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Thursday, April 11, 2024 | Back issues
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Wind and Solar Builders Descend on Texas as Tax Incentives Fade

Seen from above, the sprawling landscape of West Texas can look something like a checkerboard.

(CN) – Seen from above, the sprawling landscape of West Texas can look something like a checkerboard.

Anyone who has ever flown into Midland, the heart of the booming Permian Basin oil patch, knows the sight: dirt roads crisscross huge swaths of desert scrub, sandy veins in the sparse vegetation connecting thousands of oil and gas wells.

But change is in the air and on the ground here and across much of oil-rich Texas, as renewable energy companies from around the world rush to add industrial fields of blue solar panels and towering white windmills to the landscape.

The wind and solar industries are poised for an unprecedented boom in Texas over at least the next two years, as builders hurry to take advantage of federal tax incentives that are beginning to fade away after pushing the technologies to a place where they are now economically competitive with coal.

Reports from the Electric Reliability Council of Texas, or ERCOT, the grid operator for most of the state, paint a picture of the planning and building spree underway.

Near the dusty Texas panhandle city of Lubbock, a radiologist teamed up with a Latin American energy company to buy more than 5,000 acres for a massive solar farm next to a planned Tesla “supercharger” station.

A California firm wants to build what would reportedly be the world’s largest solar farm attached to a power storage facility, a grand-scale effort to overcome one of the industry’s biggest challenges: cloudy days.

An Italian developer with projects in Indonesia and Australia, among other countries, is pursuing a sizeable solar farm near Midland. Companies based in Spain, Canada and Germany are getting in on the action too, as is a Florida firm that traces its roots back to the founding of the Florida Power & Light Company in the early 1920’s.

Those projects and dozens of others are in various stages of planning, approval or construction. Experts say some will get built, while others won’t.

Still, ERCOT records on projects that are more than just talk – that is, those that have signed an “interconnection agreement” with the grid operator and have posted some kind of financial security – suggest the potential for explosive growth.

Solar generation in Texas could grow by more than 4,000 megawatts in 2020 and by more than 5,000 megawatts in 2021, the numbers show, in what would be a substantial increase from the state’s current capacity of roughly 1,900 megawatts.

Texas already leads the nation in wind generation with more than 20,000 megawatts of capacity, but companies in that sector are moving aggressively as well. The grid operator is tracking the potential for more than 10,000 megawatts of new wind power in 2020 and more than 11,000 megawatts in 2022.

“We’re not exactly sure what’s going to get built, but we can see trends,” Warren Lasher, ERCOT’s senior director of system planning, said in an interview. “Certainly, if you look at the amount of wind and solar that has that signed contract and has put down collateral, it’s a significant amount.”

“There’s certainly a lot moving forward, a lot under construction,” said Charlie Hemmeline, head of the trade group Texas Solar Power Association. “What specific number we get to by what date, there’s obviously uncertainty there.”


The costs to build clean energy projects have fallen “rapidly” over the past decade or so, according to the International Monetary Fund, dropping 76% for solar and 34% for onshore wind from 2009 to 2017. That’s no doubt helped spur clean energy growth in Texas and across the U.S., but builders are also now feeling a pressing motivation to wrap up their projects before federal tax incentives drop to lower levels or zero out altogether.

A 30% tax break for solar investment will drop to 26% next year and scale down to 10% after 2021. Federal tax breaks on wind power production are set to phase out completely by the end of 2020.

The federal Energy Information Administration has linked the nationwide flurry of new wind farms to the fading incentives, and the analyst firm Wood Mackenzie has said it expects U.S. wind production to peak in 2020 as a result.

“I’m sure that it’s playing into somebody’s motivation,” Hemmeline said, though he downplayed the overall significance of the credits expiring.

“There’s a little bit more of a rush at the moment just because of the level of demand,” he said. “In the past nine months or so you’ve got Honda, Anheuser-Busch, Facebook, these big players that have big demand and are doing big solar deals [in Texas.]”

Like fossil fuel production, new wind and solar farms have the potential to bring jobs and significant new tax revenue to cash-strapped rural communities.

Wind companies in Texas already pay $237 million in state and local taxes on average each year, according to the American Wind Energy Association. Another national trade group, the Solar Energy Industries Association, counts more than 9,600 solar-related jobs in the Lone Star State.

Still, even “green” energy projects can prompt concerns among locals.

In Val Verde County, a rugged stretch of the West Texas borderlands that’s home to an international lake and thousand-year-old pictographs, local activists have been warning about a potential influx of wind farms that they say would impact the state’s most pristine river and interfere with low-flying air traffic at a nearby U.S. Air Force base.

“The biggest concern is the impact it will have on the military base, which is an economic pillar of the community,” Julie Lewey, executive director of the Devils River Conservancy, said in an interview. “Every area that is undeveloped is commodity to the Air Force base.”

The region is already home to a sizable wind farm that came online in 2017, but Lewey’s group worries further development could “degrade” the region’s “frontier legacy,” among other concerns.

The group’s campaign played into one wind company’s decision to abandon its plans in the county, though the company reportedly attributed most of the decision to a lack of transmission lines in the area.

The fight revealed how wind and solar companies aren’t immune from the kind of public backlash usually reserved for oil and gas projects.

“We are not by any means anti-renewable energy,” Lewey said, “but we need to be thoughtful as to where we place it.”

But that abandoned wind farm plan also pointed to one of the broader logistical challenge of wind and solar expansion in Texas: ensuring there are enough power lines to move electricity from far-flung parts of the state to big-city markets.

It’s an issue the state’s grid managers are keeping their eyes on.

ERCOT officials say a major upgrade of transmission lines in West Texas and a plan to bring the city of Lubbock into the state’s primary grid system should make it easier for new renewable energy projects to move their product.

“What you’re seeing right now is the latest transmission projects that we are developing are reaching out to some of the best solar regions in Texas,” said Lasher. “You also see the need for kind of more major cross-the-state kind of projects.”

“Obviously, we need to keep building,” he said.

Categories / Business, Energy, Government, Regional

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