Climate change and renewable energy pote

However, it is the potential of the renewable energy industry in Texas, from manufacturing to production, which can have a significant impact: • Biomass and Bio-energy o Algae production

Renewable Energy Potential 

in Texas

  SOCIO-ECONOMICS GROUP HARTE RESEARCH INSTITUTE THE GULF OF

MEXICO STUDIES

Renewable Energy Potential

Report funded partially with a grant by The Energy Foundation

Harte Research Institute for Gulf of Mexico Studies Texas A&M University- Corpus Christi

6300 Ocean Drive, Corpus Christi, Texas 78412

Suggested Citation: Santos, C and D.W.Yoskowitz, 2010 Renewable Energy Potential in Texas,

Harte Research Institute June 69 pages

Executive Summary   1 

I. Introduction   3 

II. Traditional Energy Use and Trends    3 

i Worldwide    3 

ii U.S.    8 

iii Texas   11 

III. Renewable Energy Use and Trends   13 

i Worldwide   13 

ii U.S.    18 

iii Texas   29 

IV. Renewable Energy Opportunities‐ The Future   51 

i Areas for Improvement 51 

V  Economic Impact 54 

VI Conclusion 60

References 63

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Executive Summary

Energy is king in Texas In 2006 the oil and gas industry alone accounted for 14.9% of the Gross State Product The State produces more energy than any other state, 11.3 trillion Btu (2007) and consumes more than any other state per year, 11.8 trillion Btu (2007) A result of that dominance

is that the State is also the largest emitter of CO2 from electric power production, 252 million metric tons in 2008 At the same time that Texas leads the country in traditional energy production and consumption, there is also tremendous opportunity in development of renewable energy

The expansiveness of the State drives the opportunity in the renewable energy sector A recent study by the National Renewable Energy Laboratory ranks Texas number one with regards to wind energy potential generation at 6.5 million Gigawatt-hours (GWh) The state also has 250

“quads” of solar energy accessible every year, more than enough to meet the demands of every citizen in the State Renewable energy sources are not just limited to the wind and solar Texas also has great potential in other sources as well such as geothermal, biomass, and biofuels from algae and other sources

Texas already has a strong presence in renewable energy:

• 72% of total biomass energy was used by the industrial sector, compared to the national average of 55% (Combs, 2008a)

• By the end of 2009, Texas had installed 9,410 MW of wind energy capacity, leading the country

• Wind-related manufacturing is growing in Texas Companies based in Texas now produce different parts for wind turbines, like blades, towers, and nacelles

However, it is the potential of the renewable energy industry in Texas, from manufacturing to production, which can have a significant impact:

• Biomass and Bio-energy

o Algae production for use in bio-fuel is extremely promising Algae require three ingredients to grow: carbon dioxide, high solar radiation, and brackish water or water high in salt concentration In Texas, the best areas for algae production are West Texas and the Gulf Coast A perfect situation would be to match petrochemical facilities and power plants in the Gulf of Mexico and algae production, so CO2 could be captured to produce biofuels/bioproducts (Combs, 2008a)

• Solar

o One study estimates that Texas could capture around 13% of all new jobs and investments concerned with solar PV technologies by 2015 (Combs, 2008b, 2008c)

o West Texas has enough resources to produce up to 351 million MWh of electricity and 75% more direct solar radiation than East Texas

• Wind

o 17,000 MW of installed capacity could generate 1,700 full time jobs

o Texas is one of the regions in the country with the lowest cost due to higher performance and lower development and installation costs (Combs, 2008d, 2008c) Lower costs lead to lower prices, which makes this energy source more attractive

While all sections of the State are in a position to benefit from some level of renewable energy manufacturing and/or production, South and West Texas are in particularly good position to take advantage of future growth The potential impacts of two similar sized projects of 100 MW, one being wind and the other, a centralized solar power trough plant is:

Earnings during construction (millions)2 $145 $19

Annual earnings during operations (millions) $6 $1

If Texas were to double the amount of installed capacity generated from wind it could potentially create 466,736 jobs during the construction phases, 2,164 permanent jobs during the operation phase, $1.7 billion in earnings during the construction phase, and $94 million annually during operations The impact from solar facilities is even greater

There are still a few issues that will impact the future of the renewable energy industry in Texas The economics of construction and operations is still challenging Development of renewable energy sources has, over time, been supported by various incentives and standards at the federal and State level The major incentive for construction and production of renewable energy is the federal production tax credit (PTC) set in 1992 at $0.015/kWh Since then, it has been renewed and expanded several times, most recently in 2009, and is currently set at $0.02/kWh The Texas Renewable Portfolio Standard (RPS) is also a major engine for the development of renewable energy Additionally, transmission lines from rural parts of the State where the energy is produced to where it is consumed are critical

I Introduction

The major contributor to greenhouse gas emissions is the burning of fossil fuels (more than 80%), such as natural gas, coal, and oil The U.S and the world rely heavily on this type of non-renewable energy source leading to a serious and continuous rise of GHG emissions Developing renewable “green” energy sources such as solar, biomass, wind, and geothermal can help reduce GHGs emissions and mitigate climate change Although renewable energy sources still represent

a small fraction of the world’s energy supply, the use and efficiency of this energy can increase significantly (World Resources Institute, 2008) Renewables can improve human health with its insignificant or zero GHG emissions and potentially help boost the economy by creating new jobs

II Traditional Energy Use and Trends

i Worldwide

Energy comes from different sources Fossil fuels, like oil, coal, and natural gas are the most common For many years coal was the main source of energy, it was responsible for 70% of all energy produced Today it only supplies 26% of worldwide energy The majority of energy is now supplied by crude oil, while natural gas, although not so significant, is growing and becoming more important globally Studies predict that the remaining amount of reachable fossil fuels will last 170 years at current rate of consumption (Climate Institute, 2008)

