Texas wind power: It isn’t about the RPS

Michael Giberson

Texas did it again, it achieved it’s target for new renewable power generation capacity years ahead of schedule. And so, of course, as it becomes increasingly obvious that the Texas Renewable Portfolio Standard (RPS) is essentially irrelevant to growth in wind power, the Texas RPS is increasingly held up as a success and model for other states and the federal government.

From Brighterenergy.org:

The State of Texas exceeded its 2025 renewable energy target 15 years early last year.

The Electric Reliability Council of Texas (ERCOT) said on Friday that there was a record increase in voluntary participation in the state’s renewable energy certificate program in 2009.

Nearly 15 million renewable energy credits [RECs] were retired last year, with just 6.79 million needed by retail electricity providers to satisfy the state’s renewable portfolio standard for the year.

A further 8.14 million RECs were voluntarily retired, surpassing 2008’s record of 6.77 million.

The figures came as ERCOT submitted its annual report on the scheme to the Texas Public Utility Commission.

With more than 10,000 megawatts of renewable energy capacity on the Texas grid – mostly wind power – the state has reached its 2025 target 15 years early, and has doubled the target set for 2015.

The original mandate for 2009 was just 2,000MW, which was achieved three years early.

“Successful”

ERCOT interim CEO Trip Doggett said: “The Texas program was the first of its kind in the nation when it began in 2001, and it is now recognized as one of the most effective and successful in the nation.

“It’s also one of the biggest influences on the rapid growth of wind energy in Texas,” added Mr Doggett.

Other than the popular but faulty post hoc ergo propter hoc logic, what is the evidence?

Sort of like the 45 mph minimum speed limits on some Texas highways, the constraints are so far from binding that it is hard to see how they are relevant.

I think a better explanation of the growth of wind power in Texas (and about 95% of the Texas REC-qualifying renewable power capacity is wind power) is the combination of federal Production Tax Credit subsidies + reasonably good quality wind resources near transmission lines.  The CREZ transmission expansion plan is likely the next most important factor.  REC monies along with other state and local tax exemptions are far smaller considerations, perhaps tipping the balance in favor of development for a few projects.

What is my evidence? Oh, actually, what I have is more of an inference and interpretation drawn from a number of mostly anecdotal sources.  Nothing really reliable to show.  But given the lobbying for a national RPS, it makes a difference whether or not the Texas law is the model it is held out to be.

I’m sure someone has put together the story somewhere.  Anyone know of anything?

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5 thoughts on “Texas wind power: It isn’t about the RPS

  1. Mike,

    I see two other key elements that aided wind development in ERCOT.

    First, transmission cost allocation, in the form of postage stamp, has been critical in encouraging new generation generally, as the cost of new transmission upgrades are socialized among loads. Wind has benefited disproportionately among generators because of the lower capacity factors of wind farms.

    Second, natural gas prices above $6 per MMBTU made investment in wind farms appear to be in the money to developers.

  2. One way in which a national RPS would differ from a state RPS is that it would make it easier for FERC to justify interstate transmission for renewable energy. In TX, the RPS may be an also-ran because of the pioneering work with the CREZ transmission project, as you point out. A national RPS would be a ggod first step towards national CREZs.

  3. Admittedly interstate transmission planning is screwed up due to the mismatch between regulation and efficient markets: state regulators control oversee transmission siting decisions yet most wholesale power markets span multiple states, or at least would if economic value rather than regulatory turf wars controlled.

    I hadn’t thought of a link between a national RPS and a larger role for FERC in driving interstate transmission. Frankly, the idea of a larger role for FERC in transmission would likely drive some politicians into opposing a national RPS. Or, as a “compromise,” a national RPS that specifically denies FERC any greater interstate siting responsibility. Seems like a train wreck waiting to happen.

    Maybe, after the train wreck, someone would conclude it would be good if train tracks actually connected smoothly across state lines …

  4. Eric, I believe that postage stamp transmission cost allocation has helped wholesale competition in ERCOT work smoothly, but I don’t follow the “wind has benefited disproportionately” part of your statement. How does capacity factor fit into the story? Now if you said, “because distant-from-load wind generators demand more in the way of transmission service”, that seems sensible.

    High natural gas prices naturally gave non-natural gas generators a push, and among the non-natural gas technologies – coal, nuke, and wind – wind is quickest to build. I wonder how long natural gas prices will stay in the $4-$5 range, and if that will be too low to lead to additional wind power as the CREZ lines are built.

  5. Mike,

    In certain jurisdictions, generation developers are responsible for transmission network upgrades related to the dispatch of the new plant. A coal or nuke plant that has a 80 percent or greater capacity factor has an easier time paying off that upgrade than a wind resource with a 30-35 percent capacity factor.

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