Texas Builds a Pipeline for Wind Energy

As the second-biggest state in the country, Texas is constantly ramping up its energy production to meet the demand of its fast-growing population. Its current mix includes coal, natural gas, nuclear, solar, and it recently became the biggest wind energy producer in the U.S. But with wind farms concentrated in remote areas of West Texas and the Gulf region, the state's electric transmission grid needs to be expanded so this energy can be sent to urban areas where demand is greatest.

Getting access to electrical grids is an issue for renewable energy companies across the country, because wind and solar plants are often located in remote areas with no access to transmission lines. The current project in Texas highlights some of the problems the public and private sector faces in getting renewable energy hooked into the grid. The first hurdle is a classic chicken-and-egg problem. Energy developers are hesitant to build new plants until transmission lines are in place, but transmission companies won't build until they know there will be a steady supply of energy. In order to create incentives for both parties, Texas has come up with some creative new ways of promoting renewable energy development.

In 1999, Texas created the Renewable Portfolio Standard (RPS), which mandates the construction of specific amounts of renewable energy. In 2006, Senate Bill 20 raised the RPS in Texas to 5,880 megawatts by 2015, and set a goal of 10,000 megawatts by 2025. To help meet these mandates, the Texas Public Utility Commission (PUC) recently designated five wind-rich zones around the state as competitive renewable energy zones (CREZs), where transmission line projects can be green-lighted in advance of wind farm developments. The PUC is overseeing the transmission line planning, and over the next few months energy developers and transmission line companies will take a closer look at the project, including its timeline, costs, and other variables.

"The whole process was designed to coordinate the generation with transmission so everyone has a better understanding of the potential, and what the precise capacities will be," said Terry Hadley, a spokesman for the Public Utilities Commission of Texas, which oversees the process. "It also reduces the risk involved before making the investment," he added.

In addition to state resources used to promote renewable energy, Texas Governor Rick Perry announced in 2006 that he had $10 billion in commitments from private companies to increase wind generating capacity in the state by 7,000 megawatts (MW). Texas currently generates 4,300 MW of wind energy, which accounts for three percent of the state's electricity usage. One megawatt is enough to power about 250 households for a year, so the current wind energy supply powers more than a million homes annually. 

Several new high-voltage 345-kV transmission lines and grid upgrades are needed to carry wind energy out of West Texas, and five different scenarios are currently under review. The most basic plan would cost $2.95 billion, and the most ambitious would cost $6.38 billion. The least-expensive scenario could lead to 5,150 megawatts of additional wind power and would require about 1,600 miles of new transmission lines, with each mile costing about $1 million. It will take two to five years to build the lines, according to Hadley, and several developers are likely to be involved due to the scope of the project. After the meetings this summer, developers will bid on the transmission line projects, and the PUC hopes to have a construction plan in place by the end of the year.

"This process is new, in part, because it's a more competitive market. In the past, in a regulated scenario, the state would approve a coal plant and then you had to show a need for the transmission," said Hadley.

"Sometimes that would be lengthier, and it discouraged innovation because there was not as much variety in terms of fuels, and engaged only one company. Here, wind is competing system wide with natural gas, coal and nuclear plants. The goal is to encourage a healthy fuel mix so you aren't dependent on one fuel source."

One challenge for renewable companies as they enter this competitive energy market is the intermittent nature of wind and solar energy production – if the sun isn't shining, or the wind isn't blowing, there's no juice. However, in 2007, the Federal Energy Regulatory Commission gave power generators greater access to transmission lines by creating a rule that exempts intermittent generators from "imbalance" charges when they can't deliver on their scheduled transmissions. This could be a boon for wind and solar companies looking to expand their operations.

The costs of the new transmission lines in Texas will be divided up among ratepayers over a number of years, and transmission costs are typically about 5 percent of a customer's overall energy bill. According to a PUC report, each $1 billion of new transmission investment would increase a typical residential bill by about 80 cents per month. The good news for customers is that as more wind energy moves onto the grid, they will be paying less for energy usage, and won't be as dependent on natural gas and coal, which are now responsible for more than 80 percent of Texas' energy.

Until the transmission line plans and costs are set, consumer groups remain cautiously optimistic, and are generally supportive anytime the words "renewable energy" are part of the equation.

"We are extremely supportive of bringing more renewable energy sources online for all Texans, but we also understand that it has to be cost-effective and beneficial to consumers," said Carin Nersesian, Assistant Director of Government Affairs & Communications at the Texas Office of Public Utility Counsel, which represents residential and business utility consumers.

In California, however, a similar transmission line project for renewable energy isn't getting such enthusiastic support. The state's plan to erect a $1.3 billion power line across a 22-mile stretch of Anza-Borrego Desert State Park has angered environmentalists, and Clint Eastwood and Governor Arnold Schwarzenegger's brother-in-law Bobby Shriver are two of its high-profile opponents. The issue exemplifies the potential environmental conflict between accessing carbon-free power and transmitting it to consumers.

Photo by StevenJS24