On the other side of the table are the renewable energies These sources are not finite and can

be explored indefinitely In recent decades, this source of energy has been improved and new technologies have been developed to capture the energy of the sun, earth, wind, and oceans (Climate Institute, 2008) Demand for energy continues to rise as a consequence of increasing population around the world and expanding economies Nevertheless, increasing prices and alarms about insecure energy supplies will limit growth in fossil fuel consumption (IPCC, 2007) The primary goal of any energy improvement is to create energy services that improve productivity and people’s quality of life, whether it’s health, comfort, or life expectancy Secure, affordable, equitable, and sustainable energy supply is essential for future prosperity Economic policies focused on sustainable development will bring co-benefits that include the use of new energy technologies and better access to affordable modern energy This will determine if and how many people will achieve a good quality of life in the future (IPCC, 2007)

If the current global rate of energy consumption remains the same, energy consumption will double by 2030 and triple by 2060, when compared to 1995 levels (Climate Institute, 2008; Environmental and Energy Study Institute, 2007; IPCC, 2007) This increase in energy demand poses serious risks to the environment and human health The production and consumption of energy already produces more environmental damage than any other human activity It contributes almost 80% of the air pollutants and more than 88% of the greenhouse gas emissions responsible for global warming (Climate Institute, 2008; IPCC, 2007)

A solution to reduce GHG emissions would be a transition away from the traditional use of fossil fuels to zero- and low-carbon-emitting modern energy supplies A mix of choices to decrease the amount of energy per unit of GDP and the carbon intensity of energy systems is needed to achieve a sustainable energy future (IPCC, 2007) The figure below illustrates the complexity that exists between primary energy sources and energy carriers

Figure 1: Complex interactions between primary energy sources and energy carriers to meet societal needs

Source: IPCC, 2007

In recent years, energy consumption and demand has increased worldwide (Figure 2) By

2030, a 65% global increase above 2004 levels is expected Consequently, without mitigation measures, to cut the increasing rates of carbon emissions people will have to start using all possible cost-effective means (IPCC, 2007)

Figure 2: Global annual primary energy demand by region, 1971-2003

Source: IPCC, 2007

Note: EECA = countries in Eastern Europe, the Caucasus and Central Asia

In 2004, roughly 40% of the global primary energy was used as fuel to produce 17,408 TWh3

of electricity (Figure 3) The production of electricity has had an average growth rate of 2.8%/yr since 1995 and is expected to continue growing at a rate of 2.5-3.1%/yr until 2030 In 2005, global energy production was provided 40% by hard coal and lignite fuels, 20% by natural gas, 16% by nuclear, 16% by hydro, 7% by oil, and 2.1% by other renewables Non-hydro renewable plants have increased significantly in the last decade with solar PV installations and wind turbine growing by 30% yearly Yet, they only provide a small portion of electricity production (IPCC, 2007)

Figure 3: World’s Primary Energy Consumption by Fuel Type

Source: IPCC, 2007

Figure 4 shows the global annual energy consumption per capita by region As illustrated, the consumption of energy per capita in North America is high compared to other regions of the world

3

Terawatt hour (TWh) equals 1012 kWh

Figure 4: Global Annual Energy Consumption per capita by Region (toe /capita)

of the world primary energy demand was supplied by fossil fuels In the absence of policies limiting carbon emissions, the use of fossil fuels is expected to grow even more over the next 20-

30 years (IPCC, 2007)

Eighty five percent of the annual anthropogenic CO2 emissions come from fossil fuels From those fossil fuels, natural gas is the one that produces the lowest level of GHG per unit of energy consumed and is therefore the preferred one among mitigation policies Fossil fuels have enjoyed high economic advantages that maybe other technologies will never overcome Even so, there is

a global trend for fossil fuel prices to rise and renewable energy prices to decline due to continuous improvement in productivity and economies of scale (IPCC, 2007)

If choosing which fossil fuel conversion method will depend only on the market, all fossil fuel options will continue to be used On the other hand, if GHGs are to be reduced, either fossil energy will have to shift to a zero or low-carbon sources, or new technologies will have to be developed to absorb and store CO2 emissions (IPCC, 2007)

Coal and peat

Coal is the most plentiful fossil fuel in the world and remains the most important one in several countries (Table 1; (IPCC, 2007; World Coal Institute, 2007)

4

A tonne of oil equivalent (Toe) is the amount of energy released by burning one tonne of crude oil (Austin Clean Energy Initiative IC2 Institute, 2002)

Table 1: Percentage of Coal for Electricity Generation for Different Countries

Source: Adapted from World Coal Institute, 2007

Coal generates 41% of the world’s electricity Upon combustion, coal releases various gaseous byproducts like greenhouse gases, including carbon dioxide, nitrogen oxide, sulfur dioxide, and methane gas These gases can create acid rain, impact trees and water, and contaminate fish and shellfish and affect animals and people who eat them (Climate Institute, 2008)

Coal-burning plants generate the most carbon dioxide per unit of energy generated, when compared to other fossil fuels, and contribute significantly to air pollution (Climate Institute, 2008) Nevertheless, the demand for coal is predicted to more than double by 2030 (IPCC, 2007a; Climate Institute, 2008)

The coal industry found several ways to reduce impurities from coal More effective ways of cleaning coal before it leaves the mine, like “scrubbers” to clean sulfur from smoke (Climate Institute, 2008) Gasifying coal before its conversion to heat decreases sulfur, mercury, and nitrogen oxides emissions This results in a much cleaner fuel and reduces the cost of capturing

