While California, New York push hard on clean energy, Texas hopes the market is enough

Source: By Mitchell Schnurman, Dallas Morning News • Posted: Friday, June 16, 2017

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Texas is playing small ball on clean energy.

A few months ago, a bill was introduced in Austin to study energy efficiency in the state and look for ways to improve it. Universities would cover the costs and the findings would be reported to the next Legislature.

The bill went nowhere.

“There was a desire to just let the market do it,” said Gavin Dillingham of the Houston Advanced Research Center.

This is what passes for energy policy in Texas in 2017, at least at the statehouse.

In contrast, the governor of California recently met with leaders from China and Germany to strengthen ties on climate change and clean energy. New York is reshaping its electricity system and setting ambitious goals for renewables and emissions. Nevada has pushed several bills to spur energy storage and more wind and solar.

After President Donald Trump rejected the Paris accord this month, there was a strong reaction. Twelve states and Puerto Rico joined a new U.S. Climate Alliance, and 10 states and Washington, D.C., pledged to follow the Paris agreement. Mayors from roughly 300 cities, including Dallas, Houston and Austin, agreed to work on climate goals and a clean energy economy.

Texas leaders may not feel much urgency to act. The economy is rolling, utilities are doing well, and the state is easily No. 1 in oil, natural gas and wind power.

Texas will be a dominant player in energy with or without government help or global pledges. And companies here will have many opportunities in wind, solar, batteries and more.

“But they’re not gonna get any support from the state of Texas to do that,” said Dillingham, program director for clean energy policy at HARC, a nonprofit research hub.

It wasn’t always this way. In the 1990s, Texas created a strategic plan for energy and pulled in industry, academics, government and consumer and conservation groups. That led to new standards for renewable energy and efficiency, and was part of the march to electric deregulation.

In the mid-2000s, lawmakers also approved new transmission lines to bring wind power from West Texas. That $7 billion investment lowered electric bills and helped the environment.

Today, another opportunity beckons, and Texas should be at the forefront. Because it’s so large and has so much wind and sun, Texas has twice as much renewable energy potential as the next-closest state — and three times more than California, according to data from the National Renewable Energy Laboratory.

Texas also has a history of using market-based systems, which attract more private investment and often lead to faster progress.

“We’ve shown that markets, more than anything, drive innovation,” said Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University.

There is a role for government, even in a small-government state. Several experts want to revamp the ratemaking system for regulated utilities, such as Oncor Electric Delivery Co. The state has rewarded companies for building more transmission lines, because that helps meet the growth of an expanding economy.

But Texas could also encourage more innovation and efficiency, including batteries and other technologies. They could lower the costs of reliable solutions, said Robert King, a member of the state’s energy panel in the 1990s.

Such ratemaking changes are “the next thing for making the new economy possible,” said King, CEO of the South‐central Partnership for Energy Efficiency as a Resource, an Austin nonprofit known as SPEER.

The group is trying to build a consensus toward regulatory reforms and has been meeting with leaders from industry, environmental groups and more. If they can agree on a plan, King said, lawmakers are more likely to act.

A research paper calls for creating performance-based incentives so utility executives “wake up every morning thinking about how they can” improve service “while reducing total costs.”

Others offered more suggestions for a clean energy agenda. For example, corporate customers would set up more micro-grid projects if interconnection standards were improved and standby rates were lowered. There’s also great potential in offshore wind farms, and Texas could evaluate adding those transmission lines in the future.

The grid could be made smarter to reduce wasted energy, take advantage of advanced meters and explore ways to export more power. The state could ratchet up goals for energy efficiency, which have lagged.

A strong focus on batteries could expand Texas’ manufacturing base, in the same way that dozens of companies started making components for wind turbines, said Tom “Smitty” Smith, the longtime former director of Public Citizen in Austin.

California is leading that field, and Nevada is ramping up. But Texas has significant strengths, including some top researchers.

“How do we jump into the batteries market?” Smith said. “We need to develop a business plan to profit from the transition.”

In late 2014, Oncor floated the idea of investing $2 billion in storage batteries. The proposal, described as “fracking for the electric grid,” was seen as a major threat to power generators in Texas’ competitive market. Lawmakers never took on the issue and it faded away.

“That’s an example of an artificial barrier,” said Fred Beach, assistant director for policy studies at the Energy Institute at UT-Austin.

Economics will drive action, he said, and he pointed to the positive impact that wind power has had on landowners in West Texas.

“Just talk business,” Beach said. “If it makes economic sense, do it.”