Texas becomes ground zero for surge in wind power

Source: Javier E. David, CNBC, USA TODAY • Posted: Monday, August 11, 2014

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The winds of change are blowing through Texas—both literally and figuratively.

Home to both vast repositories of conventional and shale oil, the Lone Star State is also a major player in wind power, a new twist on the U.S. energy independence narrative. However improbable, the nation’s second largest state has been ground zero for a quiet renewable energy revolution.

Texas has invested about $7 billion in a sprawling wind power network that spans nearly 4,000 miles. Wind power generates more than 12,000 megawatts (MW) of electricity for the state, according to the Texas’ Public Utilities Commission. The state ranks first in the country for total MW of wind power capacity. Earlier this year, the state smashed a U.S. record for the most power generated from air power.

A combination of public subsidies, new federal carbon regulations and private investment has made Texas “one of the fastest growing hubs in the world for wind energy,” said Matthew Senicola, registered representative of JHS Capital Advisors.

“Texas has one of the largest electricity consumption rates in the U.S. mainly derived from their exploding energy and production sector,” he added.

In fact, wind plants have been a staple of Texas’ electric supply since at least 1995, a function of the state’s climate and the massive amounts of electricity it consumes. Overall, the sector has created more than 8,000 jobs nationwide–most of them in the Lone Star State, according to data from the American Wind Energy Association.

Traditionally, alternative energy projects have benefited mostly from generous public investment, including direct subsidies and tax incentives. However, sectors like solar energy have slowly attracted more private investment, which some say charts a potential path for wind’s growth.

Air-powered electricity remains a staple of oil and gas giant BP, as part of what the wind energy association says is more than $23 billion invested in the state’s wind sector.

Although the energy company decided last year to divest most of its renewable properties, it still maintains wind power properties worth more than $1 billion, a BP spokesman told CNBC. Of the 16 wind farms across the U.S. that produce about 2,600 MW of electricity, four BP assets are located in Texas.

In addition, Google has staked a claim to two Texas wind farms, one that the technology behemoth expects to power 56,000 houses. In varying degrees, Walmart and Microsoft have also channeled resources into the emerging wind sector.

Analysts point out that the slow trickle of capital reflects the maturing of wind power, even as alternative energy still remains very reliant on public support.

As a result, Texas’ expansion of its wind capacity could be a major test of the industry’s ability to become self-sufficient–especially after T. Boone Pickens was forced to abandon a massive wind farm initiative in 2012. The tycoon swallowed a loss on his “Pickens Plan” that helped knock him off Forbes 400 list of richest Americans the very next year.

“The more mature and efficient newer technologies become, the more they tend to grow,” said JHS’s Senicola, even though alternative energy’s has had a “bumpy ride” of public and private support.

“Texas wind build out can be viewed as a very large ‘wait and see’ experiment,” he said. “If it proves to be successful, I think the industry could really catch fire and the national build out rate will increase.”