CO2 emissions (IPCC, 2007) It is known that improved efficiencies in plants can reduce the amount of CO2 and waste heat emitted per unit of electricity produced CSIRO Sustainable Ecosystems (2005) is developing ultra-clean coal production that reduces ash under 0.25%, sulfur to small levels, and GHG emissions by 24% per kWh, when compared to other conventional plants (IPCC, 2007)

Natural Gas

Natural gas is a nonrenewable energy source and one of the main components (21%) of the world’s energy supply (IPCC, 2007) From the production and consumption of natural gas, emissions have also been increasing steadily since the 1980s Natural gas is still the cleanest of all fossil fuels, with lower emissions of sulfur, nitrogen, and carbon than oil or coal (Table 2; Climate Institute, 2008)

Table 2: Fossil Fuel Emission Levels- Pounds per Billion Btu of Energy Input

Predictions suggest that the total available reserves and resources should be enough for the next 70 years at present rates of consumption However, consumption rates are forecasted to increase, a 30 to 40 years’ supply is a more reasonable estimate (IPCC, 2007)

ii U.S

Most of the energy produced in the U.S., as in most industrialized countries, comes from fossil fuels (78.6% in 2008) It includes oil, coal, and natural gas Production and consumption were closely balanced during the 1950s, but since the 1970s consumption clearly surpassed production (Figure 5) In 2008, energy production totaled 73.7, while consumption was 99.3, which in return generated a net import of 25.775 (values are in quadrillion Btu) (U.S Energy Information Administration, 2009a)

Figure 5: U.S Energy Overview (billion Btu)

Source: U.S Energy Information Administration, 2009a

0 20,000,000

In 2008, the United States produced close to 74 quadrillion British thermal units (Btu) of energy and exported 7 quadrillion Btu Total consumption for that year was a little over 99 Btu, which led imports to reach nearly 33 Btu, close to 23 times the 1949 level (U.S Energy Information Administration, 2009a)

The increasing energy imports were driven mostly by petroleum demand In 1973, U.S petroleum imports reached the 6.3 million barrels per day In October of the same year, the Arab countries of the Organization of Petroleum Exporting Countries (OPEC) restricted the exportation of oil to the U.S., prices increased dramatically, and imports decreased as a consequence In 1986 the rising trend in imports carried on and has continued ever since (Figure 6) In 2008, U.S petroleum imports reached a high of 13 million barrels a day (U.S Energy Information Administration, 2009a)

Figure 6: U.S Petroleum Imports (Thousands of Barrels per Day)

Source: U.S Energy Information Administration, 2009

The increased use of electricity was partly due to the electrification of U.S households In

1950, 9% of American households had a TV and in 2009 that percentage increased to 98.9% (Elliott, 2008; Television Bureau of Advertising, Inc., 2009) In 1978, only 56% of American Households had air conditioning In 2001, that number increased to 75.5%, or 80.8 million of households Air conditioning is accountable for the largest share of household electric use and these numbers, rather than being static, are likely to be on the rise (U.S Energy Information Administration, 2009a)

Figure 7: U.S Energy Consumption by Source (Quadrillion Btu)

Source: U.S Energy Information Administration, 2009

0 5 10

Primary Energy Resources: Fossil Fuels

Natural Gas

Around 23% of all the energy consumed in the U.S comes from natural gas and a little over 50% of all American homes use natural gas as their heating source One benefit of using natural gas is its smaller impact on the environment when compared with other fossil fuels It burns more cleanly and emits fewer amounts of carbon, nitrogen, and sulfur than oil or coal (U.S Energy Information Administration, 2009b)

Natural gas is predicted to be the fastest growing primary energy source in the next few decades, mostly for being a clean fuel (Climate Institute, 2008; IPCC, 2007; U.S Energy Information Administration, 2009b) To satisfy this rise in demand, the International Energy Agency (IEA) predicted that around $3 trillion dollars will be needed in investment Infrastructure to handle the supply, transportation, exploration, and production will be part of the investment (Climate Institute, 2008)

In 2007, total U.S production of natural gas was 19,278 billion cubic feet and total consumption was 23,056 billion cubic feet In 2008, consumption reached an almost-record level

at 23.3 billion cubic feet (a 0.1% increase over 2007 level) Imports were higher than exports with 4,608 billion cubic feet versus 822 billion cubic feet (U.S Energy Information Administration, 2009b) Figure 8 illustrates the increase in gas consumption over time and the high number of imports versus exports

Figure 8: Total U.S Natural Gas Imports and Exports, 1994-2007

Source: U.S Energy Information Aministration, 2007

Natural gas prices delivered to electric generators have fallen drastically for the last year, which brings an opportunity for displacing coal-fired electricity generators with natural gas fired generators Since transportation costs are higher in the southeast region of the country, the areas with the biggest potential for substitution are East South Central (ESC) and South Atlantic regions (SA) (U.S Energy Information Administration, 2009a)

iii Texas

Texas is the leading state in fossil fuel reserves Texas reserves for crude oil account for almost one-fourth of total U.S reserves and for natural gas for almost three-tenths of total U.S natural gas reserves (U.S Energy Information Administration, 2009b)

Due to its large population, hot climate, and energy-dependent economy, Texas produces and consumes more electricity than any other state (over 1/10 of total U.S energy use) The state’s per capita residential use is higher than the country’s average Some of the energy-demanding industries in Texas include aluminum, forest products, chemicals, and petroleum refining (U.S Energy Information Administration, 2010)

