Texas Million-Dollar Miles
by Jennifer Warren
Approaching Amarillo on Interstate 40 from the West through Deaf Smith County, Texas’ northwest wind passage, rows and rows of wind turbines in crop-like formations cover the land for about 30 miles. Then, incalculable turbines beyond the visible horizon scatter to the North. Once the endless miles of fields of towering ivory giants capturing the natural world’s abundant Panhandle wind were placed, a new energy era was being imagined. The expansive, hypnotic plains of straw-colored wheat are occupied by noticeable wind farms and shining solar arrays with promises of a clean energy future. Thousands of people and hundreds of businesses are coming with their own dreams of the promises of Texas.
Blustering north winds, fiery sun, ranched lands, and oil fields—all seen as plentiful lucrative resources in Texas—are colliding. Energy resources seemed to be changing the nature of the land, the landscape, and the people’s lives lived on it. Two decades later, that very open progressive vision is bringing new opportunities for Texas, and challenges too now.
The wind turbines of the Panhandle are iconic Texas landmarks symbolizing a growing energy mix once represented largely by oil and gas. In 2005, Texas decided to figure out how to move and connect that wind resource and capacity to demand centers like Dallas and Austin. From that study, the plan of “Competitive Renewable Energy Zones” (CREZ) was developed, a now lauded case of transmission genius. Things have changed. The growth of renewables is possibly outstripping the ability to move those electrons in Texas, an early wind adopter.
Tradeoffs abound with renewable power. The wind just doesn’t blow and the sun shine when and where we want it to. It’s partly a transmission problem and Texas’ energy grid is facing growing pains. Policymakers are trying to figure this out—how to change an energy system built on coal, gas, and some nuclear, to add in renewables, when the economy demands and requires the reliability provided by the incumbent energy stalwarts. Wind and solar will be 40% of Texas’ grid mix next year,[i] some say it’s closer to 50%.
It’s the good, the bad and the ugly, for sure. Renewables bring zero-carbon clean energy at the source point, but are intermittent power. That’s a problem in Texas when summertime peak demand of sweltering triple-digit heat permeates homes after the sun sets. The renewables industry recompense is battery storage. Alternatively, gas-fired power offering baseload, ie., a steady supply, can be easily sited next to solar farms, biomass or biogas too. An ugly factor, for the planet, is the minerals requirements to build all of the renewables power apparatus and future battery storage facilities. Like oil and gas with their finiteness, the rare earths, minerals and mining requirement for the intense electrification drive has its limits, and are surfacing. According to Patrick Jenevein, a pioneering wind developer, capital efficiency of projects, owing to a lack of capacity utilization also factor in, with interest rates raising that bar.
On the Electric Reliability Council of Texas (ERCOT) grid, Texas’ very own power grid, significant solar power generation has been added to the renewables mix. A total of 11.5 GW (gigawatts) of utility-scale solar capacity was installed in Texas, and over 20 GW more is expected to 2025. (One megawatt can power 200 homes at peak Texas summer loads or up to 1,000 otherwise. Ten GW powers 2 million high-load days-worth of homes, up to 10 million.) In addition, 35.7 GW of wind capacity is installed in Texas, more than in any other state, with an additional 5.3 GW expected over the next three years.[ii]
Given the economic growth in Texas, Uri’s crippling freeze of 2021, and renewables integration challenges, the Texas Governor’s office convened the State Advisory Committee on Energy. Its findings were reported in September of 2022. The Public Utilities Commission, the PUC, is set to study it.
Disconnect
Figuring out how to design such a complex system to include renewables’ growth is a challenge. Transmission is one answer but it is not so straightforward. Currently 10 GW of renewables are not being utilized and more will happen.[iii] According to Sandhya Ganapathy, CEO of Houston-based EDP Renewables North America, “The U.S [is] transmission challenged; we have an old and an aging infrastructure, and how we overcome those issues I think [impacts] the scale and the pace of deployment of capital and new investment.” The State report notes the need to speed up transmission line processes. Regulatory roadblocks such as permitting is also a challenge, the industry notes.
