Texas anti-renewables bills shelved, threat to clean energy recedes
Several bills that threatened to kill off the renewables boom in Texas were set aside as the legislative session comes to a close.
In the waning hours of the Texas legislative session, a series of harsh bills that could have ended the renewables boom in the state have seemingly been shelved.
Known for its enormous oil and gas production, Texas has become the U.S. leader in solar and wind power generation, along with battery storage. Texas has a deregulated electricity market, and it is easier to build new sources of electricity compared to other states. As the cheapest source of electricity generation with short lead times, solar and wind have been proliferating, adding about 1 gigawatt of new capacity per month in the past year.
In the middle of a typical day on the Texas grid — known as ERCOT — as much as 50 percent or more of the state’s electricity generation comes from renewables and nuclear power.
However, several bills that had been progressing through the state legislature threatened to snuff out the renewables boom.
One bill that passed the state Senate earlier this year, S.B. 388, would have required that 50 percent of new sources of electricity come from “dispatchable” generation. That effectively meant any new solar or wind would need to be paired with equal parts coal and gas. Batteries are excluded from the definition of “dispatchable.” Power generating companies and utilities that fail to comply with the standard would be required to buy credits from others.
The bill would have effectively put a ceiling on the ability of the renewable energy industry to grow.
But as the month of May wore on, the odds of passing the House started to look steep. If the bill did not move forward out of a key House committee by May 23rd, “we would join what appears to be the consensus view that the proposal is likely to die in the lower chamber at session’s end,” ClearView Energy Partners, a Washington-based energy consultancy, told clients in a note on May 19th. “In other words, this is the time in the waning days of the legislative session when each day that progresses without action suggests less favourable prospects.”
By May 28th, the bill had been quietly left off the agenda in the State House, just days before the close of the legislative session on June 2nd.
“All of those bills have failed to advance by the deadlines in the legislature. It’s not over till it’s over. But as it stands now, none of the really bad anti-renewable bills look like they’ll pass,” Luke Metzger, executive director of Environment Texas, a state NGO, told Gas Outlook.
That wasn’t the only bill targeting renewables that was up for consideration.
S.B. 819 would have imposed onerous permitting requirements for renewables, requiring solar projects to be sited 100 feet from any property line and 200 feet from a built structure. For wind, that distance would be 3,000 feet, a requirement that highly polluting oil and gas projects do not have. As of May 19th, ClearView also questioned the odds of passage, and said the legislature “needs to move quickly if it wishes to keep this proposal alive.”
One bill would have prohibited offshore wind in the Gulf of Mexico from connecting to the state’s grid.
Meanwhile, another punitive bill, S.B. 715, would have required all renewable projects to basically have back-up power, a crippling requirement for individual projects.
But a broad coalition across the state opposed the anti-renewables onslaught, including renewable energy developers, environmental NGOs, farmers, and even powerful business groups. The main fear was not one of greenhouse gas emissions, but that the legislature would kill off a booming industry and force up electricity costs at a time when the state needs more power.
A study commissioned by the Texas Association of Business found that electricity prices would shoot up by around 10 percent if the state legislature halted the renewable energy build-out.
“What’s worse is that by limiting energy options, the grid would not have the capacity to serve all of Texas in the case of extreme weather events,” Glenn Hamer, CEO of the Texas Association of Business said in a statement.
Renewable energy and battery storage have been critical to the state strengthening grid resilience, a key policy priority for the state following the 2021 winter storm that led to widespread electricity outages.
“ERCOT has made a number of improvements to increase the grid’s reliability and resiliency since 2021 and continues to work with the Texas Legislature, the Public Utility Commission of Texas, and stakeholders in building a more resilient grid for the ongoing economic and population growth across the state,” ERCOT said in a statement to Gas Outlook.
The buildout of clean energy came even as the state legislature has gone out of its way to try and prop up struggling gas-fired power plants. The state established a $5 billion fund to offer low interest loans for new gas plants. But momentum has stalled because gas plants are too expensive, even with the support.
Constellation Energy and another private gas developer called WattBridge Energy withdrew 2 gigawatts of gas projects from the fund, citing uncertainty around costs, according to Bloomberg. Citigroup analysts said earlier this year that the fund was “falling apart.”
“We expect several more gas power developers to remove themselves from the [Texas Energy Fund],” Citi analysts wrote, as reported by Bloomberg.
Likewise, there are extensive bottlenecks for gas turbines, which will make it all but impossible to develop new gas-fired power plants beyond what is already in the works until the end of the decade. Those bottlenecks are also driving up the cost of new projects.
The inability to quickly build new gas plants underscores the need for solar and wind, experts say.
“We need all the energy sources we can get. We can’t afford to be banning or regulating out of existence these clean energy sources,” Metzger said.
At the national level, the Republican-controlled Congress is pressing forward with a sweeping bill that could kill off support for renewable energy, which might badly slow deployment of solar, wind, and batteries. The specifics of that legislation, which are still being negotiated in the U.S. Senate, remain unclear.
But the Texas anti-renewables push was more acute and more immediate. The demise of those bills means that clean energy will still be commercially compelling in the state.
“At least in terms of the market structure in Texas, which has been so favorable to renewables, those foundational elements are still in place. It’s still easy to build in Texas,” Metzger said.
“Wind and solar are still some of the cheapest forms of generation in the state. And so, there’s a lot of demand for it,” he added.
(Writing by Nick Cunningham; editing by Sophie Davies)