Fossil Fuels

Texas is the number one state in both crude oil production and refining capacity Its 27 oil refineries produce close to 4.8 million barrels of crude oil (1/4 of total U.S capacity) and are located close to major ports along the Gulf Coast, such as Houston, Corpus Christi, and Port Arthur Texas is the state with the highest petroleum consumption, along with products such as asphalt and road oil, jet fuel, distillate fuel oil, lubricants, and liquefied petroleum gases (LGP) Texas use of LGP is higher than that of all the states combined, mostly due to its intensive petrochemical industry, the largest in the country To meet its air quality requirements, the state has to use four different motor gasoline blends, including reformulated motor gasoline blended with ethanol (U.S Energy Information Administration, 2010)

It is the number one state in natural gas production, accounting for ¼ of the country’s total production Natural gas production reached its peak in 1972 with 9.6 billion cubic feet of annual production and since then it has been declining (Figure 9) In 2007, Texas natural gas production was 6.09 billion cubic feet, a 30.4% share of the total U.S production Today’s extensive network of pipelines expands from Texas to reach consumption markets in California, the Midwest, the East Coast, and New England (U.S Energy Information Administration, 2010)

Figure 9: Annual Texas Natural Gas Production

0 1000000 2000000 3000000 4000000 5000000 6000000 7000000 8000000 9000000 10000000

1967 1970 1973 1976 1979 1982 1985 1988 1991 1994 1997 2000 2003 2006

Natural Gas Marketed Production

Source: U.S Energy Information Administration, 2009a

Texas leads the country in natural gas consumption, accounting for near 1/5 of the country’s total consumption This high demand for natural gas is dominated by the electric power and industry sectors, which represent over 4/5 of the State’s use (U.S Energy Information Administration, 2010)

Coal and Electricity

Around 50% of electricity in Texas is generated from natural gas and the remainder from coal Although the state produces significant amount of coal, it relies mostly on rail-delivered coal from Wyoming for the greater part of its supply Texas is the leading state in coal

consumption and its emissions of carbon dioxide and sulfur dioxide are one of the highest in the country (U.S Energy Information Administration, 2010)

The state is also the biggest consumer and producer of electricity in the country Its per capita residential electricity usage is higher than the national average, primarily due to the high demand for electric air-conditioning during the hot summer months and the common use of electricity as the main source for home heating during the winter months (U.S Energy Information Administration, 2010) The table below provides the electricity consumption per capita and by source in Texas and its comparison to the U.S

Table 3: Electricity Consumption per Capita and by Source

By Source Texas Share of the U.S Period

Total Petroleum 1,208 million

Source: U.S Energy Information Administration, 2010

III Renewable Energy Use and Trends

In 2006, total world’s electricity generated by renewables was 4.14 trillion kilowatt-hours, or close to 19% of the world’s total electricity generation Renewable energy sources are the fastest growing source for world electricity production, with a 2.9% increase per year from 2006 to

2030 Of all the new renewable power added, 54% is generated with hydroelectric power and 33% with wind power Other than hydroelectric power, other renewables are still not capable of competing with fossil fuels Government policies and incentives are therefore very important for the sustainability of renewables (U.S Energy Information Administration, 2009a)

Renewable Energy Sources

Biomass and Bio-Energy

Biomass refers to living and recently dead biological material that can be used as fuel or in industrial production (Climate Institute, 2008) It is the world’s major source of food, stock fodder, and fiber It is a renewable resource used to generate heat, steam, electricity and gases,

liquid fuels, and chemicals (IPCC, 2007; SECO, 2008a) Biomass resources include forest, agricultural and livestock residues, forest plantations, herbaceous energy crops, organic components of municipal solid waste, and other organic waste streams These are used to produce energy transporters in the form of solid fuels (pellets, logs, briquettes, and chips), liquid fuels (methanol, butanol, ethanol, and biodiesel), gaseous fuels (synthesis gas, biogas, and hydrogen), and electricity and heat (IPCC, 2007) Some of the environmental benefits of using this source of energy include reduced air and water pollution, reduced erosion, increased soil quality, and improved wildlife habitat (U.S Energy Information Administration, 2009a)

The world’s biomass and waste generated electricity was 229.5 trillion kilowatt-hours in

2006, a 7% increase from 2005 The world’s total biofuels production in 2007 was 1.06 million barrels per day, a 30% increase from the previous year The world consumption of biofuels on the other hand was 1.03 million barrels a day, a 34% increase from 2006 (U.S Energy Information Administration, 2009a) As figure 10 shows, the world’s total biofuels consumption and production go hand-in-hand

Figure 10: World's Total Consumption and Production of Biofuels, 2001-2007

Source: U.S Energy Information Administration, 2009a

0 200 400 600 800 1000 1200

2001200220032004200520062007

Total Biofuels  Consumption Total Biofuels  Production

The major reason limiting the continuous growth of Biofuel production has been tax subsidies in various countries with tough support from agricultural interests (Monfort, 2008) Another reason is the pressure on the most common feedstock, corn Corn prices have been rising, which makes the profit coming from ethanol production volatile and limited However, things have changed In 2007, the U.S Energy Independence and Security Act extended the U.S Renewable Fuels Standard mandating the use of 136 billion of liters of biofuels by 2022 Other similar policies in the same year included England’s adoption of a 5% goal by 2010, Japan’s target of 6 billion liters production by 2030, and China’s goal to produce annually 13 billion liters of ethanol and 2.3 billion liters of biodiesel by 2020 In sum, at least 17 countries have endorsed mandates for adding biofuels into vehicle fuels (Monfort, 2008)

As a consequence of all these initiatives, investment in Biofuel production increased worldwide in 2007 On the reverse side, in 2007 the U.N Food and Agriculture Organization (FAO) stated that demand for Biofuel was partially accountable for an 8% increase in food price inflation in China, 13% in Indonesia and Pakistan, and 10% in Russian, Latin American, and India In the U.S the increases in price were also felt and Pilgrim’s Pride, Inc., a company based

in Texas, announced that it would close its chicken processing plant in Silver City, North

