Clean Energy (Mostly) Survives Texas Legislature

The Texas Legislature doubled down on subsidizing fossil energy at the end of its regular session and raised costs on wind and solar energy, but rejected worse attacks on the state’s booming clean energy sector.

The Legislature approved SB 2627 and SJR 93 which provide $7.2 billion in low-interest loans for the development of up to 10,000 megawatts of new methane gas power plants. Members also passed HB 5, which makes gas power plants eligible for tax breaks while revoking eligibility for renewable energy projects and battery storage for similar tax breaks. 

However, the Legislature rejected stricter rules for permitting of wind and solar projects, and a proposal that would have made renewable energy producers pay more for ancillary services costs. It also rejected HB 2288, which would have prohibited the sale of distributed energy resources on ERCOT’s wholesale market. The Legislature did approve HB 1500, which requires certain renewable projects to pay higher transmission fees and require all renewable energy projects to have backup generation capacity. Legislators mostly ignored efforts to address the demand side of the resiliency / reliability issue.

Texas’ competitive energy-only electricity market has made the state a leader in clean energy. In 2021, Texas produced roughly 26% of all U.S. wind-powered electricity generation, leading the nation for the 16th year in a row. Texas also leads the country in states that generated the most carbon-free electricity. Wind power surpassed the state's nuclear generation for the first time in 2014 and exceeded coal-fired generation for the first time in 2019, according to the U.S. Energy Information Administration. Texas more than doubled what California produced in renewable energy in 2022. That gap is expected to widen in the coming years as Texas continues to increase deploying solar power. Texas generated more than 136,000 gigawatt-hours of electricity from solar to California’s nearly 53,000 gigawatt-hours.

Restrictions on the deployment of renewable energy is expected to impact electricity prices. A 2022 analysis by Joshua Rhodes of IdeaSmiths found that clean energy reduced Texas wholesale electricity prices by nearly $28 billion from 2010 to 2022, with the vast majority of those cost savings coming in the past three years.

So why the change in direction by legislators? What’s turned Texas Republicans into proponents of big government and enemies of property rights and competitive markets? Texas may be a leading producer of wind and solar, but it also leads the nation in oil and natural gas production. Natural gas interests have been in a pitched battle with renewables ever since the Texas grid failed in 2021 over the root cause of the winter blackout that left millions without power for up to a week and resulted in hundreds of deaths. In the name of improving the electricity system’s reliability, legislators have sought ways to make it more difficult and costly to add renewable power to the grid. The efforts have been a waste of time and money. Not only were renewables not to blame for the Great Texas Blackout – that would have been… wait for it… the fact that natural gas pipelines froze causing gas-fired generating plants to fail – but they also remain highly popular with voters.

A University of Houston poll earlier this year found that a majority of Texans support expanding the country’s reliance on solar and other alternative sources of energy. Texans also overwhelmingly (90%) supported net-metering legislation that would allow homes and businesses with solar panels to sell any extra power they generate back to the electric grid for the same price that the utility charges consumers to buy the electricity, according to the online survey of 1,200 Texans conducted between January 9 and January 19 with a margin of error of 2.8%. The survey also found 82% supported tax incentives for homeowners and businesses to install rooftop solar panels and battery storage. The respondents who supported increasing reliance on solar power plants represented 80% Democrats and 50% Republicans. The net-metering legislation had even broader support – 93% Democrats and 90% Republicans.

For more on the Texas Legislature’s moves check out Canary Media and the Texas Energy and Power Newsletter. Former Wall Street Journal energy reporter and now Texas Monthly senior editor Russell Gold’s piece, The Texas GOP’s War on Renewable Energy is also worth your time.