Texas Blows by California in Wind Energy
By Peter Asmus
www.alternet.org/story/39477/
(AlterNet, July 26) -- Texas Republican Gov. Rick Perry boasted
something in early July that sounded pretty tough to swallow,
considering Texas' reputation as a state that produces freewheeling
oil men and little else in terms of energy production: "Texas
surpassed California to become the national leader in wind energy."
Surprisingly, this Texas brag has turned out to be true! How could
Texas, the home state of our dear President George Bush, and the
terrain of the fossil fuel captains of the world, beat cool, green
and progressive California on wind power, one of today's most popular
power sources?
At a time when California's electricity grid was again on the verge
of rolling blackouts, this battle of state egos sheds some light on
gaps between common perceptions and surprising reality. Apparently,
California's image as a leader on green power sources could be
nothing more than a mirage.
In 2002, the California Legislature passed a law that goes by the
wonky moniker Renewable Portfolio Standard (RPS). Inspired by Europe
-- which prefers government mandates instead of relying purely upon
the "magic" of 'free' markets -- the RPS sets numerical targets for
renewable energy for utilities. Renewable energy developers then
compete to supply the clean electricity. Wind power has been the
first choice of most since it is currently the cheapest renewable
energy resource.
Texas recently increased its RPS goal to supplying 10 percent of its
total electricity consumption by 2015 with renewable energy.
California surpassed that benchmark well over a decade ago. The
current California policy is to have renewable sources supplying 20
percent of the state's total electricity from by 2010 and then 33
percent of total state supply by 2020.
But having plans on paper is one thing. Getting projects into the
ground and up and running is another. Before getting into the nitty-
gritty of why Texas beat California at wind power, let's set the
context with a little bit of history.
California launches world's renewable industry
California was held up as a role model on energy policy throughout
the world for decades beginning in the 1970s, when the state came up
with the novel idea that reducing energy consumption could stave off
the building of nuclear power plants up and down the state's coastline.
Unlike other states, California banned oil as a fuel for electricity
generation and halted construction of coal-fired power plants due to
concerns about air pollution during the same decade. Yet the state's
real claim to fame came in the 1980s, when California literally gave
birth to the world's renewable energy industry.
In the course of just five years, a combination of tax credits, long-
term power purchase contracts, and state technical assistance
jumpstarted the wind, solar, geothermal and biomass power industries.
The passage of the federal Public Utility Regulatory Policy Act
(PURPA) in 1978 allowed for private companies to build new power
plants relying upon renewable fuels.
California was the most aggressive state when it came to
implementing PURPA. Among the incentives offered for wind power
developers were generous state investment tax credits (which
augmented federal tax credits), standard long-term utility power
purchase contracts that featured fixed prices during the first five
to 10 years of operation, and a state-funded wind resource assessment
that identified California's best wind energy opportunities.
Approximately $1 billion was diverted from federal and state taxes
into wind farms between 1981 and 1985 to jump-start the world's wind
power industry in California. The end result of this effort was the
addition of 1,700 megawatts (MW) of new wind power capacity to the
state's power plant portfolio. Generally speaking, 1 MW of
electricity can power 225 to 300 U.S. households.
That translates into California's powering as many as 500,000 homes
with this amount of wind power capacity online some 20 years ago.
Both federal and state investment tax credits were terminated in 1986
due to publicity surrounding the abuse of this investment tax
shelter. Democratic Rep. Pete Stark of Hayward, Calif., led the fight
to terminate the investment tax credits by proclaiming, "these aren't
wind farms, they're tax farms."
Yet California's public policies created a global market for wind as
well as other renewable energy technologies. The various federal and
state financial incentives played a critical role in attracting
almost $2 billion in private capital (some of which came from foreign
investors) to develop wind farms in California in less than five years.
Because of the investment tax credits, wind turbine technology
achieved the maturity in five years that typically takes 15 to 30
years in secluded government labs, argued proponents of these
financial incentives. Ed DeMeo, former Electric Power Research
Institute (EPRI) manager of renewable energy programs, notes that the
use of tax credits was "far more effective than the federal wind R&D
program. Though not perfect, the credits helped improve the
technology bit by bit."
