounts for 8% of the electricity powering Texas, an economy the size of Spain.

All that wind comes with no needs for water withdrawal or disposal, creates no air pollution, and generates thousands of jobs, and millions of dollars of lease payments to landowners and tax payments.  In some parts of Texas, wind farms provide about one-third of local school taxes.

The renewable energy boom in Texas is also one more example of renewables growing rapidly exactly where shale gas is booming.  Indeed, the shale revolution began in Texas in the Barnett and has recently took off in the Eagle Ford area.

If renewable energy can boom in Texas, perhaps it is fair to say that they can boom anywhere.  Possibly that is why renewables are booming around the world.


  1. This is interesting and I have long thought that Texas' regulatory environment would be more amenable to this.

    Do you know anything about CREZ and what the real costs of this program might be? I live in NYS where the RPS program has been a disaster, and I don't know how the Texas RPS actually works.


  2. First, I am curious about why you view the New York RPS as a disaster?

    On costs of an RPS, the accounting of costs and benefits makes a big difference. Do you count the lower wholesale market price created by the additional supply created as a benefit or offset of costs? Do you count federal tax credits? Do you count the private investment made? Do you count only the value of any RPS credits that are recovered from distribution utility ratepayers?

  3. Hi John,

    I live near a wind plant in Naples that had all sorts of trouble. The RPS hit its budget in 2009 after only building out half the anticipated renewable capacity (itself breaking down due to a $300 million recall of the manufacturers' turbine blades.

    In the review of the program in 2009 the Public Service Commission admitted to not knowing if the promised utility bill savings would materialize, most of the new buildout was in wind, with the state estimating load factors near 30% but we've seen them at the low 20s in practice, and three wind farms had their contracted purchase amounts reduced because they were unable to meet 80% of the contracted energy.

    I have not seen evidence that the renewables purchases have led to lower retail rates nor do have I seen evidence that the installation of the renewable capacity has led to a shutdown of fossil fuel generation - though would be very happy to see that. As far as wholesale rate suppression, would seem to be an offset of the costs that all ratepayers now endure to fund the RPS, but again in their review the PSC does not indicate that spot prices are falling (wind is not typically purchased by distributors in a futures market).

    So my general evaluation is in lieu of electricity prices. Given the 3/4 billion spent, it is not at all clear any carbon has been reduced or that fossil fuel generation has been reduced as a result. The counterfactual is of course difficult to know. If you have info on the program, or have some cost-benefit analysis that I have not seen I sure would love to see it and share with friends here. Thanks for the time, I enjoy the site.