With money to be made, wind power booms in oil-rich Texas

von Dr. Peter Nagel

• By Ian Partridge, University of Texas •

Wind power is now big business in the US, and it is getting bigger. Last year, the US wind industry added 1,087MW of new wind power capacity, about the same as is currently installed in Austria, and by the year’s end 12,000MW was under construction, almost double that currently installed in the UK. New records for power output are set every year – for example, during the evening of March 26 this year wind provided 10,296MW of power to Texas electricity grid, meeting 29% of demand at that time.

So why is wind booming in the US now, especially in Texas, known more for its rich oil and gas deposits? To understand what is going on we have to look at three factors: subsidies, transmission lines and the interplay of state and federal policies.

US wind power data from the American Wind Energy Association 2013 annual report.

As is the case elsewhere in the world, wind power in the US depends on subsidies, known as the production tax credit (PTC). The actual generation cost of a new project is about US$50 per megawatt hour (MWh): with the PTC providing US$23 per MWh, the project is profitable at a contract price of US$27, possibly a little less for project in a favourable site. This is competitive with fossil fuel power stations.

It is worth pointing out that a 2008 study by the Texas Comptroller of Public Accounts found that wind received only 3.4% of subsidies given by the federal government to the energy sector. The big winner (in 2006) was biofuel ethanol, with 34.6%, and fossil fuels accounted for 45.9%.

Politicising energy

The problem is that the PTC has become a political football, sometimes renewed by Congress for only a year at a time ...

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