Lingering uncertainty: Will Texas try again to slow growth of wind and solar?

Though several anti-renewables measures died when the legislative session ended, business and industry is left with uncertainty about the future.

The anti-renewable energy bills that made the state grid operator wary and had experts warning of higher utility bills — and possible market collapse — died in the House when the legislative session ended. But they still left a mark. 

The measures panned by critics as dangerous to grid reliability were approved by the Senate and some even passed a House committee — further than similar bills made it in the previous session. The probability they’ll rise again next session now is a concern for Texas business.

“These bills caused our members to question their Texas strategy,” said Bryn Baker of the Texas Energy Buyers Alliance, which represents some of the state’s biggest employers. “They noticed how far these bills got and question whether Texas is a predictable place to do business.” 

The four most-contested measures would have created new obstacles for utility-scale wind and solar projects. One would require solar and wind generators to secure costly back-up power — which most said would slow or stop development of needed generation — and another could have capped renewable development based on how much gas-fired generation comes online. 

Republican lawmakers’ efforts to slow renewables didn’t just set off alarms for energy developers and consumer groups, but for the big power users and data centers that have chosen Texas for major investments. 

Gov. Greg Abbott has said Texas is open for business, rolling out the red carpet for AI-driven data centers and high-tech manufacturers that use massive amounts of power at a time statewide demand is already growing at record speed. Those businesses now are questioning how much Texas lawmakers are prioritizing fossil fuel politics over generation needs from all resource types, trade groups say. 

Energy needs mount 

“We’re seeing this willingness right now to throw the needs of our grid and our economy, for that matter, by the wayside, to politicize energy,” said Judd Messer, Texas vice president of Advanced Power Alliance, which promotes development of renewables. “And I think it’s left investors uneasy. I think it’s left my member companies uneasy about the market here in Texas.” 

The head of the statewide grid — Pablo Vegas — said the sentiments behind the GOP bills were understandable but the approach was off. Vegas, who runs The Electric Reliability Council of Texas, has long said new gas-powered generation wasn’t coming online fast enough to replace the state’s aging fleet. But stopping renewables, he’s said, isn’t a solution.

Some lawmakers said they must act to put gas on an even footing with the boost renewables got from the Inflation Reduction Act approved during the Biden administration.

But supply chain constraints, especially for the turbines, means few new gas-fired generating plants can come online before the end of the decade. Texas needs power now, ERCOT has said. Its latest adjusted estimates forecast peak demand to hit 148 gigawatts by the end of the decade. Currently, it’s about 85.5 gigawatts. 

“Characterizing renewables as a problem, I don’t think is helpful to the conversation. I don’t think it’s accurate,” Vegas told reporters in May. “What we really need is a portfolio that can actually deliver on the resource requirements ahead of us.”

‘The battle is not over’

Messer’s members are mostly associated with large-scale projects like the fast-growing solar farms that give Texas the cushion of power that’s needed during peak demand periods on summer afternoons and the sprawling wind farms that line I-37 near Corpus Christi. 

Throughout the session, trade groups such as his lobbied in favor of traditional Texas conservative sensibilities to make their case against the onslaught. They said the bills fly in the face of the Texas ideal of limited government, risk the free energy market and infringe on private property rights by telling landowners they can’t build solar or wind farms. 

Members of the Senate, the more conservative of the two chambers, are likely to file the bills again when session resumes in two years. 

“The battle is not over because I don’t see the pendulum swinging all the way back on the political side,” Messer said. “I don’t think it’s going away, no matter what industry you’re working in, as the extremes grow further and further apart on the left and the right.” 

Of a slew of bills supporters said would “level the playing field” for gas generation against the federal grants and subsidies that helped grow renewables, four stood out.

Critics and energy experts considered Senate Bill 715 and its companion House Bill 3356 the biggest danger. It would have required existing and future wind and solar farms to secure back-up power from batteries or natural gas plants for times the sun isn’t shining or wind isn’t blowing. 

