Texas Wind Power: Gets by with a Little Help from Tax Credits

Michael Giberson

Out in west Texas you can still see the occasional old-style wind mill on a farm or ranch, dutifully pumping up water when the wind blows. A much more common sight these days is the new, sleek wind power generator. A combination of good fundamentals for wind power, federal tax credits, state renewable energy mandates, and consumer demand for renewable power has led to rapid growth in wind power in the state.

A story in the New York Times reports that Texas surpassed California two years ago to become the largest wind power producer in the United States.

Rapid growth in power production has brought some challenges. Getting all that power delivered from west Texas into the state’s population centers in the east will take an investment in transmission. At least Sweetwater, Texas — highlighted in the article — is within ERCOT, the intrastate power interconnection in Texas that includes the bulk of the state’s population. Some otherwise desirable sites in west Texas fall outside of ERCOT, and may face bigger challenges getting connected to the grid and finding a market for their power.

Congress sometimes lets federal clean energy tax credits expire, too. While oilfield Texans are used to boom and bust cycle in the energy business, it is somehow easier to be at the mercy of nature and the international oil market than to find one’s livelihood in the hands of a mercurial Congressional majority. In the long run, however, federal policy should be directed at properly internalizing the externalities associated with various forms of power generation and let the market sort out technologies of production.

Crazy, I know, but an economist can dream, can’t he?


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