Texas, a Clean-Energy Pioneer, Turns Against Renewables

Source: By Jennifer Hiller, Phred Dvorak and Katherine Blunt, Wall Street Journal • Posted: Monday, May 29, 2023

The state welcomed wind and solar power for years, fueling rapid growth; now Republicans want a rollback

A solar farm takes shape near Mount Vernon, Texas.
A solar farm takes shape near Mount Vernon, Texas. NITASHIA JOHNSON FOR THE WALL STREET JOURNAL

For many Texas Republicans these days, renewable power is about as welcome as a porcupine at a nudist colony.

In the state capitol in Austin, Republicans are targeting wind and solar power with a slate of bills that would clamp down on renewable projects by, among other things, adding additional environmental requirements and excluding them from a state tax break.

Lt. Gov. Dan Patrick, who effectively controls the legislative agenda, has vowed that lawmakers won’t leave Austin this month without approving legislation that would spur the construction and maintenance of conventional power plants, calling renewable energy a “luxury.”

Across the U.S., renewable-energy projects have slowed in part due to local opposition that has thrown uncertainty into previously routine permitting and development. The potential turnaround is especially sharp in Texas, a state known for its open business policies that is now home to America’s greatest concentration of wind, solar and battery storage projects.

Just 13 years ago, as he touted diversifying electricity supplies, then-Gov. Rick Perry compared wind projects to Spindletop, the oil gusher that launched the state’s petroleum era in 1901.

“Thanks to a new generation of hardworking visionaries, Texas is again leading the way on the renewable-energy front,” Perry said in 2010.

Texas Gov. Greg Abbott, center, addresses the state Senate at the start of the latest legislative session, while first lady Cecilia Abbott and Lt. Gov. Dan Patrick listen. Photo: Jay Janner/Austin American-Statesman/Associated Press

Wind and solar have grown to provide 31% of the electricity in Texas, closing in on natural gas at 43%. Several coal plants have closed, unable to compete against natural gas or the plummeting cost of building renewables, fueling more green investment.

But the success of wind and solar has provoked powerful enemies.

Many well-heeled, conservation-minded landowners across the state don’t want renewable projects near their ranches or recreational properties and have supported creating a state-permitting and siting process for clean energy.

Meanwhile, a battle for control of Texas’ vast power market is under way as lobbying groups for drillers and owners of gas- and coal-fired power plants back some of the bills under consideration. Many state Republicans are arguing for measures to prop up conventional power sources, saying they are necessary to maintain the reliability of the electric grid following its near collapse during a freak winter storm in February 2021.

The increasingly adversarial national politics of energy have crept in, too, as many Republicans bristle at President Biden’s climate policies.

Renewables have “become a four-letter word,” said James King, a landowner along the Pecos River in Val Verde County, where wealthy residents are pitted in battle against a planned wind farm.

King, a descendant of the founder of the King Ranch in South Texas, the country’s largest, supports renewables but thinks they should be out of bounds in the state’s most scenic and wild areas. He is placing his own property along the Pecos River into a conservation easement, permanently limiting the way the land can be used.

Texas has more renewable energy projects on the grid and under development than any other state, according to the American Clean Power Association. More than a third of all U.S. clean-power installations last year were in Texas.

A wind turbine towers over the landscape near Del Rio, Texas. Photo: Eric Gay/Associated Press

A tour group visits the Engie Sun Valley Solar project in Hill County, Texas. Photo: mark felix/Agence France-Presse/Getty Images

Renewable project developers say bills introduced during the current legislative session, which ends Monday, stand to dramatically overhaul the state’s electricity market in a way that would severely disadvantage wind and solar. Consulting firm Customized Energy Solutions at one point tracked 171 bills affecting the state’s electricity market, many of them anti-renewables.

One bill being negotiated between the state Senate and House could require wind and solar projects to effectively pay fees that would mostly benefit fossil-fuel plants. Another would have built new natural-gas-fueled power plants for emergency use only, though it stalled. A newer measure would offer low-cost loans for building or upgrading natural gas-fired generation, pending voter approval in November.

