Federal wind and solar energy incentives are under attack in Texas, where the Senate passed a bill that mandates state regulators to “identify and study” them for ways to eliminate their perceived negative effects on the main electric power market – and by extension, traditional generators.
Backers of Senate Bill 2232 believe the study will clearly show how renewables subsidies impose unfair costs on the system, and will provide the basis for future legislation to shift those costs to wind and solar developers and facility operators.
In addition, it could perhaps find a formula to pay coal, natural gas and nuclear generators more for the electricity they produce.
Fossil-fuel generators have argued that the wind production tax and solar investment tax credits (PTC and ITC) leave them at an unfair competitive and financial advantage in a market where they are paid only for electricity supply, not capacity. They find themselves increasingly undercut on price by resources that are intermittent.
In their view, the Legislature has made their plight worse by requiring all consumers pay for the massive transmission infrastructure that helps enable utility-scale renewables development.
Renewables are also the only generators not required to dispatch in ERCOT. This means they do not have to pay for costs the system must absorb when they are unable to deliver power because there is no sun or wind.
Pro-fossil lawmakers say this is not only unfair, but tilts the playing field too much in favour of renewables that are already enjoying too much federal largesse.
They do not mention, or only grudgingly acknowledge, that fossil fuels and nuclear have also received hundreds of billions of dollars in federal assistance ranging from tax credits and deductions to special allowances – many embedded in the US tax code.
The $7bn, 345kV transmission build-out earlier this decade that linked remote wind resource to large metropolitan areas is also paying dividends for the state's expanding oil industry, delivering much-need power to West Texas.
SB 2232 details
SB 2232 was sent to the state House of Representatives where it will likely first receive a hearing in the State Affairs Committee.
The House version (HB 2908) is not identical, meaning one would have to pass both chambers to become law (if would need to be signed by Governor Greg Abbott). HB 2908 is now sitting in the House Calendars Committee awaiting assignment to a floor calendar.
We feel strongly that they are ill-advised and transparent attacks on renewable energy.
A diverse group of clean energy, consumer, environmental and other advocacy groups are opposing both bills.
“We feel strongly that [they] are ill-advised and are transparent attacks on renewable energy,” Jeff Clark, president of the Advanced Power Alliance in the state capital of Austin, said in an email. Group members include many of the country’s leading wind and solar developers.
He asserts that testimony given at the hearing for SB 2232 “made clear that opponents of renewables would like to use this bill as justification for assigning new costs to renewable generation in ERCOT”.
ERCOT serves about 90% of the state’s electric load and has more than 22GW of wind power capacity, by far the most of any US grid, and 1.9GW of solar capacity. It is the nation’s fastest growing market for both technologies.
The other 10% is served by regional grids, but wind development is taking place only in the northern Panhandle region servied by the Southwest Power Pool.
The electric system also serves the Permian Basin, the largest US oil and natural gas production region, as well as several major shale natural gas recovery locations.
The Legislature is scheduled to adjourn on 27 May.
Republicans control both chambers: 19-12 (Democrats) in the Senate and 83-67 in the House, which in recent years has been more supportive of renewable energy development. Various Republican representatives come from rural districts, where wind is generating economic benefits for communities and landowners.
The bill requires the Public Utility Commission to “identify and study the effects that renewable energy subsidies have on pricing, reliability and efficiency of the electric power market in the ERCOT power region.”
Specifically, the scope of the study must include peak price formation, negative pricing, ancillary services, congestion, reserve margins, and transmission and distribution costs.
The regulatory body shall request comments from interested parties and an independent organisation certified for ERCOT.