With Money To Be Made, Wind Power Booms In Oil-rich Texas

With Money To Be Made, Wind Power Booms In Oil-rich Texas

Wind power is now big business in the US, and it is getting bigger. Last year, the US wind industry added 1,087MW of new wind power capacity, about the same as is currently installed in Austria, and by the year’s end 12,000MW was under construction, almost double that currently installed in the UK. New records for power output are set every year – for example, during the evening of March 26 this year wind provided 10,296MW of power to Texas electricity grid, meeting 29% of demand at that time.

So why is wind booming in the US now, especially in Texas, known more for its rich oil and gas deposits? To understand what is going on we have to look at three factors: subsidies, transmission lines and the interplay of state and federal policies.

With Money To Be Made, Wind Power Booms In Oil-rich Texas

US wind power data from the American Wind Energy Association 2013 annual report.

As is the case elsewhere in the world, wind power in the US depends on subsidies, known as the production tax credit (PTC). The actual generation cost of a new project is about US$50 per megawatt hour (MWh): with the PTC providing US$23 per MWh, the project is profitable at a contract price of US$27, possibly a little less for project in a favourable site. This is competitive with fossil fuel power stations.

It is worth pointing out that a 2008 study by the Texas Comptroller of Public Accounts found that wind received only 3.4% of subsidies given by the federal government to the energy sector. The big winner (in 2006) was biofuel ethanol, with 34.6%, and fossil fuels accounted for 45.9%.

Politicising Energy

The problem is that the PTC has become a political football, sometimes renewed by Congress for only a year at a time. The situation today is that projects under construction at the end of 2013 receive the PTC (provided they are producing power in 2015), but later projects miss out. This creates a boom-and-bust cycle – of the 12,000MW of new projects that began construction last year, almost all (accounting for 10,900MW) started during the last quarter in order to take advantage of the subsidy. And essentially no projects will start construction during the first half of 2014, because the subsidy has ended.

These cycles create high levels of uncertainty and complicate the task of supply-chain management. Sometimes operators must lock in construction contracts, financing and power purchase agreements during a short window of opportunity, while all their competitors are doing the same thing.

What is really surprising is not today’s boom but the fact that the US wind industry has consistently achieved rapid growth over a long period. Annual capacity growth from 1990-2011 was 16.3%, and during the latter part of that period, growth continued unabated even while the cost of gas, a hugely important part of power generation in the US, was falling sharply.

Infrastructure Is Vital

Transmission lines are vitally important. Texas is a huge state, in a huge country. While good wind conditions are found in regions like West Texas, they are hundreds of miles from cities with demand for power. A significant factor in today’s boom is that Texas recently completed what is probably the largest ever programme of co-ordinated investments in wind energy. The CREZ project (Competitive Renewable Energy Zones) designated five zones where wind could compete against fossil fuels in energy generation, and then built almost 3,600 miles of high-capacity transmission lines to deliver the output from an estimated 18,500MW of new wind capacity.

The new transmission lines, even without the cost of the wind turbines themselves, cost almost US$7 billion, a cost paid for ultimately by a levy on consumers. Other major wind-related transmission projects are under construction (Prairie Wind Transmission, in Kansas) or about to start (Transwest Express, linking Wyoming to California).

This brings us to the interplay of federal and state policies in the US wind market. If you listen to their rhetoric you know that Texas politicians are fiercely conservative. Energy is serious business here – not a playground for environmental activists or soft-centred liberals. In this state, subsidy is a four-letter word. So why is Texas leading the charge towards ever higher levels of wind penetration? It has 12,354MW of wind capacity installed, more than a fifth of the national total and more than any European country other than Germany or Spain.

With Money To Be Made, Wind Power Booms In Oil-rich Texas

 US wind power resources - it’s blowy in West Texas. NREL

The reason why the conservatives who run the Texas energy sector like wind so much is very simple. If you leave federal taxes out of the equation as inevitable, wind is a very profitable proposition at state level. An economic study made in advance of the CREZ investment found that it would bring down prices to Texas consumers, attract industrial investment, create 40,000 jobs and boost the state’s leading position in wind-related industries.

The same study found that CREZ would contribute to cutting water usage by 17 billion gallons, and CO2 emissions by 16%. With outcomes like that, even a Texas conservative can accept a subsidy from Washington.

This article originally appeared on The Conversation.

About The Author

partridge ianIan Partridge is a Postdoctoral Fellow at University of Texas. He has worked part time at the Energy Institute since joining it as a post-doctoral researcher in January 2013. He is working on setting up a Graduate Portfolio Program in Energy Studies at the University of Texas and participating in Energy Institute research projects. His research interests include the economics of renewable energy and financing of low carbon electricity generation, particularly in the developing world, the effects on human health of emissions from coal-fired electricity generation plants and environmental issues related to oil and gas production.

Dr. Partridge graduated with a Ph.D. in Public Affairs from the University of Texas at Austin in 2012. Before coming to the University of Texas, he worked for many years in the oil and gas industry, as a management consultant and in investment banking. He has degrees in Engineering from Cambridge University, England, and in Management from the Massachusetts Institute of Technology.

