Right after Election Day, the U.S. formally withdrew from the Paris climate agreement, a process President Donald Trump had started in 2017.
But that didnâ€™t stop Energy Transfer LP, a giant pipeline operator, from making a 15-year commitment to solar power. The Dallas company â€” best known for its controversial Dakota Access oil project and led by Kelcy Warren, a major Trump donor â€” agreed to buy the solar energy from a 28-megawatt plant being built in Pecos County.
â€śThis project marks a new milestone for us as our first dedicated solar-powered facility,â€ť an executive said in announcing the deal.
An oil-drenched company in an oil-rich state embracing solar? Itâ€™s one more sign of how the energy business is changing, especially in Texas.
Hereâ€™s an even louder signal: Last month, almost 95% of the new capacity proposed for Texas’ ERCOT electric grid was for solar, wind and storage batteries. Natural gas was a distant fourth and no coal plants were on the table.
In Texas, solar capacity is expected to double this year to over 5,000 megawatts. Itâ€™s projected to double again next year to over 13,000 MW, according to projects in the pipeline at ERCOT, the grid operator handling 90% of the stateâ€™s electricity.
During peak demand, 1 MW can power about 200 homes in Texas.
Natural gas remains crucial, fueling almost half of ERCOTâ€™s load in the first nine months of 2020. Coal and nuclear are still important, too. But the future of Texas energy is going green.
In addition to the solar surge, wind power is scheduled to add over 5,800 MW of new generation, a record one-year increase. And batteries, which help cover the generation gaps that come with solar and wind, are scheduled to triple their capacity this year.
â€śIf you want to come to Texas and buy renewable energy, we got people knocking down our door to build it,â€ť Rhodes said in a phone interview. â€śAnd there are people knocking down our door to buy it. Thatâ€™s just a recipe for a great market.â€ť
Texas has a competitive electric market, and all the projects in ERCOTâ€™s interconnection queue are not likely to be started. Historically, about 70% are built, said Rhodes, a research associate at the University of Texas at Austinâ€™s Webber Energy Group.
But the makeup of the queue â€” so dominated by solar, wind and batteries â€” indicates that investors and developers agree about the future growth in Texas.
Why are renewables so attractive? Start with the price.
â€śThe short answer is that solar is cost-effective,â€ť said Charlie Hemmeline, executive director of the Texas Solar Power Association. â€śWeâ€™ve had the resource forever, but now weâ€™re really taking advantage of it at scale.â€ť
Over the past five years, the cost for utility-scale solar has declined about 11% annually, according to a study by Lazard, a major asset management firm. The cost of wind power has fallen 5% annually over the period.
As a result, the study said: â€śWhen U.S. government subsidies are included, the cost of onshore wind and utility-scale solar is competitive with the marginal cost of coal, nuclear and combined cycle gas generation.â€ť
At the same time, more homeowners, apartment renters and corporations want to do something about climate change. Committing to renewables is a natural step.
Energy Transfer, for example, said its 15-year solar agreement â€śdemonstrates our commitment to reducing our environmental footprintâ€ť â€” and noted that it was also â€śeconomically beneficial.â€ť
â€śThe corporate sector has really jumped into solarâ€ť in the past few years, Hemmeline said.
Like Energy Transfer, they often sign power purchase agreements, pledging to buy a facilityâ€™s clean energy under a long-term contract. In 2019, U.S. corporations bought 13 gigawatts of electricity through such agreements â€” four times the volume of two years earlier.
Google, AT&T, Facebook, Microsoft, Walmart and Amazon were among the largest buyers, according to the 2020 Sustainable Energy in America Factbook.
Texas generators landed 40% of those contracts last year. And nearly two-thirds of the Texas deals were for solar power, the book said.
â€śTexas gets the benefit of the investment and the solar power, and these companies get the benefit of the economics and sustainability,â€ť Hemmeline said. â€śItâ€™s really a win-win.â€ť
Texas easily leads all states in wind power and ranks fourth in solar capacity with solar coming on fast. In the first half of 2020, Texas added more solar than any state, said the Solar Energy Industries Association.
Renewable energy also has become a tool in economic development. When Nasdaq was talking with Texas about a possible move to Dallas, the stateâ€™s renewable energy was a major selling point.
Existing wind and utility-scale solar projects generate roughly $5 billion in new tax revenue for local communities, according to a report by Rhodes. Texas landowners also are expected to get $4.8 billion to $7.3 billion in royalties over the lifetime of those projects, he said.
Texas no longer has mandates for renewable energy (the state passed those goals long ago), so people often ask Rhodes how the state attracts so much private investment. He cites the abundance of sun, wind and land, and a competitive market that welcomes all players.
The stateâ€™s growth factors in, too. In the past five years, U.S. electricity generation rose less than 1%. But Texas’ electric load jumped 10.4% over the period, according to federal data.
That helps attract more manufacturing and business, which helps lure more workers. The additional activity requires more energy, and in todayâ€™s world, that means more renewable energy.
â€śYou got supply and demand in a virtual cycle,â€ť Rhodes said. â€śItâ€™s just easy to do it in Texas.â€ť