Senate Bill 7, the Electric Restructuring Act, passed in 1999, introducing retail competition. In January 2002 all Texans will choose their own retail electric provider, or REP, the entity that provides customer service. Since distributing electricity requires only one set of wires, that part of the business will remain a local monopoly. That's why if you switch to a new electric company, you still call the local utility in the event of any problems. (That's also why claims of reliability in advertisements are misleading.)
Under SB7, all companies must comply with a renewable portfolio standard (RPS) to help Texas reach its goal of installing an additional 2,000 megawatts of renewable power by January 1, 2009. (One megawatt powers roughly 1,000 homes.) Texas law defines renewable technology as solar, wind, hydro, geothermal, tidal energy and biomass. The law also allows Texas natural gas to count as "green."
The Saudi Arabia of wind: West Texas's desert landscape and plateaus make it ideal for generating power.
AWEA
The Saudi Arabia of wind: West Texas's desert landscape and plateaus make it ideal for generating power.
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Although all of these technologies are available, "when you're talking about renewables in Texas, you're talking about wind," says R.W. Rushing, CEO of National Green Power, an REP that plans to offer 100 percent renewable power. That's because solar power is still expensive, the amount of landfill gas is small, and any river that can be dammed already has been. (Of the 880 megawatts of existing renewable energy in Texas, most of it is hydro.)
As it turns out, West Texas is the Saudi Arabia of wind power. Rushing, who has visited McCamey (an epicenter for wind energy located an hour south of Midland) paints a picture of west Texas as a big, windy desert with large plateaus.
"The wind comes across the desert and gets scooped up inside of the plateau," he says. "When it hits the corner of the plateaus, it's at a high velocity."
And that's the perfect spot to plant a windmill. Wind technology has advanced so much that with the recent spike in gas prices, it is competitive with natural gas, and cheaper than nuclear (everything is) though still more costly than coal. When wind turbines first went up in California more than 20 years ago, they generated only 25 to 50 kilowatts. Now a wind turbine stands 100 meters from the ground to the tip (the higher you go, the more the wind blows), its three sleek blades measure 70 meters in diameter, and it can generate 1.3 to 1.6 megawatts. (A megawatt powers roughly 1,000 homes.) It remains pricey to build (roughly $1 million per megawatt), but fuel costs nothing, it creates no pollution, and the process of building a wind turbine, from planning to permitting to construction, takes roughly 18 months, quick for the energy world.
According to the American Wind Energy Association, wind accounts for only 1 percent of the nation's energy, but 2001 will see a 60 percent increase in existing capital. About a third of that will come from Texas, says AWEA spokesperson Christine Real de Azua. Texas ranks second in the nation for wind potential; North Dakota is first. By the end of the year, Texas will have the second-largest capacity, behind California.
By 2003 Texas needs to have 400 of the 2,000 megawatts installed. At first industry representatives reacted with skepticism that Texas could meet that goal, says Russel Smith, executive director of the Texas Renewable Energy Industries Association. But TREIA data show that ten projects totaling 893.32 megawatts already have been announced, putting Texas well ahead of schedule.
Smith, Rushing and other industry experts say renewables would not be as viable as they are today without that governmental push from SB7.
"Historically, renewables have been a government-mandated supply-side thing, and the electric utilities wanted to put up wind turbines so they could put the picture on their brochures and distribute press releases and that's it," Rushing says. His company takes a demand-side approach to show that consumers demand wind power, he says.
Although the 2,000 megawatts required by the RPS will account for only 3 percent of Texas energy, the state's regulations have been widely praised as the best so far in the country for its fairness.
"It's the best -- not because of amount, which is not a huge amount," Real de Azua says, "but because of the way in which it's being required."
To verify compliance, the PUC created a system called the renewable energy credits trading program. For each megawatt of new renewable energy produced, an REC is also generated. A company must have RECs to prove it bought new renewables. For example, if a company contracts for 100 megawatts of wind energy, it must have 100 RECs at the end of the year. Since wind is an intermittent source (you can't flip a switch and just turn it on), the company could end up with more or less than it planned for. The plant might produce only 90 megawatts, or it might produce 110. At the end of the year, companies match their megawatts with RECs. Companies with extra RECs can sell them -- bankable for three years -- to companies that haven't met their requirement.
The REC system enables a provider to guarantee a 100 percent wind product even though the wind doesn't always blow. It also metes out punishment in cases of noncompliance, something that not all states do, says Real de Azua. The penalty is $50 per credit or twice the market rate, whichever is less.
