This case study covers the Republican-led Texas state legislature and the Republican governor of Texas from 2005 to 2013
Introduction
For about five hours in the middle of the day on Feburary 24th this year electricity was practically free. It was a sunny and windy day, which meant that renewables all over the state were performing particularly well. That day renewables provided Texas with 75% of its electricity. This is compared to the Texan average of 37% for its total energy grid.
Texas is not a densely populated state. There is a high level of renewable energy potential, particularly for wind in the west of Texas, but the biggest population centres are in the east of the state. In the early 2000s, Texas started considering how to build out the capacity of the energy grid to connect the high renewable potential areas of Texas to the high-demand areas.
The solution was what the state government called Competitive Renewable Energy Zones (CREZ). These built the infrastructure needed to connect renewable energy to the power grid as quickly as possible before there were the energy generators that needed the transmission lines. This meant that Texas was able to avoid the bottlenecks in planning that many energy systems end up having when they only build transmission infrastructure after generators are in place.
The idea of identifying areas particularly suited for renewable energy and then loosening the planning rules in those areas in order to encourage investment has been replicated across the world, including in the Philippines and most recently in the EU with Renewable Acceleration Areas.
Speed of growth
Practically free electricity belies a trend in Texas for ever-increasing renewable energy capacity. The bar chart race below shows the US states by production of renewable energy. The states that previously dominated in renewable energy production were California and Washington, largely because of their hydroelectric capabilities. Texas only breaks into the top five in the last five years and overtakes California only in the last few years.
This speed is not because of subsidies or ‘Bidenomics’ (Texas became the largest renewable energy producer in the US before the Inflation Reduction Act was even passed). Instead, it has simply followed the economic realities of renewable energy across the world and has allowed new technologies to be built when and where they make sense to do so.
Texas’s energy grid is well set up for renewable energy. The energy market in Texas is an energy-only market, which means that producers are only compensated for the energy they produce. This is compared to a capacity market, such as that in the UK, which buys a guarantee of energy in advance. What this means is that in Texas, renewable energy producers with battery storage can take advantage of the changing price to sell power during daily spikes. But to do that you need to make sure that the grid is well connected to be able to respond to these energy price changes. Otherwise, renewable energy generators may use battery storage to store excess energy but are not able to deploy it quickly enough to take advantage of the grid price.
Competitive Renewable Energy Zones
In 2005, the Republican Governor of Texas, Rick Perry, set renewable energy targets in Texas for around 5880 MW or 5% of the state’s electricity demand by 2015, with a long range target of 10% by 2025. This was an ambitious target when it was set, requiring a doubling of renewable energy to meet the 2015 target. This change was not driven by any ideology around climate change. Instead, it was driven by a desire to diversify Texas’s energy supply and make the power grid more resilient.
If Texas had any chance of meeting these new renewable targets, it was clear it would have to upgrade its grid. To solve the problem of high renewable potential in one part of the state and high renewable demand in another, Texas introduced what were called ‘competitive renewable energy zones’ in 2005. These competitive renewable energy zones were areas, initially five in number, that were identified as having high renewable potential, particularly for onshore wind in the first phase. Once these first five zones were identified, the Public Utility Commission of Texas (PUCT), opened a competitive process for companies which competed to build transmission lines from the zones to more densely populated East Texas.
This was designed to solve a circular problem for renewable developers. A new renewable generator can be physically built in two years or under. However, the cost of getting permission to develop transmission lines can take up to ten years, even in Texas where there are fewer barriers to development than most places. Wind and solar developers usually require transmission lines to be built in advance to get financing for their projects, so they can ensure that any power they produce can be well connected to the grid. But one of the reasons regulators are so slow to confirm transmission line development is because they need a guarantee that new lines will be used.
Once developers for the transmission lines were selected, these companies were able to build transmission lines before the grid desperately needed them. The regulatory processes and technical planning processes in the zones moved forward in tandem. This considerably sped up the process of building these new transmission lines and gave certainty to renewable energy companies that they would not be blocked by planning restrictions.
The impact of CREZs
The CREZ projects finished building in 2013. The total was 3,600 miles of high-voltage transmission lines - nearly a quarter of the total transmission lines added in the whole United States in the last 12 years.
This helped to bring in 23 GW of new wind power to Texas. This is nearly as much wind capacity as the whole of Brazil and two GW more than France. And this has been good for Texans’ energy bills too. One study found that the increased renewables in Texas has saved the average Texan household almost $200 dollars a year.
A global model
The practice of designating zones particularly suited to renewable energy and reducing the level of planning regulations around them has been adopted elsewhere in the world. Globally getting planning permissions for new energy projects is a problem that is slowing down decarbonisation. In the UK it is estimated that over 40GW of onshore wind projects are tied up in the pipeline alone. The model of competitive renewable energy zones may be helpful in getting more renewable energy built globally.