Texas developers have long benefited from being able to build sprawling wind and solar farms relatively easily, often in the expanses of West Texas. They doubled down on expansion plans as project costs plummeted.

More recently, projects pushed into new areas with entrenched interests. In many parts of the state, the fight over renewables is pitting neighbors against each other.

Alpin Sun, a European company, came to Texas in 2016, focusing on building solar farms in the relatively untapped northern part of the state, said CEO Bogdan Micu. It fanned out, wooing large landholders.

One such target was a 1,700-acre ranch southwest of Fort Worth owned by Kyle Bass, a hedge-fund multimillionaire famous for betting on the collapse of the U.S. housing market 15 years ago. The area’s rolling grasslands are dotted with estates of wealthy Dallas-Fort Worth landowners and longtime farmers.

Alpin Sun offered an annual fee of $1,000 per acre to lease land for 30 years, Bass said. He refused: An avid conservationist, Bass said he doesn’t need the money and doesn’t approve of renewables development so close to valuable farmland or forests. He also owns a ranch in the same area of Val Verde County as James King, and opposes that wind project.

If you can see a wind farm from your property, the value of your land drops, Bass said, while multi-acre solar farms look “like absolute crap.”

But the family to his west took Alpin Sun up on its offer to install solar panels across thousands of acres of farmland, according to Bass. Bass said that although he sympathizes with farming families’ need to make more money off their land, “we should put solar panels in the desert where all there is is sand and wind and sun.”

B.F. Hicks, an attorney in Mount Vernon, said of a local solar project, ‘We just feel like we’re under assault.’ Photo: Nitashia Johnson for The Wall Street Journal

In Franklin County, 100 miles east of Dallas, attorney B.F. Hicks’s land includes more than 900 acres of native tallgrass prairie and woodlands that have been in his family since the 1800s, which he placed into a conservation easement a decade ago. “This is one of these virgin, unplowed original Texas prairies,” Hicks said, pointing to primrose, wild carrot, and Indian paintbrush.

Renewables projects often zigzag around landowners who don’t lease, and a planned 230-megawatt solar project by a unit of Italian energy company Enel would abut three sides of Hicks’s property. “It changes the drainage pattern of the land, it changes the flow of wildlife,” Hicks said. “It’s spreading rapidly. We just feel like we’re under assault.”

When Alpin Sun knocked on Tim Fuller’s door in Hopkins County in late 2018, the 64-year-old landowner said he jumped at the chance to lease his 85 acres for 30 years for a solar farm. In this case, it was being built by French energy company Engie. Fuller had retired from a job at a local utility a few years before and was trying to make extra income by growing hay and raising a few dozen cows.

Ranching was hard work, he says, with meager profits that went up and down. Now, Fuller says he can earn “way over” 40% more by leasing his land to a solar farm than by rearing cows—and he doesn’t have to do anything.

“Solar panels are so much better. You don’t have to feed them. They just sit out there and get all the money,” said Fuller, who lives in town. “It’s just an absolute godsend to me.”

A few miles east of Fuller, a grandson of oil mogul T. Boone Pickens is leading the fight against Engie’s project, which is near his mother’s 284-acre property. Michael Pickens says he opposes the project because of concerns that include its large size, the removal of trees, soil erosion and potential changes to water drainage.

Michael Pickens, a grandson of oil mogul T. Boone Pickens, shown pictured with his mother, Cynthia Martin. Photo: Nitashia Johnson for The Wall Street Journal

 Pickens worries that a big solar-power project would remove trees, cause soil erosion and potentially affect water drainage, including at this small pond on his mother’s property. Photo: Nitashia Johnson for The Wall Street Journal

His late grandfather once attempted to build the largest wind project in the Texas panhandle. Ironically, the project was doomed by a lack of transmission lines, the exact thing that makes Michael Pickens’s mother’s ranch attractive for building new solar projects. “That’s what these guys are really after,” Pickens said, standing beneath the high-powered lines.

Some local opposition is natural for large projects such as theirs, said Julie Vitek, a vice president of government and regulatory affairs at Engie North America.

