The Greening of Texas?

Transcription

1 The Greening of Texas? June 24, 2009 Jay Zarnikau, PhD Frontier Associates, LLC and University of Texas at Austin LBJ School of Public Affairs and College of Natural Sciences

2 Questions.... Can one of the leading states in fossil fuel production and consumption become a leader in renewable energy and energy efficiency? Can the transition be achieved through market mechanisms within relatively-competitive market structures? And without global warming concerns as a motivation? Solar

3 Consumption Texas ranks first in total energy consumption. Solar Source of data: US DOE EIA Texas consumes almost 12% of all energy used in the US. In 2005, Texas energy consumption exceeded that of California, the nation s second largest energy consumer, by 38 percent.

4 Consumption Total Consumption by Sector (Trillion Btu), 2005 Texas⁴ U.S. Texas Percent of Total U.S. Consumption Residential 1,618 21, % Commercial 1,399 17, % Industrial 5,812 32, % Transportation 2,730 28, % Total 11, , % Source: Information Administration Solar

5 Consumption Texas ranks fifth in energy consumption per capita. Million Btu Solar Source of data: US DOE EIA Alaska Wyoming Louisiana North Dakota Texas United States State

6 Trillion BTU Consumption 12, , , , , ,000.0 Exhibit 3 Production Estimates by Source in Texas, Year Source: EIA: Coal 1 Natural Gas 2 Crude Oil 3 Nuclear Electric Power 4 Solar

7 Texas Balance If you count Btus, Texas became a net importer of energy in the 1990s. But if you consider the value of energy imported and exporter, we are still a net exporter of energy resources by a long shot. Solar 18, ,000.0 Trillion Btu 14, , , , , , , Total Production Estimates (Trillion Btu) Total Consumption Estimates (Trillion Btu) Year

8 Texas leads the nation in CO2 emissions by a very wide margin. Million Metric Tons in TX CA PA OH FL IL IN NY MI GA LA Solar Source of data: US DOE EIA

9 Texas CO2 emissions have been trending upward generally Source of data: US DOE EIA Texas Solar

10 But Texas share of U.S. CO2 emissions has declined slightly. 12.0% 11.5% 11.0% 10.5% 10.0% 9.5% Source of data: US DOE EIA Solar

11 Texas Policies Highly restructured electricity market. Very little federal regulation over electricity matters. Considerable competition in natural gas markets. Laissez faire political attitude. Among policy makers, some skepticism regarding global warming. Solar

12 Can Texas Change Course? Can Texas change course? Can and help Texas regain it s leadership in? Solar

13 Solar Source of data: US DOE EIA

14 Initiatives to develop the state s wind power potential have proven extremely successful: A Portfolio standard (goals for renewable energy) A credit trading program, enabling Retail Electric Providers to obtain their share of the required credits as a reasonable price Yet, some problems have arisen: Inadequate transmission to move wind power from the best sites (mountains in west Texas, the Panhandle, and coast) to population centers. $5 billion investment is needed. Some market gaming by wind generators (although these problems have been largely fixed.) Wind contributes little to summer peak generation requirements in Texas. Inability to predict and control wind power has led to problems in operating the state s power network. In the presence of transmission bottlenecks, wholesale electricity prices can go negative in west Texas. Solar

15 Solar Source of map: Texas PUC

16 2005 Legislative Requirements to Remove Transmission Constraints to Development Section (g) The (Public Utility) commission, after consultation with each appropriate independent organization, electric reliability council, or regional transmission organization: (1) shall designate competitive renewable energy zones throughout this state in areas in which renewable energy resources and suitable land areas are sufficient to develop generating capacity from renewable energy technologies; (2) shall develop a plan to construct transmission capacity necessary to deliver to electric customers, in a manner that is most beneficial and cost effective to the customers, the electric output from renewable energy technologies in the competitive renewable energy zones

17 Potential Wind Resource ERCOT sponsored a study to identify areas with best wind resource potential Identified highest CF 100MW sites and clustered into 25 areas Identified wind capacity potential (in MW) with >35% capacity factor in each area is shown Source: Ercot