Solving the transmission puzzle of how to connect renewables to demand centers—like the populous Texas Triangle of Dallas, San Antonio-Austin, and Houston—isn’t even the whole problem to solve. In Texas, wind and solar power generation capacity of 27.8 GW are 83% of the proposed interconnections tracked by ERCOT, with natural gas 4%. For 2021, $2.5 million of transmission projects are endorsed, which is neither financed or cleared through the public.[iv]
The transmission challenge is revealing however. “An inadequate transmission and distribution network leads to constant congestion and curtailment issues, affecting the economic viability of [renewables] projects,” notes a World Economic Forum article, citing Texas as a shining example because of our CREZ lines. Transmission lines are both not enough —and harbingers of the second order effects of federal tax credits, more government renewables spending like the Inflation Reduction Act (IRA) policy, and an environmental, social and governance (ESG) drive gone wild at times. Federal tax credits and state portfolio standards have encouraged renewables development and the new green policies passed in 2022 will incentivize more renewables capacity. The ESG movement is creating demand for green projects sometimes beyond the capacity to absorb them.
Moving molecules
The Texas deep freeze of February 2021 caused a major refocus of attention to the grid of the future. Some say Texas was within a few minutes of a shutdown that would have resulted in roughly a month of no power, a virtual economic wipeout. Renewables have been called out. In speaking to this accusation at a recent Fed energy conference in Houston, Ganapathy said her “team was in the deep freeze defrosting turbines to get them spinning because wind was one of the only technologies working, in fact.” She further suggests that the addition of storage with wind and solar can ensure that renewables sustainably deliver.
The goal of CREZ was to cost-effectively deliver power from wind farms in rural North and West Texas to Dallas, Fort Worth, Austin and other areas.[v] The Texas Panhandle is just stoked with windiness. Right beneath I-40 after Amarillo sits Deaf Smith County, the most wind-swept place in Texas. A Rice University report says that CREZ provided 3,600 miles of high-volume transmission, or 23% of the transmission capacity added in the [whole] U.S. in 12 years, as of 2020. In service in 2014, the $6.9 billion price tag breaks down into $1.2 million per mile; transmission project costs can be two-fold that amount even. A tradeoff was noted: less air pollution but at the expense of ‘idyllic landscapes being marred from large wind turbines and giant transmission lines.’
With CREZ, the Public Utility Commission had regulatory oversight for permission and siting. In part due to state law and policy, landowners, local governments, and regional organizations also played an unexpectedly important role in shaping this significant energy infrastructure.[vi] Tens of thousands of documents came from stakeholders, attesting to the plethora of interests inherent in infrastructure projects. There are also differing local, regional and political dynamics that would make a CREZ 2.0 difficult. For example, Dallas is an energy island unto itself. “Generation plants cannot be built inside the Dallas ring and it’s very difficult politically to build more transmission lines inside the ring,” says Patrick Jenevein, who sat on the Governor’s energy advisory committee.
CREZ focused on five zones totaling 32,000 square miles in which wind development was a high priority. The initiative was more costly, larger and time-consuming than anticipated. Landowners and local governments along transmission routes are critical stakeholders in energy infrastructure projects. While everyone connected to a power network benefits, the local concerns (for and against) strongly influenced the geography, cost, and time-to-completion. (Texas has 60,000 miles of power transmission lines.)[vii]
By comparison, the Midwest recently announced a major transmission investment. Long-distance transmission lines totaling over 2,000 miles[viii] will synch up 20 GW of existing renewables capacity, and enable 53 GW of new capacity. With a $10.3 billion price tag, that’s roughly $5 million dollars per mile, plus considerable capacity expansion. Built by 2013, Texas CREZ transmission lines helped support the economic boom of wind development in the Panhandle, supporting 23 GW of wind power generation. Surprisingly and counterintuitively, the Mid-Atlantic and Northeast regions are said to be “quite behind in terms of renewable demand versus project development,” [given] the renewables targets of the states in those regions, notes a Lawrence Berkeley National Laboratory report.[ix]
Harnessing the Sun
The bottlenecks in moving renewable energy shows up in congestion and curtailment costs. Congestion means capacity is trapped owing to a lack of transmission and curtailments are reductions to output to balance load. Further, an issue called the duck curve or “dead armadillo” curve in Texas speak, can lead to blackouts given the load rebalancing requirements, the State report notes of solar power after the sun goes down.[x]
However, congestion and curtailment costs were nearly $3 billion in 2022, says Judd Messer, vice president of Advanced Power Alliance, Texas. Last year these costs were $2.1 billion. “That’s just low-cost wind and solar megawatts, largely in South and West Texas, that are trapped— this congestion hits everybody,” he says. That’s money wasted because power isn’t flowing efficiently from where the generators are sited to where power is needed. He points to Senate Bill 1281 meant to “identify projects where the [upfront] cost of a transmission line would be completely offset by lower congestion costs to the customer” and other system benefits. The bill’s passage could, in part, move the renewables build-up from the West, where one San Angelo representative wants transmission projects.[xi] Messer says, “Large [corporate] offtakers are signing power purchasing agreements (PPAs) of wind and solar energy from a developer but that wind is trapped.”
