IN DEPTH: The new Texas wind rush

After 64 years, Oldham County judge and legislator Don Allred is finally at peace with the wind that whistles through the tiny town of Vega, northwest Texas.

“I grew up on a ranching farm. I’ve always cussed it. It’s difficult to work in. Now, I can look out my courthouse window and see those turbines turning. This makes the wind much more tolerable knowing you are selling it and our taxpayers benefit,” he says.

He isn’t alone. With few exceptions, residents and public officials across the rural Texas Panhandle and adjacent plains are embracing what is the biggest wind rush in North America. About 11GW of projects are being developed or have been proposed in the region, with Oldham and 40 other counties competing for billions of dollars in potential investment.

Indeed, some of these projects will be among the largest in the US, such as Tri Global Energy’s 1.1GW Hale Community Energy, E.ON Climate and Renewables’ 600MW Conway, Iberdrola’s 500MW Pampa and EDF Renewable Energy’s 500MW Comanche Run.

“Panhandle wind is remarkable,” says Andy Bowman, president of Pioneer Green Energy, which is developing several projects in the area. “It’s not only very strong but consistent, with a high portion produced during on-peak hours. There are a good number of projects being built there that will have a capacity factor over 50%.”

Project opportunities abound on the sparsely populated, semi-arid treeless plains, where old-fashioned circular windmills dot the landscape. There are negligible environmental and space constraints, local communities are welcoming developers with open arms after three years of drought, while few areas away from the US coastline have such high-quality winds combined with heavy-duty transmission and a ready market.

The recently completed 5,800km of high-voltage transmission lines — which have taken eight years to build at a cost of $6.9bn — have been the main catalyst for this latest Texas wind boom. The Competitive Renewable Energy Zone (CREZ) project has opened up thousands of square kilometres of the state’s best wind resources, linking them with load centres such as Dallas, Houston and Austin.

The CREZ was a triumph of public policy. In 2005, the state legislature anticipated the need for additional transmission capacity if Texas were to realise its immense wind development potential of two terawatts. It bet correctly that with the CREZ in place, a surge in wind investment would follow. 

The CREZ will allow the main grid operator, the Electric Reliability Council of Texas (ERCOT), to eventually send about 18.6GW of mainly wind power across the state. It had 11.2GW of wind generation in service on 1 January and expects 5GW (3GW in the Panhandle) more by the end of 2015.

“CREZ has been absolutely critical to driving wind development as it was successfully completed at the right time,” says Bowman.

Knowing CREZ lines would soon be energised, developers rushed projects forward in 2013 before the production tax credit expired. Congress then renewed it, easing criteria for projects to qualify through 2015.

New players have entered the market including Dallas-based Tri Global, whose audacious chief executive, John Billingsley Jr, is promoting a new concept for large-scale community wind development. Others include high-powered asset management firms such as Blackrock and infrastructure funds like Starwood Energy, and foreign players led by Canada’s Enbridge and Japan’s Sumitomo. Google and Microsoft are embracing Texas wind as both an investment and to improve their carbon profiles.

Also driving wind expansion is a booming state economy that is bigger than Canada’s, fed by oil and gas production and a vibrant export sector. 

The wind supply chain is scrambling to keep pace. Vestas, for example, has rung up 960MW in firm turbine orders in Texas for delivery throughout 2015. Add-on deals are possible. “Most of these projects are large sites that people like to extend,” says Chris Brown, who runs Vestas’ North American operations. “From our perspective, Texas has been a great market.”

While not a baseload source, the wind can produce prodigious amounts of power when it blows hard — the record is almost 28% of the ERCOT system load. In January, wind provided essential power to help meet record electricity demand within the ERCOT area after 1.8GW of conventional plant capacity abruptly went down due to cold weather. 

Wind power, of course, is nothing new in Texas, which led the nation with 12.2GW of generation capacity on 1 January. The first turbine began spinning in 1995, with most installations taking place from 2004-10. That expansion occurred mainly in West Texas — where the winds are less strong and consistent than the Panhandle — with the rest along the southern Gulf of Mexico coast.

But at times, West Texas output exceeded available transmission capacity. This led to wind generation curtailment as high as 16%, costing asset owners at least 2.5 terawatt hours in lost sales. The constraints also led to lower wholesale electricity prices. With project economics suffering, asset owners have frozen most investment there in recent years.

System upgrades included in the CREZ fixed most of that problem by providing a more robust connection between each node, or generation source, and the four ERCOT regional dispatching hubs.

Steve Myers, executive director of advocacy group Class 4 Winds & Renewables, is a busy man these days. The non-profit organisation, based in the Panhandle capital of Amarillo, serves a radius of 240km, and he is often out meeting business groups, developers, landowners, elected officials and others seeking to capitalise on the wind upsurge.

“Everywhere I’ve been at in the past two months, they’re already talking expansion,” he says, referring to proposals for a second CREZ phase that would support even more future wind capacity. “A couple of arms on the [transmission] towers don’t have wires on them yet. Developers have the idea to keep growing and catching all the winds because they are so good.”

At the local level, the economic impact is less about new jobs, although some are being created in O&M, while Alstom has built a nacelle assembly plant in Amarillo. That’s fine for the dozens of small communities that don’t have the public infrastructure to support a big influx of outsiders.

Wind developers are spending tens of millions of dollars purchasing goods and services locally, which aids local businesses and preserves jobs, strengthening the social fabric in small municipalities whose fortunes are tied to cattle prices and cyclical cotton and wheat crops. And with landowners struggling with the three-year drought, income from turbines has been hugely important.

“These are farmers who were ready to pack it in years ago,” says Myers. “They can still run crops and cattle, and relax a bit, knowing they don’t have to worry at year-end whether or not they are going to repay the bank [for loans for equipment and planting purchases].”

Once built, wind farms increase the local tax base and revenue, enabling authorities to lower the property tax for all residents.

“These counties before just had farms and ranches, and their tax rolls were basically the same for many years,” says Myers.

Developers also voluntarily donate millions of dollars to upgrade schools and other public services. “They don’t have to, but many are very community-conscious,” says Wes Reeves, a spokesman for local utility Southwestern Public Service, which has led the purchase of wind power in the area.

In Oldham, a 3,888sq km county with a population of just over 2,000, three wind farms have been built, another is coming on line and two more are planned — a situation Judge Allred describes as positive. “You’ll have the wind no matter what. This is an industry that fits well in the way that we can profit and the personality of our community.”