During testimony last session over a similar bill, Vegas explained that such resource-specific backup requirements would drive up costs for customers because solar and wind farms’ added costs would trickle down to regular Texans’ bills. This session, he reiterated to lawmakers that development of utility-scale projects would slow or existing ones close in response to the costly back-up requirements. 

Even the Texas Oil & Gas Association and the Texas Association of Manufacturers opposed the legislation. 

Senate Bill 819 would’ve exercised the “police power of the state” to establish new permitting and setback requirements only for wind and solar projects. Senate Bill 383 would’ve banned offshore wind turbines from connecting to the grid through state waters. 

The fourth, Senate Bill 388, could have dramatically slowed renewable energy growth to the pace of new natural gas power generation. Supporters argued it was to support an unbalanced grid. Critics said the shortage of gas plant parts made it nonsensical to tie development of renewable power to that of gas, especially with demand soaring to support data centers, industry and increasingly extreme weather.

Ultimately, Messer said “cooler heads” prevailed this session.

Bills’ supporters 

Midland Republican Sen. Kevin Sparks, president of a family owned oil and gas company, was SB715’s author. The sponsor of the companion bill in the House, Rep. Jared Patterson, wrote on social media during discussions that “renewables are not a source of generation to power a modern economy.” 

Sen. Phil King and other Republicans say federal tax breaks have skewed the market too much in favor of renewables, which is why they’re growing so rapidly. King said he aimed to correct that with his bill, which would have tied renewable growth to gas growth. 

Supporters of the bills also pointed to a recent study from the right-leaning Texas Public Policy Foundation — of which Sparks is a former board member — that said renewables are burdening ratepayers with $2.3 billion in extra costs because their unreliability requires ERCOT to lean on its backup power reserves. Those same reserves are called on when traditional generation falters.

But a Public Utility Commission of Texas study, made at the request of the Legislature and published in December, examined the same issue. It found that the growth of renewables — despite their intermittent nature — are not increasing ERCOT’s spending on programs it uses to tap into reserves to mitigate risks on the grid.  

In fact, a recent study from Aurora Energy Research commissioned by the Texas Association of Business found that restrictions on renewables — like those that would be created under laws proposed this session — would increase Texans’ power bills by 10%. 

Brent Bennett, the foundation’s energy policy director, has argued prices would raise “a little” in the near term, but not affect the state’s ability to meet electric demand.

What now?

After watching and lobbying on the bills until the last day of session, the grid operator and renewables industry are breathing a sigh of relief.

“It was nerve-wracking, and it was scary,” said Mark Stover, executive director of the Texas Solar and Storage Association, a statewide trade group. “The threats were real.” 

Baker, of the Energy Buyers Alliance, said big businesses counting on a growing Texas’ power supply felt the anxiety, too. 

“Questions were raised that could have chilled investment,” she said. “Thankfully, lawmakers kept Texas open for business because that viewpoint of ‘we’re going to need it all’ prevailed.” 

Baker said Texas lawmakers are being driven by the lessons learned during blackouts caused by a deep freeze in February 2021 and anything that could risk the grid’s ability to meet skyrocketing demand in the future. 

“Simply put, the economic reality and math of energy demand prevailed in Austin, and that is a good thing for Texans’ energy bills, the economy, and grid reliability,” said Abigail Ross Hopper, CEO of the Solar Energy Industries Association, the leading solar trade group. 

Now, renewables are facing another set of challenges as federal lawmakers consider cutting tax programs that have bolstered renewable projects and at-home solar systems.

At the same time, lingering concerns over the state GOP’s attack on renewables will linger. 

Messer said that as the bills advanced this session, members of Texas industry were reaching out for guidance. Banking partners who had plans to support projects were putting deals on pause as they questioned lawmakers’ priorities. Ultimately, he said, some wound up hedging Texas solar projects by bundling financial agreements with other projects tied to other electric grids. 

While he isn’t sounding an alarm for a massive drop in projects over the uncertainty that’s been caused, he doesn’t see that anxiety leaving the market until a Texas legislative session in which such bills don’t advance — or don’t appear. 

“Our opposition seems to be very well funded, and so I don’t think the well is going to dry up,” Messer said.