According to power markets analyst Hoza at BTU Analytics, “With 108 GW of wind and solar capacity proposed in ERCOT, curtailments will continue to grow. Solar curtailments will likely start to outpace wind in the next couple years given the 90 GW of new solar capacity proposed.” He adds that PPAs, hedges, and tax credits can buffer the cost of curtailments, congestion, and therefore subsequent weak pricing to the projects themselves.[xii] The decarbonization of the grid is racking up losses in electrons and money. So, reliable energy mix sources such as natural gas and nuclear, the incumbents, matter greatly to the grid as well.[xiii]
The U.S. renewables industry has tailwinds because of the 10-year line of sight ahead with the IRA providing tax credits certainty. A mere $128 billion is cornered for wind, solar and storage credits, the lion’s share of the IRA’s $369 billion green package. Both wind and solar new generation is expected to grow from over 30 gigawatts (GW) of installations in 2021 up to 500 GW across the ten-year period.[xiv] This is a significant addition of renewables installed capacity.
But you can’t just build it so they come. It has to be connected and balanced with baseload, ie., steady reliable power. Today, new transmission construction can amount to about $2 million per mile for a 345-kilovolt line, paid for by consumers.[xv] Noted at the Fed energy event: Texas coal plants that are 50-60 years old are operating at 20-22% capacity, and not retired as of yet. Counterintuitively, the signals sent by federal legislation may retire too soon or alter power mix choices. We saw this movie in Germany with the energy shock cause by Russia’s invasion of Ukraine, but the cracks were happening prior to the invasion, in California too.[xvi] The early retirement of legacy infrastructure assets can usher in the problem of reliability challenges.
While CREZ lines were built largely in ERCOT West and the Panhandle, renewables project development may be outpacing the capacity to use it, which circles back to Jenevein’s inefficiency observation. With the population and economic growth expected in Texas, a mismatch exists between growing renewables resources (supply) and need (demand). However, new approaches are emerging to match the supply of resources, and they have to happen. It’s a land rethink, but not so fast…
New frontiers and physicality
Geographical expanses, especially Texas-sized ones, are a challenge in connecting remote wind resources from Panhandle turbines and the sunshine of West Texas. Chad Ellis, CEO of Texas Agricultural Land Trust, notes the influx of population, with roughly 1,300 people moving here each day, and losing 1,000 acres per day of agricultural lands to development. Representing the cattlemen, agriculture and wildlife groups of Texas, he says this is leading to a “fragmentation” in land. “Solar and wind [installation] sitings are not necessarily placed in the best places with the best use in mind but closer to existing transmission lines.” He believes there isn’t a coherent plan or policy framework that can facilitate the changes brought about by economic growth.
“Once you contractually tie up land in wind and solar leases, your [choices] are made for 10, 15, or 30 years,” offers foremost Texas land broker and developer Bernard Uechtritz of Icon Global. Uechtritz mentions that selling off parts of statuesque ranches or breaking them apart, the disaggregation Ellis notes, actually limits potential siting locations for renewables or other infrastructure. He knows firsthand with his quest to keep the Waggoner ranch intact, the largest Texas and U.S. ranch under one fence.
Truly, landowners do not want the massive wires and towers offending their hypnotic, visual rhythms of rolling hills and wheat-colored prairie grasses. Eminent domain would and will be required to affect these changes. In Texas, that can be a hard sell. Quintessentially Texas, agricultural and ranch lands are adapting and allowing space to new possibilities though, to which both Ellis and Uechtritz agree.
“Economic development unlike anywhere else in the country,” is how the State report characterizes Texas. This requires energy. Think liquefied natural gas terminals along the Texas Gulf Coast, support of the electrification of oil and gas production in far West Texas, and the growing digital tech stack. In fact, industry and re-juxtaposing land use can help absorb renewables capacity. The private market, a Texas beacon, is leading the way. Large firms, with low-carbon ambitions, are relocating to Texas, notes Bob Helton, vice president of government and regulatory affairs of ENGIE North America, part of a French multinational. In his invited testimony to the Committee, he advocates for technology neutrality, which means allowing for battery storage too.[xvii]
In Texas, two projects speak to the adaptive nature of industry, the landscape and infrastructure. At the time of the legendary Waggoner Ranch listing, Uechtritz recognized that a nearby coal plant was being decommissioned and pitched it to would-be buyers. The “interconnectivity” to the grid it offered could complement the financial and operational efficiency of the ranch, helping keep a Texas legacy intact. The coal plant there, currently under remediation, is now slated as the Oklaunion Industrial Park, which plans to source natural gas, solar, and data centers alongside a transportation hub play. Next-gen infrastructure developments like the Oklaunion concept ideally speak to the new rhythms of the energy transition.
