Texas Blows by California in Wind Energy

Texas Republican Gov. Rick Perry boasted something in early July that sounded pretty tough to swallow, considering Texas' reputation as a state that produces freewheeling oil men and little else in terms of energy production: "Texas surpassed California to become the national leader in wind energy." Surprisingly, this Texas brag has turned out to be true! How could Texas, the home state of our dear President George Bush, and the terrain of the fossil fuel captains of the world, beat cool, green and progressive California on wind power, one of today's most popular power sources?

At a time when California's electricity grid was again on the verge of rolling blackouts, this battle of state egos sheds some light on gaps between common perceptions and surprising reality. Apparently, California's image as a leader on green power sources could be nothing more than a mirage.

In 2002, the California Legislature passed a law that goes by the wonky moniker Renewable Portfolio Standard (RPS). Inspired by Europe -- which prefers government mandates instead of relying purely upon the "magic" of free markets -- the RPS sets numerical targets for renewable energy for utilities. Renewable energy developers then compete to supply the clean electricity. Wind power has been the first choice of most since it is currently the cheapest renewable energy resource.

Texas recently increased its RPS goal to supplying 10 percent of its total electricity consumption by 2015 with renewable energy. California surpassed that benchmark well over a decade ago. The current California policy is to have renewable sources supplying 20 percent of the state's total electricity from by 2010 and then 33 percent of total state supply by 2020.

But having plans on paper is one thing. Getting projects into the ground and up and running is another. Before getting into the nitty-gritty of why Texas beat California at wind power, let's set the context with a little bit of history.

California launches world's renewable industry

California was held up as a role model on energy policy throughout the world for decades beginning in the 1970s, when the state came up with the novel idea that reducing energy consumption could stave off the building of nuclear power plants up and down the state's coastline. Unlike other states, California banned oil as a fuel for electricity generation and halted construction of coal-fired power plants due to concerns about air pollution during the same decade. Yet the state's real claim to fame came in the 1980s, when California literally gave birth to the world's renewable energy industry.

In the course of just five years, a combination of tax credits, long-term power purchase contracts and state technical assistance jump-started the wind, solar, geothermal and biomass power industries. The passage of the federal Public Utility Regulatory Policy Act (PURPA) in 1978 allowed for private companies to build new power plants relying upon renewable fuels. California was the most aggressive state when it came to implementing PURPA. Among the incentives offered for wind power developers were generous state investment tax credits (which augmented federal tax credits), standard long-term utility power purchase contracts that featured fixed prices during the first five to 10 years of operation, and a state-funded wind resource assessment that identified California's best wind energy opportunities.

Approximately $1 billion was diverted from federal and state taxes into wind farms between 1981 and 1985 to jump-start the world's wind power industry in California. The end result of this effort was the addition of 1,700 megawatts (MW) of new wind power capacity to the state's power plant portfolio. Generally speaking, 1 MW of electricity can power 225 to 300 U.S. households. That translates into California's powering of as many as 500,000 homes with this amount of wind power capacity online some 20 years ago. Both federal and state investment tax credits were terminated in 1986 due to publicity surrounding the abuse of this investment tax shelter. Democratic Rep. Pete Stark of Hayward, Calif., led the fight to terminate the investment tax credits by proclaiming, "these aren't wind farms, they're tax farms."