Carolina, and six of its 13 distribution centers due to higher corn and soybean prices, combined with an oversupply of chicken These closures eliminated 1,100 jobs (Combs, 2008a) Additionally, the International Monetary Fund and other agencies stated that using food to produce biofuels will keep on stressing already scarce water and arable land resources (Monfort, 2008)

Wind Energy

Wind power has been booming worldwide despite the financial crisis and economic downturn In 2008, world wind power added 27,051 megawatts (MW), finishing the year with 120,798 MW of wind energy capacity This renewable source generated in that same year over 1.5% of the world’s electricity (Sawin, 2009) In 2009, wind energy rose 31%, leading to 157.9

GW of wind energy capacity (Dorente, 2010)

The United States was the leading country in new installations, surpassing Germany, the former leader, in 2008 U.S capacity rose by 50%, reaching the 25,170 MW at the end of that year and 39% in 2009 New additions could have been even greater if the extension of the federal Production Tax Credit had not been delayed, which caused investors to postponed some of the projects to 2009 (Sawin, 2009) In 2009, China surpassed the U.S and became the world’s wind growth leader For the fifth consecutive year, China doubled its wind power capacity (Dorente, 2010)

For the first time, in 2008, wind power was Europe’s leading source for new electricity capacity with 65,946 MW, beating natural gas with 6,939 MW and coal with 763 MW At the end of 2008, Europe had 55% of the global wind capacity and wind power represented 8% of European Union (EU) power capacity (Sawin, 2009)

The global market for wind turbine installations was worth $47.5 billion, in 2008, an increase

of 42% from the previous year and $63 billion in 2009, a 32.6% increase from 2008 (GWEC, 2009) Over 400,000 people are employed in the wind industry worldwide Nevertheless, an important part of these jobs can be lost due to project financing problems brought by the world economic crisis (Sawin, 2009)

Wind power is the most economically competitive of all the renewable energies (SECO, 2009) and although short-term expectations for this industry are cloudy, long-term expectations are promising Turbine prices are expected to fall as a consequence of the economic crisis, while several entities and organizations are still moving forward with projects for this source of energy The economic stimulus packages in the United States and other countries targeting wind power and other renewables are also contributing to the development of wind energy (Sawin, 2009) The global Wind Energy Council predicts an added wind capacity of 332,000 MW to be installed by 2013 (Sawin, 2009) and the World Wind Energy Association expects a continuous net growth rate of more than 21% annually until 2010 (SECO, 2009) Lastly, a Danish research firm, BTM Consult, predicts that wind power new installations will account for almost 6% of the world’s electricity generation by 2017 (Sawin, 2009) Figure 11 shows how world wind-energy capacity has been increasing over time

Figure 11: Global Annual Installed Capacity in MW (2000-2009)

Solar thermal systems produce heat which can be directly used as heat energy or transformed into electricity There are three solar electric thermal technologies under development or in place around the world: central receivers, parabolic troughs, and parabolic dishes All three use tracking mirrors to reflect and accumulate sun radiation (Climate Institute, 2008)

Solar water heaters can supply half or more of an average house hot water needs Simple or complex, these heaters are inexpensive ways of saving money from heating water It replaces the cost of gas or electricity usually used for such purposes Solar water heating system can vary in price from $800 to $3500 Typically, conventional water heater cost less than $1000 when installed (SECO, 2008b) Solar panel prices are expected to decline due to the increase of global polysilicon supply (Malik, 2008)

In 2008, solar power saw the most significant growth ever, with increases in installation of PVs and solar thermal plants by 48% New added power from PV reached the 5,600 MW, more than double the 2,400 MW from 2007 Cumulative PV power installed totaled 15,000, a much higher number than 9,000 from 2007(Liu, 2009) In 2009, solar grew by only 26%

Europe is the leader in the market for PVs, with over 80% of the market share in 2008 (Figure 12) Spain surpassed Germany to become the leading country in world PV market, with its market increasing by 364%, from 560 MW to an estimated 2,600 MW in 2008 The United States occupied the third position with a much lower 348 MW of new installations, followed by Italy, South Korea, and Japan (Liu, 2009)

Figure 12: Share of Global PV Market by Country or Region, 2008

Source: Liu, 2009

Europe 81%

Japan 4%

United States 6%

South Korea 5%

Rest of World 4%

The growth of solar power in leading countries such as Spain and Germany show that Governmental support policies are essential to the development of the solar market In Spain, a feed-in tariff policy demands utilities to buy electricity generated from solar power projects at premium, an initiative to promote the use of renewables Germany, former leading country in solar power generation, has also a feed-in tariff program Its goal is to reduce solar electricity prices until solar energy becomes competitive with conventional power The feed-in tariff program has proven to be successful for the development of the market and Germany is expected

to regain its PV market leading position again this year (Liu, 2009)

Global PV cell production saw an increase of 87% in 2008, from 3,715 MW in 2007 to 6,940

MW in 2008 Concentrating solar power (CSP) is also expanding around the world, especially in areas with abundant solar resources Between mid-1980s and mid 1990s, 350MW of CSP was built in California The U.S hosts one of the world’s largest CSP plants in Nevada with 64 MW (Liu, 2009)

Geothermal Energy

Geothermal energy involves using the high temperatures (heat) produced beneath the earth to create electricity (Climate Institute, 2008; Combs, 2008e) Geothermal energy can also be used for direct functions such as drying crops, while geothermal heat pumps can be used for heating and air conditioning systems; it accounts for 4 percent of the country’s total renewable energy generation (Combs, 2008e)