More repurposed land use is upon us. The industrial lands of Texas are becoming recycled brownfield sites where new demand centers exist, like the Alcoa-Sandow Lakes Ranch in the Texas Triangle. The global industrial firm Alcoa owned 31,000 acres of Texas farmland and industrial assets, including one of the world’s largest decommissioned aluminum smelters. Their environmental stewardship of the development even won an award for exemplary coal mine reclamation, a national honor from the Department of the Interior.[xviii]
The existing energy infrastructure played an enormous role for the ultimate developer-buyer. Part of the property was known as ‘power island.’ “Importantly, it included a high-capacity switch, which allowed the transfer and sale of electricity by fossil-fueled plants, out to the grid,” Uechtritz explains. “Similarly, this switch [allowed for] behind-the-meter revenues from future renewable sources, solar or waste conversion to plug-and-play right into the ERCOT grid.” A once-rusty, run-down, Chernobyl-looking old industrial development—born of steel, smelters, turbines, smokestacks and conveyer belts— is morphing into another future.
Finally, physically, the inputs, such as the critical minerals to build renewables and transmission lines are becoming more expensive, as is the battery storage required to deal with intermittency issues. The minerals and mining equations are a limiting factor in the energy storage revolution, notes Morgan Bazilian, a minerals expert from Colorado School’s Payne Institute. This complication is a factor for wind, solar, and energy efficiency critical minerals.[xix] Of course, technological advances are happening to identify better sustainable minerals combinations and geopolitical supply chain workarounds.
Whispers from the West
Transmission and grid updating is expensive—a million-dollar mile — at the very low end, and then the wires being utilized to capacity is another story. In other words, this renewables capacity—new projects and farms—can be built, if permitted, but then will they be used to capacity? Or will Texas ultimately be littered with wind turbine and solar array graveyards?
A prized asset of West Texas, Permian Basin oil and gas production growth was helped by the CREZ lines, according to a report by Southern Methodist University.[xx] Leading Permian player Pioneer notes that transmission is a limiting factor for oil field electrification, one path that helps reduce emissions.[xxi] They have a 140 MW wind farm on their Permian acreage, incidentally. In the region ERCOT calls West Texas— the McCamey, Central West and Central CREZ —wind developers added 11 GW of new capacity, of which 4 GW went into service after the CREZ lines were built. In the Panhandle, 4.4 GW of wind capacity was added with all going into service. [xxii]
Mark Berg, executive vice president of operations for Pioneer, says that electrification of operations requires long-term planning with state utilities—and will take many years. “While renewables have a place,” Berg says, acknowledging their intermittency, “reliable oil and gas production requires reliable baseload power that is gas-generated for stability of the grid.” The world counts on this production. He notes that Pioneer has to balance emissions reduction activities with capital efficiency. Supply chain issues and technological improvements will also be factors in electrification’s expansion. Pioneer’s emissions reduction goals, however, are not fully dependent on field-wide electrification.
Notably, Rice University reports over the CREZ period, Texas population grew 15%, GDP grew 46% and total greenhouse gas emissions were flat. Wind helped but also the switch from coal to more natural gas-fired generation. An expanding digital infrastructure also comes with an expanded carbon footprint. Energy-intensive bitcoin mining and blockchain operations are targeting the state since they were kicked out of China. They or other forms of digital infrastructure can be useful to balance and absorb renewables’ loads however.
Texas has hard choices to make. The PUC believes a CREZ-like initiative isn’t in the cards for the legislature presently.
As Goes Texas…
To arrive at a better energy place, collaboration is key, and is happening. Importantly, Texas illustrates the scale required of energy systems to deliver. At the Fed conference, some experts acknowledged the prospects of an economic meltdown if the goal of net-zero decarbonization is pushed too hard, too fast, with Europe’s case looming large.
Connecting the Panhandle’s windiness and the West’s sun means synching the right land in the right place—a confluence of the physical resource itself and the social license to proceed with these power-generating farms. New forms of industrial demand and land developments are co-mingling alongside this new energy era.
