Texas Built an Energy Powerhouse—New Rules Could Tear It Down
Texas has long prided itself on being a business-friendly state with low regulatory burdens and a reasonable tax structure. No sector has benefited more from this environment than energy. There’s a reason Texas is the energy capital of the United States. However, two bills currently moving through the legislature—combined with production constraints for natural gas turbines—could create a nightmare for Texas’ electrical grid and the businesses and consumers that depend on it for affordable, reliable power.
Last week, the Texas Senate passed SB 388, which mandates that utilities generate or purchase at least 50% of their electricity from “dispatchable” sources—defined as sources that: 1) are not dependent on weather, 2) can produce electricity quickly when called upon, and 3) can generate electricity continuously for a set period of time. Coal, natural gas, and nuclear plants are always considered “dispatchable”. Battery storage is generally considered dispatchable as well since it can send energy to the grid in milliseconds, isn’t weather-dependent, and can provide power continuously for up to eight hours. However, SB 388 specifically excludes battery storage from the definition of “dispatchable”, despite the fact that battery systems shattered a record earlier this week by providing more than 10% of the energy on the grid while over 25,000 MW of coal and gas generation were offline. This led noted Texas energy expert Doug Lewin to say “[b]atteries are keeping us out of energy emergencies.”
Today, building new coal generation is not economically feasible, and constructing natural gas and nuclear generation facilities takes a minimum of five years—usually more. If passed, SB 388 will unnecessarily restrict utilities from generating or buying electricity from the most practical, least expensive, and fastest-to-build sources (solar, wind, and batteries), threatening both affordability and reliability for consumers.
This week, the Senate Committee on Business & Commerce will consider SB 819, which requires wind and solar developers to obtain permits from the Public Utilities Commission (PUC) in order to build their projects. This may not seem terribly burdensome until one considers that no energy generation facility of any kind in Texas has EVER had to apply for a PUC permit.
The bill also imposes impact fees—a burden also not imposed on any other form of energy generation—on solar and wind projects. Furthermore, SB 819 provides the PUC with no clear guidelines for evaluating wind and solar applications, effectively giving unelected commissioners the power to approve or deny projects at their whim. If passed, this bill would unfairly constrain two of the fastest-growing, fastest-to-build sources of energy in Texas, contradicting the state’s long-standing free-market, “all of the above” energy policy.
Adding to the problem, the years-long backlog in gas turbine production has been widely reported. So, if a utility decides today that it needs to build new generating capacity to keep up with growing energy demand, it faces a serious dilemma:
Building a new gas plant (to comply with SB 388’s “dispatchable” requirement) may mean waiting five years for the necessary turbines.
Building a wind or solar farm risks violating the 50% dispatchable requirement under SB 388, while also facing uncertainty over whether the PUC will approve the project under SB 819.
Texas’ energy demand is rising at the fastest rate in more than 20 years. Utilities and private sector developers need flexibility to build the generation and storage facilities that make the most sense. Now is not the time to abandon the free-market, pro-business principles that are near and dear to the heart of Texans and have made Texas’ grid reliable.
Please ask your legislators to uphold Texas traditions and vote NO on SB 388 and SB 819.
Suggested Talking Points
Texas is the energy capital of the United States because of its free-market, “all of the above” energy policy that allows all forms of energy to compete on a level playing field
SB 388 disrupts this free-market, “all of the above” approach by requiring 50% of all new energy generation come from “dispatchable” sources (coal, natural gas, and nuclear)
Despite Texas being second in the nation in battery deployment and battery technology meeting every legal definition of “dispatchable”, SB 388 specifically excludes battery storage systems from being deemed “dispatchable”
Due to the lack of economic feasibility of coal generation, natural gas turbine supply chain problems, and long construction timelines for nuclear, it is not possible for Texas to meet the 50% threshold for “dispatchable” power under SB 388 in the near term
If SB 388 passes, the net result will be very little to no new energy generation in Texas due to the inability to meet the 50% threshold, halting economic development and growth across Texas
SB 819 also disrupts Texas’ free market, “all of the above” energy policy by subjecting wind and solar to new Public Utility Commission (PUC) permitting processes. No other form of generation has ever had to obtain such a permit in Texas history
SB 819 also subjects solar and wind energy to impact fees which no other form of energy generation has to pay
Solar and wind are the fastest to market and least expensive forms of new energy generation and they, along with battery storage, will play a pivotal role in helping Texas meet our growing energy demand.
SB 388 and SB 819 will not help Texas meet our state's growing electrical demand, and risks halting Texas’ economic growth
Texas has long been our country's leading producer of oil and natural gas. In recent years, Texas has also become the number one state for solar and wind production, and is number two for battery storage capacity. Let's continue Texas’ energy dominance, not hinder it.