18 Network Upgrades From the perspective of network upgrade needs, there are generally four sets of potential CREZs 1. Coastal (Area 24) 2. Mc Camey Area (Areas 5&6) 3. Abilene Area (Areas 9,10,12 &14) 4. Panhandle (Areas 2 & 4) $5 billion price tag. Source: Ercot

19 Wind power generation is considerably below the rated capacity of the wind turbines. Solar Source: Ercot

20 Wind generation in west Texas, investment tax credits, and transmission constraints have combined to create some bizarre pricing patterns in the state s wholesale electricity market. $1,600 $1,400 Balancing Prices in Various Zones on June 3, 2008 Solar Dollars per MWh $1,200 $1,000 $800 $600 $400 $200 $0 15 -$ Minute Interval Houston North Zone West Zone Source: Ercot

21 Solar Solar Source: Texas Resource Assessment

22 Thermal/Photovoltaic Technologies Solar

23 Animal Wastes Crop Residues Forest Products/Mesquite/ Cedar Grain High Tonnage Sorghums Microalgae Municipal Solid Waste / Urban Waste Oilseed Crops Sugar Cane/ Cane Sweet Sorghum Switch Grass Solar

24 Texas has the ability to be a U.S. leader in using renewable geothermal resources in a range of applications. Solar

25 Temperature of Underground Formations Temperature of Formations at 10,000 ft Temperature of Formations at 12,000 ft Solar Source: Texas Resource Assessment

26 Texas Resource by Category Solar

27 From Water ENERGY FROM TEXAS WATER RESOURCES HYDROPOWER OCEAN SALINE GRADIENT ExistingSite Undeveloped Hydro Feasible Undeveloped Small Hydro and Low Power Ocean Thermal Gradients Tides Waves Salinity Gradient Solar Pond RED/PRO at freshsaline interface Solar Source: Texas Resource Assessment

28 Investor-owned electric utilities are required to meet a goal for energy efficiency. The goal is consistently exceeded on a statewide basis, but some individual utilities may fall short. Austin has been a leader in this area. Solar

29 Source: Demand Savings (MW) Goal Achieved Solar

30 The Challenges Faced as we Move Toward Greater Reliance upon s and Cost of Investments Accommodating Intermittency Transmission of to Markets Valuing Distributed Generation Incorporating Storage Jobs and Economic Development Solar

31 In theory, Texas has the potential to satisfy all of its demand ( Quadrillion Btus) for energy with renewable energy resources. Solar RESOURCE SOLAR TOTAL PHYSICAL RESOURCE (quads/yr) ACCESIBLE RESOURCE (quads/yr) ENERGY DENSITY: GOOD TEXAS SITE (MJ/m²/yr) 4, ,000 X X PRIMARY ENERGY USES ELECT. HEAT MECH TRANS. NON ENERGY USES WIND X X BIOMASS WATER (as electricity) X X X Food, feed, and fiber X X X Water supply: flood control GEOTHERMAL Source: Texas Resource Assessment 400,000 81, X X

32 Findings So, is Texas a green state or a brown state? Texas leads in total energy consumption, CO2 emissions, and the use of coal as a generation fuel. The state s conservative leadership has expressed little concern over global warming to date. But, Its wind power industry is the nation s largest and will increase in scale considerably in the coming decades. The state s vast potential for solar power is about to be tapped. resources may also have considerable potential. efficiency efforts have proven efficient and effective. The oil and gas and semiconductor industries which enriched the state in decades past are slowly being replaced with green industries focused on developing wind power, solar power, and batteries. Solar

33 Findings These new industries are aided by a favorable entrepreneurial and investment climate. To date, this state s policies to develop renewable energy and energy efficiency are off to a good start. Gains in these areas have been made within electricity and natural gas markets which have been restructured to foster competition by setting goals and using market mechanisms to achieve the goals. What happens in Texas is not merely of importance to Texans. The success of any world wide initiatives to reduce greenhouse gas emissions and reduce reliance upon fossil fuels is greatly impacted by what happens in Texas, in light of its contribution to energy consumption and CO2 emissions. Solar

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