The world’s total installed geothermal energy capacity in 2005 was 9064.1 MW, with 24 generating countries involved (International Geothermal Association, 2009) However, the number of countries producing geothermal power could increase to as many as 46 by 2010 (Gawell & Greenberg, 2007) The table below illustrates some of the countries producing geothermal energy

Table 4: Estimated Production of Geothermal Energy by Country and MWe in 2010

Source: (Gelman & Hockett, 2009)

Overall, geothermal energy generation seems to be rising Both the number of producing countries and the total of new megawatts of power capacity installed are increasing Once again, linked with this development are the country’s government policies and incentives The degree

of development of geothermal energy seems to be more connected with policies and adequate funding than with geologic factors (Gawell & Greenberg, 2007)

Some of the advantages of using geothermal energy over conventional energy sources include (Climate Institute, 2008):

• Geothermal energy is the most energy-efficient, cost-effective, and clean system for temperature control

environmentally-• Geothermal power plants only occupy a fraction of what other power plants usually occupy and that land can be used simultaneously for other purposes, like agriculture

• Even if geothermal energy is technically finite, its typical lifecycle is so long, from 5,000 to 1,000,000 years, that it is considered a renewable energy source

II U.S

In 2007 in the U.S., consumption from renewable sources totaled 6.8 quads (quadrillion Btu) (a 1% decrease from 2006), or about 7% of the country’s total energy consumption (Figure 13) The peak of renewable energy consumption was in 1997, with 7.2 squads More than half of the total renewable energy used goes to electricity generation, followed by the production of heat and steam for industrial purposes (U.S Energy Information Administration, 2009b)

Figure 13: U.S Energy Consumption by Energy Source, 2007

Coal 22%

Natural Gas

23 %

Petroleum 40%

Nuclear  Electric Power 8%

Renewable  Energy 7%

Source: U.S Energy Information Administration, 2009b

From 2003 to 2007, renewable energy consumption grew at an annual average of 3%, compared to total energy consumption average of 1% The increase was mainly due to biomass and wind energy Within the biomass category, biofuels consumption grew the most (U.S Energy Information Administration, 2009b)

The use and consumption of renewables in the U.S have been increasing faster in recent years This is mainly due to increased prices of oil and natural gas and due to a number of State and Federal incentives5 Although the U.S still relies on non-renewable energy sources for most

of its energy needs, renewables are expected to grow during the next 30 years (U.S Energy Information Administration, 2009b) As seen in the Figure below, energy from renewable sources comes mainly from biomass

5

Including the Energy Policy Acts of 2002 and 2005, which were signed as an attempt to fight energy problems by providing tax incentives and loan guarantees to accomplish a diversified energy portfolio

Figure 14: U.S Renewable Energy Consumption by Energy Source, 2007

Biomass 53%

Geothermal 5%

Hydroelectric  Conventional 36%

Solar/PV 1%

Wind 5%

Source: U.S Energy Information Administration, 2009b

A major step towards the development of renewable energy was given in June, 2009 A federal renewable portfolio standard was approved in the American Clean Energy & Security Act of 2009 One of the requirements is 20% of energy coming from renewables by 2020 and through 2039 Also, the Federal government must purchase 6% renewable energy by 2012 and 20% by 2020 (SEIA, 2009a)

Additionally, on May 22, 2008 Congress passed a new farm bill to speed up the commercialization of biofuels, including cellulosic ethanol, to promote the production of biomass crops, and to develop the U.S Department of Agriculture’s Renewable Energy and Energy efficiency programs (U.S Department of Energy- Energy Efficiency & Renewable Energy, 2008a)

Renewable Energy Sources

Biomass and Bio-Energy

Biomass is the country’s largest source of renewable energy representing 53% of total renewable energy consumption in 2007 Hydroelectric energy declined by 14% in 2007 due to a decrease in precipitation in various areas of the country while biomass energy increased by 7% The major reason for the increase seen in biomass energy was the production of biofuels such as ethanol and biodiesel (U.S Energy Information Administration, 2009b) Federal subsidies have also contributed significantly to this increase (Combs, 2008a)

Wind Power

In 2008, the U.S wind energy industry installed more than 8,500 megawatts (MW) of new generating capacity, which is enough to power more than two million homes This increased the

nation’s total wind power generating capacity by 50% to over 25,300 MW (AWEA, 2008) In

2009, the U.S Wind energy industry broke all previous records and installed close to 10,000

MW of new wind energy capacity The total installed capacity in the country is now 35,000 MW The major factors driving this development were the federal stimulus bill passed early in 2009, expectation of action on climate change, state policies, and attractive wind project economics The Recovery Act incentives also pushed the growth of construction, operations, and management jobs in 2009 (AWEA, 2009b)

Figure 15: Existing Power Capacity by State- 4 th quarter of 2009

To incite increased wind energy capacity, the 2009 American Recovery and Reinvestment Act (ARRA) includes a three year extension of the renewable energy production tax credit (PTC)6 and additionally a new program that gives renewable energy developers the option to abstain from PTC and instead accept a grant from the Treasury Department of 30% investment tax credit (ITC) This program can be crucial to the growth of wind energy industry in the face of the downturn in 2009 caused by the global economic crisis (AWEA, 2008)

One benefit of wind energy is reduced dependence on fossil fuels A report by the U.S Department of Energy suggested 20% of the country’s electrical energy coming from wind by

2030 With this 20% wind scenario, wind power would displace 50% of electric utility natural gas consumption by 2030 This represents an 11% decrease in natural gas consumption on all industries and an 18% reduction of coal consumption CO2 emissions would also be reduced by 25% (U.S Department of Energy- Energy Efficiency & Renewable Energy, 2008b)

