Texas easily leads the nation in oil and gas production, and the Lone Star State is also a top player in renewable energy.
But the two industries face different prospects in the Legislature. Texas lawmakers aggressively defend fossil fuels and propose billions in new public spending for natural gas plants, largely with a goal of improving reliability on the electric grid.
At the same time, they’re targeting renewables, proposing limits on growth and pushing for new requirements that would drive up costs for wind and solar power.
As many critics have said, elected leaders seem intent on picking winners and losers in the nation’s biggest electric market.
If Texas were a country, it would rank fifth in the world in renewables, Lt. Gov. Dan Patrick said recently, adding that the state shouldn’t overbuild.
“We have invested heavily in renewables, but now it’s time to focus on dispatchable” power, Patrick said at a March news conference unveiling a suite of Senate bills related to the electric grid.
When Texas lawmakers and regulators talk about adding dispatchable power — supplies that can be dispatched at a moment’s notice — they’re effectively talking about natural gas plants.
Patrick and others believe wind and solar operators are held to a lower standard; if they don’t generate as much electricity as expected, they’re not penalized in Texas’ “energy-only” market.
He wants that to change: If the wind isn’t blowing or it’s a cloudy day, wind and solar companies should have to go into the state’s deregulated market and buy power to meet commitments, presumably buying from natural gas plants.
“They have to play on the same level playing field as dispatchable moving forward,” Patrick said. “That’s how you get incentives” to attract investment in new natural gas plants.
Incentivizing more gas plants, which provided over 42% of Texas electricity last year, may make sense. Despite strong growth in population and electric load, generation capacity from natural gas grew just 3% from 2017 to 2022.
Wind power grew 46% over the same period and solar grew even faster from a smaller base. Penalizing fast-growing renewables would harm consumers and the economy, experts said.
“It’s misplaced blame,” said Joshua Rhodes, a research scientist at the University of Texas at Austin. “Wind and solar have been doing great things for Texas in terms of keeping prices lower and providing a lot of economic development in parts of the state that don’t get much of it.
“It seems like we’re biting the hand that feeds us,” Rhodes added.
Last year, he studied the impact of renewables in the Electric Reliability Council of Texas, known as ERCOT. The nonprofit organization runs the electric grid serving 90% of Texas’ electric load.
From 2010 to 2022, the widespread adoption of renewables cut wholesale electricity prices by nearly $28 billion, Rhodes estimated. In the first eight months of 2022, renewables were saving consumers about $925 million a month.
Billions more were saved in water and emission reductions. “Summing it all up,” Rhodes wrote, renewables provided $38 billion to $106 billion in total benefits to Texas residents from 2010 to 2022.
The industry also accounts for over 42,000 jobs in Texas and will pay over $11 billion to landowners for existing wind, solar and storage facilities over their expected lifetime, according to data from the Advanced Power Alliance.
The group has over 40 members, including BP, Dallas-based Leeward Renewable Energy, Google, NextEra and Duke Energy.
When Patrick said, “We have invested heavily in renewables,” that’s not quite right. Private players, not government, decide where to invest in Texas’ competitive electric market. And they’ve plowed $93 billion into wind, solar and battery projects across the state, the power alliance said.
Renewables also are the most popular choice going forward — by far. Through July 2024, renewables account for 29,000 megawatts proposed for the ERCOT grid, which would be enough to power 5.8 million Texas homes during peak demand.
Over the same period, natural gas power producers propose adding 1,688 megawatts, which means renewables account for nearly 95% of the proposed generation in the ERCOT pipeline.
“If you think you’re helping oil and gas by hurting renewables, you don’t understand what the future looks like,” said Jeffrey Clark, CEO of the Advanced Power Alliance. “It’s like [lawmakers] want to go back to the 1980s. They’re just going to stop all progress in Texas and hope the world stops with us. And that’s just not going to happen.”
Renewables lower the price of power for consumers and businesses, and they’re important to many firms working to reduce their carbon footprint. Dozens of well-known companies have signed power purchase agreements for clean energy in Texas, including ExxonMobil, 3M, 7-Eleven, Walmart and IKEA.
General Motors’ SUV assembly plant in Arlington “will have all of its electricity needs met with green power,” the automaker said when announcing a deal with a 150-megawatt wind farm in Concho County, Texas.
Renewables also will be essential in developing synthetic fuels and carbon-capture projects, and running plants that convert natural gas for export, Clark said.
Senate proposals targeting renewables “are the worst threat I’ve seen,” he said. One bill requires half the new generation to come from dispatchable sources, which means natural gas. Another adds a reliability requirement that would drive up costs.
“These proposals are designed to punish renewable energy and to subsidize natural gas,” Clark said.
Much of the rationale stems from the epic blackouts of February 2021. A brutal winter storm shut much of the Texas grid for days, causing over 200 deaths and billions in damages.
Some Texas lawmakers were quick to blame wind and solar for not delivering power. But all sources suffered.
Natural gas units accounted for 58% of electricity generation that went down, according to a report by the Federal Energy Regulatory Commission and others. Wind accounted for 27% of missing generation; coal, 6%; and solar, 2%, the report said.
Outages happen regularly on the grid, even during less extreme weather.
“It’s not just that wind and solar doesn’t always show up,” said Alison Silverstein, an energy consultant who formerly worked with FERC and the Public Utility Commission of Texas. “It’s also the gas plants they’re claiming are more dependable.”
Gas plants provide the most electricity in Texas and set the price on the competitive market. Wind and solar offer significant savings for consumers, along with environmental benefits. Renewables also reduce exposure to natural gas prices, which can be driven high by world events, such as Russia’s invasion of Ukraine.
“This is the challenge of the energy transition,” Silverstein said. “We use different resources for different purposes, and they all play different roles. We need to use all these resources effectively — and in complementary ways.”
Investing in energy efficiency and demand-response programs would deliver great benefits, she said.
“It would be the most useful thing to stabilize the grid and reduce risk and costs,” Silverstein said.
Lawmakers aren’t talking about those options. Instead, Senate leaders propose adding 10,000 megawatts of new natural gas plants, even if it means using taxpayer money to do so.
That would keep investors out of the Texas market, at least on the dispatchable side, Silverstein said: “Because who would be stupid enough to build a new gas plant that wasn’t subsidized?”