Fuller says he doesn’t take kindly to some of his neighbors’ anti-renewable proclivities.

“I have a big problem with you telling me what I can do with my piece of property,” he said.

The Texas Real Estate Advocacy and Defense Coalition, a landowner group, is pushing a measure to require state permits for renewables that would call for environmental assessments, notification of county officials within 25 miles and public meetings. The bill stalled, but a version was amended onto another measure being debated in the session’s waning days. “Some of these projects are five to ten thousand acres and they have zero permitting,” said Jessica Karlsruher, the group’s executive director.

Wind and solar developers are also butting heads with conventional power producers as the groups compete for one the county’s largest electricity markets.

The renewable-energy boom in Texas was shaped by some of the characteristics that define the state itself—wide-open spaces, regulatory permissiveness and a fiercely competitive electricity market unlike any other in the country. An overhaul of the state’s power market approved in 1999 under then-Gov. George W. Bush set the stage for the renewable frenzy. Deregulation broke up the functions of monopoly utilities and introduced competitive auctions for wholesale power. Part of the plan included adding at least 2,000 megawatts of renewable generating capacity by 2009. Texas blew past that goal, set another and surpassed it too.

The federal production tax credit for wind producers, first passed in 1992 and extended and modified over time, meant wind generators could make money even at times when electricity prices fell to zero or went negative. Texas developers also tapped a popular state property tax break, used by everything from auto plants to data centers and LNG export facilities, that expired at the end of 2022.

The combination of federal and state incentives helped make renewable projects among the cheapest and most competitive forms of power generation within the Texas market, which rewards those that can produce electricity at the lowest cost. Such projects now supply substantial amounts of electricity, especially on hot days when demand is high, leaving fewer days throughout the year when pricier coal- and gas-fired plants are needed.

The devastating winter storm in 2021 that left millions of residents freezing in the dark revealed tensions that had been simmering for years. Wind farms and gas- and coal-fired plants, as well as a nuclear plant, froze and failed. Both gas production and power generation from gas dropped by about a third. During the blackouts Gov. Greg Abbott pinned blame on wind and solar, which he said had “thrust Texas into a situation where it was lacking power on a statewide basis.”

The storm also called into question the viability of Texas’ “energy-only” market, long a fierce point of pride for lawmakers and regulators. In Texas, power producers are paid only for the electricity they generate. All other competitive electricity markets in the U.S. offer producers some form of compensation for being ready to come online when needed, meant to maintain backup resources for emergencies.

Texas lawmakers, spurred on by conventional power-plant owners, continue debating incentives for power sources that can fire up on demand. Renewable-energy developers, whose projects generate electricity only when the sun is shining or the wind is blowing, argue that unfairly favors fuel-fired power plants.

Large industrial power users and consumer and environmental groups have also raised concerns that the proposed incentives could result in substantially higher electricity costs and have fought for a cap.

The state’s largest gas plant owners, including Vistra and NRG Energy, have pushed for an expansive version of a credit that would pay power plants for their availability during times of need. NRG last month pledged to build more gas-fired power plants in Texas if that were approved, and Vistra is considering doing the same.

A devastating winter storm in 2021 that left millions of Texas residents freezing in the dark. Photo: Ron Jenkins/Getty Images

Vistra CEO Jim Burke said he sees the credit as necessary to keep gas plants online to backstop renewables as the build-out continues.

“It’s not anti-renewables,” he said. “It’s about how to ensure reliability as these plants likely run less.”

Mona Tierney-Lloyd, head of U.S. public policy for Enel, one of the largest renewable energy developers in Texas, said the company would consider scaling back development plans if lawmakers passed bills that made projects more difficult or expensive to build.

“I would call it an interventionist approach to the market, as opposed to what Texas has historically prided itself on—an open market with competition driving the development of new resources,” she said.

Write to Jennifer Hiller at jennifer.hiller@wsj.com, Phred Dvorak at phred.dvorak@wsj.com and Katherine Blunt at katherine.blunt@wsj.com