With Potential Repeal Of RPS, Wind Developers In Lone Star State Face Texas-Sized Headaches 

Source: By Mark Del Franco, North American Wind Power • Posted: Wednesday, March 25, 2015

If a Texas Republican has his way, the state will end its renewable portfolio standard (RPS), undo the billion-dollar competitive renewable energy zones (CREZ) initiative and relinquish its status as the No. 1 state for wind energy generation. 

Introduced by Troy Fraser, R-Horseshoe Bay, S.B.931, “relating to the goal for renewable energy and [CREZ],” would end Texas’ RPS at the end of the year while undoing the massive, $7 billion-plus CREZ project that unlocked bottlenecked wind areas through the building of transmission lines.

In addition, the bill would require that any new transmission projects in the footprint of the Electric Reliability Council of Texas (ERCOT) would no longer proceed through the CREZ process but would now be required to meet an economic needs test, a more onerous hurdle.

On March 24, S.B.931 was expected to go before the Senate Natural Resources Committee (a committee chaired by Fraser) before moving to the full Senate for a vote.

Adopted in 1999, the Texas RPS required 2,000 MW of new renewable energy capacity to be installed statewide by 2009. In 2005, the Texas legislature expanded the program to accommodate 5,880 MW by 2015 and included a target of 10,000 MW by 2025. Texas reached the 10,000 MW plateau in early 2010 – 15 years ahead of schedule.

At times, Texas wind accounted for as much as 25% or more of the electric generation within ERCOT.

According to language contained in the bill, “Texas has surpassed every measurable goal associated with the renewable program conceived in 2005. The targets, mandates and exemptions associated with RPS and CREZ are now irrelevant and should be eliminated or phased out.”

Fraser, who championed Texas wind energy in its formative days, reportedly told the Dallas Morning News, “Mission accomplished. We set out to incentivize and get wind started in Texas, and we far surpassed that goal. There’s no state that’s come close to what we’ve done.”

However, advocates say that ending the RPS program now not only is short-sighted but threatens to disrupt Texas’ energy market.

“Ending the RPS overnight sends the message that Texas is not committed to renewable energy,” explains Jeff Clark, executive director at The Wind Coalition, a regional partner of the American Wind Energy Association. “Lawmakers may not be aware of the negative financial impacts an RPS repeal will create for energy projects and investors in the state.”

Clark says an RPS repeal would also disrupt the renewable energy certificate market in Texas, causing an immediate devaluation that harms investors in wind energy projects and the landowners whose payments are derived from wind projects.

S.B.931 is just the latest in a string of anti-wind sentiments coming out of Texas within the past year.

Last May, Donna Nelson, chairwoman of the Public Utility Commission of Texas (PUCT), which regulates the state’s wholesale electricity market in Texas and has authority over ERCOT, let loose with a scathing anti-wind memo that questions what fossil fuel-based generators have privately thought for years: Does wind energy receive preferential treatment in Texas? Are wind farm owners and operators equally shouldering costs related to transmission upgrades?

The now-infamous Nelson memo was followed by an equally explosive report from the State Comptroller Susan Combs in October 2014. Combs asserted that wind was too expensive and unreliable and, therefore, should no longer receive state subsidies.

Unfortunately for Texas wind supporters, there is precedent for rolling back (or eliminating) an RPS program. In May 2014, Ohio became the first state to successfully dismantle its renewable energy mandate.

However, Wind Coalition’s Clark is hoping that other Texas legislators will recollect how wind-inspired businesses – and related investments – have prospered and will vote to keep the program intact.

“Because Texas prides itself on its pro-business environment, we are hopeful that the state will consider maintaining the [RPS] program, rather than a sudden market-disrupting repeal.”