6

PTC or Production Tax Credit is a federal tax code that supports renewable energy by giving companies that

generate wind, solar, or geothermal energy 2.1-cent per kilowatt-hour (kWh) (Combs, 2008a; UCS, 2008)

Wind turbines are very effective in reducing emissions of CO2 A single wind turbine (750 MW) produces around 2 million kilowatt-hours (kWh) of electricity annually Based on average fuel levels, for every kWh produced, 1.5 pounds of CO2 is emitted This means that one single turbine (750KW) is responsible for avoiding the emission of 1500 pounds of CO2 every year, the same that could be absorbed by a 500-acres forest (AWEA, 2009a) Wind energy can bring increased property tax base for rural counties and income to farms and ranches (AWEA, 2005)

Challenges related to Wind Power

There are still some constraints around wind turbines that are better understood now, but remain present Such constraints include noise, aesthetic (visual) impacts, electromagnetic interference (EMF), airline flight paths, protection of areas with high landscape value, land-use, and bird and bat strike (IPCC, 2007; Climate Institute, 2008)

Another challenge for using such an energy source is that wind is not always constant (Climate Institute, 2008; Combs, 2008c) The system must be capable of reacting to swings in wind intensity and in electricity usage by customers (Combs, 2008d) A way of overcoming this

is by using batteries that will guarantee turbines remain working when no wind is available and weather forecasts that will predict when strong winds will occur (Climate Institute, 2008); yet, another opportunity for economic development

Wind energy faces transmission barriers, for some the greatest barrier Some of the windiest places are located in remote areas away from population centers This makes wind power dependent on long-distance transmission The problem is wind energy is produced on site and cannot be transported by pipeline, road, or rail, like fossil fuels and biomass Thus, wind energy can only be transported by electric transmission lines and extending transmission lines to windy places can be expensive (Combs, 2008d)

A major step was taken in March, 2009 when the Public Utility Commission (PUC) assigned seven utility companies to build some parts of a $5 billion transmission line project to bring power from West Texas and connect it to North Texas and Houston The proposed improvements in the transmission lines are expected to save consumers over $3 billion yearly tied to lower fuel costs and competition in the market This transmission line will bring power from where the wind is stronger (where energy is produced) to where the electricity is most needed (Souder, 2009)

Since the commercialization of wind energy is significantly new, it has to compete for transmission with established generators It can also outstrip transmission capacity because it can

be developed at a much faster rate than new transmission capacity (it can be developed in a matter of months, while transmission capacity can take several years to develop) For all these reasons, transmission capacity is crucial for wind power development and the new project connecting West Texas, North Texas, and Houston was a major step to the development of wind energy in the state (Porter, 2004; Souder, 2009)

Wind Energy Costs

Wind power economics typically involve investment costs, operation and maintenance costs (O&M), electricity production per average wind speed, turbine lifetime, and discount rate Of all these, wind turbines’ electricity production and their investment are the most important ones (AWEA, 2009a)

The cost of wind energy depends significantly on the wind speed of the specific site As seen

in Figure 16, as the wind speed increases (expressed in meters per second), the cost per

kilowatt-hour decreases The costs presented below include the wind production tax credit (AWEA, 2005)

Figure 16: Cost of Energy and Wind Speed (for a 51MW farm)

Source: American Wind Energy Association, 2005

Another factor influencing the cost of wind-generated electricity is the wind farm size, meaning that economies of scale work for wind energy A large wind farm generates electricity

at a lower cost than a smaller farm by spreading the costs over more kilowatt-hours than a smaller one Thus, larger projects have lower operation and maintenance costs (AWEA, 2005) Wind generation systems can be obtained by about $1000/kW (AWEA, 2009b; SECO, 2008c) Nevertheless, total onshore wind farm costs can range from around 1000 to 1400 US$/kW, depending on location, proximity to load, or road access O&M costs vary from roughly 1% of investment costs in the first year, to 4.5% after 15 years Thus, on good sites with capacity exceeding 35%, power can be produced for roughly 30 to 50 US$/MWh (IPCC, 2007)

Table 6: Technology Assumptions

Wind Farm

Natural Gas Combined Cycle

Pulverized Coal

Source: (AWEA, 2009a)

The increasing demand for power has led many governments setting goals to increase the percentage of energy generated by wind power Costs for this energy source can vary broadly with location (IPCC, 2007) Yet, with improved manufacturing methods and technology, happening every day, costs have dropped to less than 7 cents per kilowatt-hour, compared to 4-6 cents to operate a new coal or natural gas power plant Costs are expected to drop even more over the next 10 years In the last 22 years, wind power prices per kilowatt-hour with the help of PTC8 decreased by 80% In 2006, the country’s wind power price, including the PTC, was between 3 to 6 cents per kWh (Climate Institute, 2008)

Solar Energy

Solar energy is one of the cleanest and most abundant sources of energy in the country, yet it only accounted for roughly 1% of the country’s total renewable energy consumption in 2007 (Figure 17) One of the biggest challenges the U.S faces is leveling out production so that the costs of producing solar energy decrease and become competitive with fossil fuel sources (SEIA, 2009b) A study found that in the U.S., a 1kW solar electric system can produce an average of over 1,600 kWh annually, versus 1,200 kWh per year in Germany The same solar system in parts of Nevada, Arizona, New Mexico, and West Texas can generate 2,100 kWh per year (Combs, 2008b)

In 2008, U.S total solar energy grew by 1,265 MW, higher than the 1,159 MW installed in