In the 1990s, things started to unravel. Leading renewable energy
companies such as Kenetech of Livermore, Calif. -- the world's
largest wind power company -- went belly-up due in large part to
California's unstable power market conditions. A planning process for
new power plants that was supposed by to be "biennial" dragged out
for eight years, and then was overturned by federal regulators. Some
1,458 MW of planned new supply, including approximately 500 MW of new
wind and geothermal capacity, was never put into the ground.
In the 21st century, California's business climate for the cutting-
edge energy technologies of tomorrow has deteriorated to the point
where many of the nation's leading clean power companies -- a few
still based here -- have all but thrown in the towel. During the
energy crisis of 2000-01, when California needed renewable energy
more than any other time in its history to avoid rolling black-outs
and high-priced wholesale spot-market power purchases, very little
new renewable energy capacity came online, despite developers being
ready, willing, and able.
Perhaps the clearest sign that California has relinquished its
leadership role in promoting clean power technologies is the
unfolding story of wind power. California was once home to more than
80 percent of the world's total wind power capacity. But the state
stood virtually still between 1994 and 2004, and the state's share of
global wind power capacity has shrunk to single digits. Instead, coal
imports into California increased from 16 percent to 21 percent.
Believe it or not, California now uses nearly twice the amount of
coal as renewable energy!
The history of Texas energy policy has been dominated by unfettered
consumption of oil, natural gas, and coal. Due to aggressive energy
efficiency programs, California uses less than half as much
electricity per dollar of gross state product as does Texas. Because
it sealed itself off from the rest of the country and refused to be
part of the national electricity grid, Texas increased its
consumption per capita as California's per capita power consumption
went down over the past few decades.
Texas did not even begin to seriously entertain renewable resources
until 1999, when legislation signed into law by then-governor George
W. Bush included a RPS goal that was quickly surpassed by companies
such as Enron Corp. and Reliant Energy, two firms implicated in the
California energy crisis of 2000-01. These two firms voluntarily
exceeded the state RPS goals, citing the volatility and the state's
heavy reliance on natural gas as an electricity fuel.
Living in the present
According to the American Wind Energy Association (AWEA) as of the
end of June this year, Texas surpassed California in terms of the
amount of installed wind power capacity, bringing 2,370 MW online.
This compares to California's current installed capacity of 2,323 MW.
Because California's wind farm fleet is so old, most of its machines
only produce power 20 percent of the time, compared to modern wind
turbines at some of the best wind sites in Texas generating
electricity 40 percent of the time.
Both states are plagued by a lack of fresh investment in the
transmission lines required to bring electricity from remote wind
farms to urban consumers. In California, this lack of progress on new
transmission has stalled new development, whereas in Texas, existing
wind farms cannot always get their power to big urban areas such as
Dallas-Fort Worth.
Mike Sloan, managing consultant with the Wind Coalition, an Austin-
based wind energy advocacy organization, claims the state's
accumulative wind power capacity will total almost 2,500 MW by the
end of 2006. "Texas has managed to keep its renewable energy rules
pretty straightforward," Sloan said. "California would be well-served
to heed the words of Elvis: 'A little less conversation, a little
more action, please'."
AWEA projects that 500 MW of wind power could come online by year's
end in California, but insiders say those numbers are overly
optimistic, and that by the end of the year, Texas will likely retain
its current lead. Regardless of California's dithering, wind power
has never been more popular. Current trends suggest that global wind
power capacity will reach 75,000 MW by the end of 2006.
"When it comes to renewable energy sources such as wind power,
California has earned a reputation for providing a lot more words
than megawatts," said V. John White, executive director of the Center
for Energy Efficiency and Renewable Technologies (CEERT). "Everyone
in California is in favor of renewable energy sources, but we can't
seem get to get our collective act together to get stuff into the
ground to actually produce clean electricity."
Both Republican Gov. Schwarzenegger and Democratic gubernatorial
candidate Phil Angelides trumpet the virtues of wind and other
renewable energy sources in campaign speeches, as do scores of other
state politicians. They know it polls well. But Texas has proved that
when it gets down to getting the job done, the home state of our
current president -- and the center of this nation's fossil fuel
industry -- is better at transforming vision into reality.