 

enafarzh-CNzh-TWdanltlfifrdeiwhihuiditjakomsnofaplptruesswsvthtrukurvi

follow InnerSelf on

facebook icontwitter iconyoutube iconinstagram iconpintrest iconrss icon

 Get The Latest By Email

Weekly Magazine Daily Inspiration

LATEST VIDEOS

The Great Climate Migration Has Begun
The Great Climate Migration Has Begun
by Super User
The climate crisis is forcing thousands around the world to flee as their homes become increasingly uninhabitable.
The Last Ice Age Tells Us Why We Need To Care About A 2℃ Change In Temperature
The Last Ice Age Tells Us Why We Need To Care About A 2℃ Change In Temperature
by Alan N Williams, et al
The latest report from the Intergovernmental Panel on Climate Change (IPCC) states that without a substantial decrease…
Earth Has Stayed Habitable For Billions Of Years – Exactly How Lucky Did We Get?
Earth Has Stayed Habitable For Billions Of Years – Exactly How Lucky Did We Get?
by Toby Tyrrell
It took evolution 3 or 4 billion years to produce Homo sapiens. If the climate had completely failed just once in that…
How Mapping The Weather 12,000 Years Ago Can Help Predict Future Climate Change
How Mapping The Weather 12,000 Years Ago Can Help Predict Future Climate Change
by Brice Rea
The end of the last ice age, around 12,000 years ago, was characterised by a final cold phase called the Younger Dryas.…
The Caspian Sea Is Set To Fall By 9 Metres Or More This Century
The Caspian Sea Is Set To Fall By 9 Metres Or More This Century
by Frank Wesselingh and Matteo Lattuada
Imagine you are on the coast, looking out to sea. In front of you lies 100 metres of barren sand that looks like a…
Venus Was Once More Earth-like, But Climate Change Made It Uninhabitable
Venus Was Once More Earth-like, But Climate Change Made It Uninhabitable
by Richard Ernst
We can learn a lot about climate change from Venus, our sister planet. Venus currently has a surface temperature of…
Five Climate Disbeliefs: A Crash Course In Climate Misinformation
The Five Climate Disbeliefs: A Crash Course In Climate Misinformation
by John Cook
This video is a crash course in climate misinformation, summarizing the key arguments used to cast doubt on the reality…
The Arctic Hasn't Been This Warm For 3 Million Years and That Means Big Changes For The Planet
The Arctic Hasn't Been This Warm For 3 Million Years and That Means Big Changes For The Planet
by Julie Brigham-Grette and Steve Petsch
Every year, sea ice cover in the Arctic Ocean shrinks to a low point in mid-September. This year it measures just 1.44…

LATEST ARTICLES

trees to plant for climate2
Plant These Trees To Improve City Life
by Mike Williams-Rice
A new study establishes live oaks and American sycamores as champions among 17 “super trees” that will help make cities…
north sea sea bed
Why We Must Understand Seabed Geology To Harness The Winds
by Natasha Barlow, Associate Professor of Quaternary Environmental Change, University of Leeds
For any country blessed with easy access to the shallow and windy North Sea, offshore wind will be key to meeting net…
3 wildfire lessons for forest towns as Dixie Fire destroys historic Greenville, California
3 wildfire lessons for forest towns as Dixie Fire destroys historic Greenville, California
by Bart Johnson, Professor of Landscape Architecture, University of Oregon
A wildfire burning in hot, dry mountain forest swept through the Gold Rush town of Greenville, California, on Aug. 4,…
China Can Meet Energy and Climate Goals Capping Coal Power
China Can Meet Energy and Climate Goals Capping Coal Power
by Alvin Lin
At the Leader’s Climate Summit in April, Xi Jinping pledged that China will “strictly control coal-fired power…
Blue water surrounded by dead white grass
Map tracks 30 years of extreme snowmelt across US
by Mikayla Mace-Arizona
A new map of extreme snowmelt events over the last 30 years clarifies the processes that drive rapid melting.
A plane drops red fire retardant on to a forest fire as firefighters parked along a road look up into the orange sky
Model predicts 10-year burst of wildfire, then gradual decline
by Hannah Hickey-U. Washington
A look at the long-term future of wildfires predicts an initial roughly decade-long burst of wildfire activity,…
White sea ice in blue water with the sun setting reflected in the water
Earth’s frozen areas are shrinking 33K square miles a year
by Texas A&M University
The Earth’s cryosphere is shrinking by 33,000 square miles (87,000 square kilometers) per year.
A row of male and female speakers at microphones
234 scientists read 14,000+ research papers to write the upcoming IPCC climate report
by Stephanie Spera, Assistant Professor of Geography and the Environment, University of Richmond
This week, hundreds of scientists from around the world are finalizing a report that assesses the state of the global…

 Get The Latest By Email

Weekly Magazine Daily Inspiration

New Attitudes - New Possibilities

InnerSelf.comClimateImpactNews.com | InnerPower.net
MightyNatural.com | WholisticPolitics.com | InnerSelf Market
Copyright ©1985 - 2021 InnerSelf Publications. All Rights Reserved.