Texas is about to go green — by 2020, more electricity will come from wind than coal, according to analytics/consulting firm Rystad Energy.
Propelled by the surging shale revolution, Texas now contributes 40% of total U.S. oil production and nearly 25% of marketed natural gas production, Kallanish Energy reports.
However, the “Lone Star State” is about to break out of its hydrocarbon-rich mold with this wind vs. coal milestone moment, according to Rystad.
Spectacular surge in wind production
“Our forecasts suggest that onshore wind in Texas will generate about 87 terawatt-hours (TWh) of electricity by 2020, vs. the anticipated 84.4 TWh from coal,” says Carlos Torres-Diaz, head of Gas Market Research at Rystad Energy. ”
The U.S. overall has seen a spectacular surge in wind production, led by Texas and other “red states” that overwhelmingly voted for Donald Trump in the 2016 presidential election.
Wind power generation has grown at an exponential rate and is set to make up 10% of the power mix in the country so far this year, compared to 23% from coal (down from 44% in 2009).
Renewables more prevalent in Democratic states
However, looking at the total power mix of the U.S., Democratic-leaning states are the clear winners when it comes to renewable energy. Renewable power, including hydro, has supplied 27% of total power demand in the Democratic states, compared to only 13% in Republican states.
The greener renewable sources may be ousting “brown” fossil fuels, but red and blue are also important colors in the equation – the political divide that invariably influences energy debates.
At the national and state level, renewables – in particular wind – have seen support throughout past decades, but that support is waning under Trump, who campaigned on revamping the coal industry.
New installations driven by economics
“However, our view is that renewable energy technologies are reaching a level where new installations are not driven solely by policies or subsidies, but by economics,” Torres-Diaz said.
This opinion is supported by the trend of ever-lower production costs, as well as the healthy pipeline of planned capacity additions, despite the soon-to-disappear tax break.
The global average levelized cost of electricity from onshore wind farms dropped below $0.06 per kilowatt-hour (kWh) in 2018, according to the International Renewable Energy Agency (IRENA).
Cost of wind generation drops to cost of fossil fuels
This development brings the cost of wind generation down to the lower cost limit of fossil fuel power, explaining why wind capacity has been growing and pushing increasing amounts of coal generation out of the power mix.
As a result, 2019 is set to be the biggest wind development year yet, with an onshore installed wind capacity set to reach a peak of 14,000 megawatts by the end of 2019, if the projects currently in the pipeline materialize.
The future of green energy faces more than just rhetorical headwinds: the Production Tax Credit (PTC), a federal subsidy for each kWh produced by wind, is set to phase-out at the end of 2019.
Under current PTC legislation, wind projects are eligible to receive tax credits based on either the year the project starts operations, or the year the developer demonstrates it has spent 5% of the project’s total capital cost and construction has begun. Therefore, it is possible for companies to file a large purchasing order at the end of the year, and technically qualify for the PTC in 2019.
Midwest states have most to lose
“Heartland” states in the Midwest have the most to lose. Clean energy sources in these states tend to enjoy bipartisan support as the surging renewable industry creates jobs and brings in state revenue through taxes.
“Even without government subsidies, wind will likely remain competitive in the Midwest and south-central U.S. markets. Further expansion in the Rockies and California is likely, as state governments pursue more carbon-friendly energy solutions. However, downside risk to wind could materialize in the mid-Atlantic and New England states, as the loss of subsidies will make it harder to clinch new market share,” Torres-Diaz said.
This post appeared first on Kallanish Energy News.