Latest posts by H. Sterling Burnett (see all)
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- Trump’s ESA Changes: A Good Start - September 18, 2019
How long does a state have to subsidize an industry before it has to stand on it own — evidently 15 years is the limit in Texas, as the state is on its way to repealing its renewable energy mandate.
Texas’s renewable power mandate has been around since 1999, offered in order to get certain legislators and politically connected industries to buy into the 1999 legislation which established competitive electric markets in the state. Texas, always different, didn’t set a percentage standard but rather specified a particular megawatt amount of power that had to be supplied. The initial mandate required the state’s competitive electric providers to cumulatively install 2,000 MW of new renewable energy capacity by 2009. In 2005, the Texas legislature expanded the RPS to require 10,000 MW of installed capacity from renewable energy sources by 2025 [though that standard was met by 2010 with Texas having the most installed wind capacity of any state.]
As Josiah Neely, senior fellow and Texas director for the R Street Institute, points out in an article on the MasterResource Blog:
The legislature also acted to deal with a geographical inconvenience: Most of Texas’ wind capacity was in the sparsely populated west, while our electrical demand is centered in urban areas hundreds of miles to the east. In response, the legislature created the Competitive Renewable Energy Zone (CREZ), to build a thousand miles of transmission line to link wind farms with urban demand (to solve the nowhere-to-somewhere problem).
These programs have been costly for Texas. Transmission lines under the CREZ program have cost nearly $7 billion, or $270 per Texan. The cost of transmission lines is socialized across all electrical consumers, and will start appearing on Texans’ utility bills in the near future. Costs of meeting the RPS have been lower, but still have been estimated at approximately $543 million since 2005.
In April, the Texas Senate voted to repeal the state’s Renewable Portfolio Standard, as well as some related subsidies to the wind industry. If passed by the House and signed into law, the move could signal a broader change in how lawmakers treat energy in the U.S.
Neely argues, “With Texas wind power capacity at more than double the state’s RPS minimum, repeal is unlikely to do much to change the profile of renewable energy in Texas. But repeal is still important, because it sends a clear signal that markets, not politics, should decide what kinds of energy Texans use.”
There is a growing sense that programs like renewable energy mandates and tax credits and direct subsidies, have outlived their usefulness (if they were ever useful to begin with). Texas’ move comes after Ohio froze its mandate, West Virginia repealed it’s and Kansas’ Gov. announced that he, the legislature, utilities and even the wind industry, agreed to a planned replacement of its renewable mandate with an aspirational goal.
Other states are in various stages of either freezing or repealing their own standards. This trend, moving faster than the initial movement to force utilities to provide renewable energy, combined with the lapse of the federal production tax credit will result in promises savings for ratepayers and the darkest days the renewable power industry has seen in years.
Another positive on the energy front out of Texas was the Senate’s vote bar cities from enacting local bans on fracking. The Texas house had passed a similar bill in April. The bill now awaits an expected signature from Gov. Abbott.