"The California legislature has set aside hundreds of millions of
dollars in ratepayer funds to help buy down the cost of new renewable
energy resources, but almost none of the money has been invested,"
White said. "Our electric utilities spend hundreds of thousands of
dollars on television ads, touting their green energy programs, and
yet California today is increasingly vulnerable to unstable natural
gas supplies and price spikes."
Bob Gates, who helped develop some of the first wind farms in
California in the early '80s, and is now a senior vice president with
Santa Barbara-based Clipper Wind, is clearly frustrated with the slow
pace of new wind development in his home state. "In the '80s, we had
rules that created a stable market, which is very important for the
financial side of things. Today, we worry excessively. California is
now considered a laggard. I think we need a wholesale re-tooling of
California's approach. It's just too laborious to get things done in
California today. We've known we needed more transmission access to
the Tehachapi wind resource area way back in 1983, and here it is
2006, and we are still scratching our heads!" said Gates. "To say
that permitting facilities goes faster in Texas is a dramatic
understatement."
Of course, the air quality in Texas is in jeopardy due to the
simultaneous licensing of 17 new power plants that burn coal, the
dirtiest of all fossil fuel sources. In this case, the ease of
permitting new power plants works against the environment. Texas
state legislators are likely to exempt these power plants located
upwind of the smoggy Dallas-Fort Worth area from a federally mandated
plan to improve regional air quality. In fact, TXU Energy is based on
local lignite, the most polluting firm of coal.
In a sign that simplicity is not always a virtue, Texas regulators
will treat each of these coal units as if they operated in isolation,
not looking at the big picture of the accumulative pollution these
plants will bring to the Dallas-Fort Worth region. The mayor of
Dallas, as well as other cities, is rising up in protest. "With
established wind patterns, those emissions are headed straight for
North Texas, especially the six counties around Dallas-Fort Worth.
How can Dallas-Fort Worth, which is a significant non-attainment [of
federal air quality standards] area, possibly clean up the air when
17 new coal-burning plants are on the drawing board and the smoke
headed our way?"
Looking to the future
California still leads the nation in renewable solar, geothermal,
and biomass energy resources. But there is a long list of technical
and esoteric reasons why, despite its impressive-looking public
policies, it is falling behind on its RPS targets.
The state's private utilities may run ads touting their "green"
power supply portfolios, but they then work behind the scenes to
fight adding new supply, playing state agencies against each other,
and bringing in armies of lawyers to sabotage the best-intended
policies.
And, in a sense, California has become the victim of its own success
-- and the wind industry itself has also played a role in this.
Costs for wind (and solar) power are going up, not down, due to steel
shortages and the simple math of supply and demand: The wild
popularity of wind and solar has led to shortages of raw materials,
which then translates into long waits and higher prices for these
clean power systems.
It seems a balance between the ever-present search for perfection
that epitomizes today's architects of California's energy policies --
and the simplistic business-friendly attitude of Texas -- might well
be the answer. Since California's utilities no longer make any money
from power generation provided by wind and other renewable sources
built by independent power producers, they have little incentive to
move forward.
As someone who moved to California in 1980, a time that marked the
very beginning of global wind development on the golden hills that
made this state famous, it is certainly ironic that the visionary and
entrepreneurial zeal that characterized then Gov. Jerry "Moonbeam"
Brown's approach to government would dissipate into today's
bureaucratic muck.
With issues such as global climate change, the terrorist threat, and
clean air on the table, California, Texas, and every other state
needs to play a role. So far, 22 states and the District of Columbia
have adopted an RPS to foster new markets for clean, renewable energy
sources. (For more on this, read the report Race to the Top: The
Expanding Role of U.S. State Renewable Portfolio Standards at
www.pewclimate.org).
California once boasted the world's most forward-looking and
sophisticated power supply system -- and renewable energy sources
were a key part of why the Golden State earned this reputation.
Perhaps the competitive spirit -- and widespread disdain for Texas --
can light a fire under the state's regulators, utilities, developers
and NGO's.
Who will be ahead come 2010? I'm not a betting man, but I'm keeping
my fingers crossed that my colleagues in California will rise to the
occasion and show those good old boys in Texas that we can stop
sucking our thumbs and start moving around a little dirt.
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Peter Asmus is the author of "Reaping The Wind: How Mechanical
Wizards, Visionaries, and Profiteers Helped Shape Our Energy Future"