Texas is a bastion of freer market approaches and experimentation, part of its charm. Regarding energy resources and innovative approaches, Uechtritz observed: “[In Texas], we’re the heart and hub. Other places do not have similar vibrant drivers of the economy which creates opportunity.”
Oil-, gas- and wind-rich Texas is also entrepreneurial and pragmatic, magnetic even. The universal laws of physics and unknowns inherent in innovation are absolutely in play. A sustainable Texas may offer new lessons in energy, land use and the means of working with nature. While many want to come and bet the farm in Texas, a reflective, cowboy sixth-sense factor respectfully permeates these ancient lands and open ranges.
Just think…
“The infrastructure—the buildings, roads and power plants—hold a key. The infrastructure networks are, curiously, a physical manifestation of social networks. This I find unbelievable: a physical manifestation of something that isn’t physical.” — From my 2012 interview of a renowned theoretical physicist, Dr. Geoffrey West of the Santa Fe Institute, on his emerging theory of scale, prior to the 2017 book, “Scale.”
PS.
These videos were shot on road trips through the Panhandle (by request of Hannah) in August 2022 and Dec 28 and Jan 1, 2023. They were inspirations for the story, of course, shot well before the original commission and during a re-write. Ultimately, an alternative media route was chosen for this piece. Below is an alternate introduction from “Approaching the Panhandle…” video, August, 2022, from hours of road video and indie rock.
On a blistering hot August day, my daughter Hannah and I sped along 287 headed north, beyond Wichita Falls, through Barnett Shale territory, the proving grounds of the U.S. shale gas revolution. Then came the sleek elegant ivory towers. From Wilbarger County, the de facto headquarters of the fabled Waggoner Ranch, through roughly thirty of 85-mile-an-hour minutes, one section of them danced to the moody road trip melody of “O Children” by Nick Cage. “Children—lift up your voice; lift up your voice,” played as iPhone video was shot while endless Texas highway and turbines passed, punctuated with some pump jacks.
Endnotes
[i] https://www.ercot.com/files/docs/2022/02/08/ERCOT_Fact_Sheet.pdf
[ii] EIA
[iii] Author calculation from fact sheet, fn 1
[iv] Jenevein affirmed.
[v] http://www.ettexas.com/Projects/TexasCrez
[vi] Baker Institute, CREZ, Nov 2020, p. 4
[vii] State report, 26.
[viii] https://betterenergy.org/blog/the-race-to-build-electric-transmission-in-america-has-finally-begun/
[ix] https://pv-magazine-usa.com/2022/06/29/faster-lower-cost-interconnection-by-combining-ercot-miso-pjm-approaches/
[x] https://www.energy.gov/eere/articles/confronting-duck-curve-how-address-over-generation-solar-energy
[xi] https://citiesservedbyoncor.org/new-law-that-could-determine-pace-of-transmission-approvals-inside-ercot-divides-lawmakers/
[xii] https://btuanalytics.com/power-and-renewables/wind-and-solar-curtailments-in-ercot/
[xiii] High solar adoption creates a challenge for utilities to balance supply and demand on the grid. This is due to the increased need for electricity generators to quickly ramp up energy production when the sun sets and the contribution from PV falls. Another challenge with high solar adoption is the potential for PV to produce more energy than can be used at one time, called over-generation. This leads system operators to curtail PV generation, reducing its economic and environmental benefits. While curtailment does not have a major impact on the benefits of PV when it occurs occasionally throughout the year, it could have a potentially significant impact at greater PV penetration levels. https://www.energy.gov/eere/articles/confronting-duck-curve-how-address-over-generation-solar-energy
[xiv] Fed conference: 6:33:00, Ganapathy plus Bloomberg slide no. 9
[xv] https://citiesservedbyoncor.org/new-law-that-could-determine-pace-of-transmission-approvals-inside-ercot-divides-lawmakers/
[xvi] See Fed transcript of 11/10/22.
[xvii] Report, p 77.
[xviii] https://www.osmre.gov/programs/excellence-in-surface-coal-mining-reclamation-winners (2012)
[xix] Bazilian, Payne Inst., Critical Minerals slide (from CEMAC)
[xx] https://www.smu.edu/-/media/Site/Cox/CentersAndInstitutes/MaguireEnergyInstitute/ONCOR-final-report-1-18-19.pdf?la=en (p. 11)
[xxi] Pioneer, Sustainability report, 2021, p. 22 transmission, 33 emissions by ops.
[xxii] Baker report. p 14