The Philippines has adopted the model of the CREZ entirely and in 2018 started consultations on where to locate renewable energy zones. It is now well along the process of building new transmission lines for this energy. The United States Agency for International Development (USAID) and the United States Department for Energy provided technical assistance for the Philippines. They now hope to further provide technical assistance to other countries in the East Asian region to replicate this model further.
A similar idea to the CREZ has also been launched by the EU in the wake of the invasion of Ukraine and the subsequent energy price spike. This version, called Renewable Acceleration Areas, comprises areas that are especially suited for renewable energy which will then have certain permitting measures removed. Unlike the Competitive Renewable Energy Zones the Renewable Acceleration Areas do not focus on building transmission lines specifically though these are likely to follow the building of new renewable energy generators.
Both of these models owe much to the Texan model of Competitive Renewable Energy Zones.
The big freeze
The importance of reliable energy infrastructure was made all too clear by the big freeze in 2021, which caused an energy crisis in Texas. During an extended period of blizzard conditions and snow, energy demand rocketed and parts of the energy grid were overloaded or taken out of action. This showed one of the shortfalls of the deregulated energy grid as the more responsive utility companies, which changed their energy price in real time to reflect the wholesale price, ended up charging some Texans hundreds of dollars to keep the electricity on during snowstorms.
In the wake of this energy crisis, some critics blamed the level of renewables in the power grid for the blackouts that ensued. The governor of Texas, Greg Abbott, blamed the Green New Deal, which wasn’t yet a national law - and renewable energy for the energy grid collapsing.
While it is true that 16 GW of renewable electricity went offline during the storm, this made up only around a third of the lost power, with thermal power stations like coal and gas stations making up nearly double the amount, despite these fuels not being intermittent. The cause of all of the power generators going offline was the Texas grid’s not being ready for such low temperatures so when temperatures sank power stations went offline . After a similar but less severe winter storm in 2011 that also caused blackouts, there were recommendations to ‘winterize’ the electrical grid to prevent it from freezing but this did not happen. During the 2021 storm the grid overloaded until it was minutes away from completely shutting down and having to be restarted with a ‘black start’ - a process that would have left Texans without power for weeks or months.
Many wind turbines can deal with extremely low temperatures, with the northernmost wind park in the world being located in Finnmark, Norway, at the same latitude as the northernmost point of Alaska. There are also wind turbines on the US research station at the South Pole. The problem for Texas was not that wind turbines could not cope with cold temperatures but that the specific wind turbines installed in the Texas grid could not cope. This reflected the assumptions of the renewable energy installers who did not project that such a winter storm might occur. Adding designs like warming coils in turbines costs extra, though not more than 10%. The power grid company, ERCOT, also did not anticipate winter storms either, with even the most extreme scenario that it pre-planned falling short of what happened.
As climate change continues to worsen, extreme weather events, like snowstorms, will become more common in Texas. To keep the lights on in Texas and avoid any more of these blackouts, the Texan grid will need to update and to ‘winterize’ all of its energy producers, including wind turbines. This will be more expensive to retrofit than to do at the beginning of the process.
The Texas legislature used these blackouts as a pretext to start providing extra subsidies for natural gas and to take them away from renewable energy. This included removing certain tax breaks from renewable energy generators, which are still available to natural gas, and funnelling money from electricity bills to generators that can produce electricity when grid conditions are tight, which favours thermal energy producers like gas and coal.
Since Rick Perry’s first renewable energy targets in Texas, renewable energy has been politicised in the United States, with renewables becoming part of the culture war around environmentalism. This may slow down the future decarbonisation of Texas’s energy grid and keep electricity bills high. However, the legislation that was passed to support thermal energy producers may not provide enough funding for new gas stations, so Texas’s spot as the number one renewable energy producer in the United States may be here to stay.
Lessons to be learned from Texas’s Competitive Renewable Energy Zones
Streamline planning rules to speed up development - Designating zones which were designed for renewable energy production sped up the average time it took for these generators to be set up
Plan for resilient infrastructure before it is needed - The average lifespan of a wind turbine is around 30 years. If they are not weatherproofed at the beginning of their lifespan, it is difficult to retrofit them. As more extreme weather events occur, it will be important to make sure that energy infrastructure is prepared to deal with this.
Renewable energy is useful for more than just reducing emissions. Greenhouse gas emissions were not a major consideration of the Texas legislature when it started the competitive renewable energy zones. The main draw of renewables was instead the economic benefits bringing cheaper energy to the state.
Copy policies that work. The Philippines was able to fast track its CREZs because most of the details could be imported directly from the Texas model. This sped up the process compared to how long it took in Texas. Using existing expertise can increase the efficiency of building.
Consider all parts of the electricity grid. Building new renewable energy generators is not helpful unless there is a way to connect this energy to where it needs to go. The lack of transmission lines caused a catch 22 for new generators which could not get projects funded without energy connections. Providing certainty for generators can unlock huge levels of private investment.
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