Texas leads the nation for installed wind capacity, according to a new report, but local and national policies are threatening its place at the top.
Since 2011, 40 percent of all new energy generating capacity installed in Texas has come from wind, and the state installed more than a third of the nation’s new wind capacity last year, according to a report released Wednesday by the American Wind Energy Association (AWEA). Texas also leads the nation with 17,000 wind industry jobs, the U.S. Wind Industry Annual Market Report found.
This growth is largely due to local and national policies encouraging wind development, which have paid off by making wind is cost-competitive with other energy sources in Texas.
For example, when Georgetown, Texas, went shopping for a new electricity agreement, it was a financial decision to select a wind developer, said Chris Foster, the city’s manager of resource planning and integration. “They won straight up on price,” he said Wednesday at a press conference.
For the past few years, the wind industry in Texas has benefited from supportive local policies and a national production tax credit (PTC). ERCOT — the local electricity authority in Texas — allows providers to source their electricity from anywhere in the region at the same transmission rate, which means wind turbines can be placed in the best possible locations for energy generation. The state also started a program to build out additional transmission lines and instituted an RPS.
But AWEA’s report comes just a day after the Texas state Senate passed a bill that will remove the state’s renewable energy standard (RPS) and reduce investment in transmission lines. And the national Production Tax Credit (PTC) was left to expire at the end of last year.
This could be a double-punch to local wind developers.
Under the RPS, utilities have the option to buy renewable energy credits (RECs), if they do not produce enough energy from renewable sources. This system has driven the development of a $40-million market for RECs in Texas, which would disappear if the state bill SB931 becomes law. The bill would not only repeal the RPS, it would also halt investment in high-voltage transmission lines.
Jeff Clark, executive director of the Wind Coalition, a Texas-based trade organization, said wind energy has been developed in good faith, with the expectation that the transmission line will be built and the REC market will continue.
“That is typically not how Texas treats businesses, changing the rules in the middle of the game,” he said during the press conference Wednesday.
Policy uncertainty can wreak havoc on cost-competitiveness — and jobs — in a nascent industry (and wind is still nascent — nationally, wind accounted for 4.4 percent of electricity production in 2014, according to AWEA).
And the federal PTC might be even more uncertain than local policies. Under the congressional budget process, the PTC has expired and been renewed four times since 1998, leading to steep declines in installations — and industry employment — each time.
In 2012, failure to extend the PTC in a timely fashion cost the industry 30,000 jobs, more than a third of the then-total. The current version of the PTC expired Dec. 31, 2014, but industry representatives have expressed hope that it will be included in current tax packages under consideration by Congress.
The PTC “shouldn’t have to go off a cliff,” said AWEA spokesman Rob Gramlich. He urged Congress to pass a multi-year extension. “We don’t necessarily need the PTC forever,” he said.
Congress is notoriously gridlocked on tax issues, but the wind industry is a rare across-the-aisle issue, creating a domestic energy source while satisfying calls for clean, renewable energy.
“It was the intent of Congress to create an alternative production source of American electricity,” Rep. Steve King (R-IA) said in a statement. Citing the dramatic cost declines, he said, “The wind industry has done what Congress asked them to do. Congress needs to hold up their part of the bargain.”