2007 This means that total cumulative capacity increased by 16% to 9,183 MW (SEIA, 2009b) More than 62,000 new solar thermal and solar electric installations occurred in 2008, an increase

of 16% from 2007 (Sherwood, 2009) Installations happened mostly in 6 states, California, Hawaii, Maryland, North Carolina, Ohio, Oregon, and Pennsylvania Figure 17 shows some of the states with higher solar water heating systems installed in 2008 Texas is not in the picture, showing that although with tremendous potential, Texas is not exploring its natural resources as other states are In 2006, solar energy accounted for only 0.01% of all U.S electricity mostly because it was more expensive than other power options (Solar Energy Industries Association, 2009b)

Figure 17: Solar Water Heating Systems Installed in 2008

Hawaii 37%

Florida 20%

Other  States 12%

Mid‐

Atlantic 7%

California 7%

New  England and  NY 5%

Colorado 5%

Arizona 5%

Oregon 2%

Source: Solar Energy Industries Association, 2009b

Federal subsidies have played a big role in developing the solar energy industry and it will continue to play for the expected future (Combs, 2008) The Emergency Economic Stabilization Act of 2008 (EESA) prolonged the 30% solar investment tax credit (ITC) for eight years, lifted the cap for residential PV installations, removed the restrictions against utilities’ use of the ITC, and allowed the use of tax credits against the alternative minimum tax (AMT) (SEIA, 2009b) The American Recover and Reinvestment Act of 2009 (ARRA) was signed by President Obama to mitigate the economic slowdown felt in the solar industry It established a grant program that allows commercial solar customers to receive payment covering 30% of the cost of installing solar equipment The Act also formed a fund to assure up to $60 billion in loans, expressly for renewable energy and transmission projects (SEIA, 2009b)

Countries with the strongest incentive programs have seen the fastest growth and innovation

in their solar energy industries The extension of the federal income tax credit has led to rapid growth in the solar energy market (Combs, 2008b) One example is the booming of solar hot water installations that occurred since ITC was extended to residential installations in 2006 (Sherwood, 2009)

The Federal Renewable Portfolio Standard (RPS) was very important for the development of renewable energy The RPS requires retail electricity providers to supply a minimum percentage

of energy from renewable sources President Obama set a minimum of 25% of electricity from renewable sources by 2025, which is roughly equal to what the European Union has set for its members (SEIA, 2009b)

Access to a strong transmission infrastructure is another important factor Transmission lines

in the Southwestern part of the country are near or at capacity and access to new high-voltage transmission lines is essential for the development of utility-scale solar power plants The expansion of the transmission grid to areas abundant in solar resources is definitely very important (SEIA, 2009b)

Solar energy could not escape from the global economic crisis and as such, many companies and investors decreased their involvement in renewables Nevertheless, PV capacity increased in

2008 by 58% and solar heating capacity grew by 40%; although these numbers remained below the record levels set in 2006 (Figure 18; SEIA, 2009b)

Figure 18: Solar Energy Capacity Additions

Source: Solar Energy Industries Association, 2009b

Solar water heating installations continued to grow through 2008, with total installed capacity reaching 485 megawatts thermal-equivalent (MWTh) With over 80 million single-family homes in the U.S and all needing heated water, the market potential for solar water heating is huge Furthermore, the U.S Department of Energy set a goal of “zero-energy home”, which means each home would produce as much energy as it uses by the end of 2020 (SEIA, 2009b)

U.S manufacturing of PV modules grew significantly in 2008 Some manufacturers reported

an increase of 60% over 2007 numbers Directly or indirectly this increase will create thousands

of new permanent jobs in the U.S Efforts were also made to increase transmission capacity for renewable energy sources, with California’s Renewable Energy Transmission Energy Zone Initiative (RETI) (SEIA, 2009b)

In the U.S., 2008 retail electricity prices averaged almost 10 cents per kWh for all sectors, but for residential use the price averaged 11 cents per kWh Parabolic CSP systems generated electricity for 12 cents per kWh and PV systems for about 18 to 23 cents per kWh (Arvizu, 2008; Combs, 2008b) During peak hours however, the retail electricity price can rise to between 25 to

40 cents per kWh in some parts of the country When this happens, solar energy becomes much more competitive (Combs, 2008b)

PV systems generally create more electricity during the hottest time of the day and this can

be very helpful in decreasing the need to add expensive generating capacity to satisfy higher demand (Combs, 2008b) An important factor is also the size of the system The price per watt is actually significantly lower for larger systems According to California Solar Initiative database, installations of systems larger than 500 kW cost 17% less per watt than residential installations, the majority of those are smaller than 10 kW (Sherwood, 2009) Additionally, research by New Energy Finance suggests that solar power costs will decrease by 50% by the end of 2009, as compared to the end of 2009 (Shahan, 2009)

Geothermal Energy

The United States remains the world leader in online geothermal energy capacity and growth (Jennejohn, 2010) Though little recognized by the general public, geothermal energy (“earth heat”) is the third largest source of renewable energy in the United States, behind hydropower and biomass (U.S Energy Information Administration, 2009c; USDE, 2008) In 2007, Geothermal Energy accounted for 0.35% of the U.S total energy consumption, 5% of the country’s total renewable energy consumption, and 4% of the country’s renewable energy-based electricity consumption (Jennejohn, 2010; Slack, 2009; U.S Energy Information Administration, 2009a)

The attractiveness of geothermal energy has been changing over time due to the rising prices

of electricity and the high price of hydrocarbons Some geothermal systems that may have seemed not viable before may seem profitable now due to increased electricity prices, tax incentives, and new portfolio standards (McKenna & Beardsmore, 2006)

The U.S has more geothermal electric production capacity than any other country (Combs, 2008e) As of September 2009, eight states produced geothermal electric power: Alaska, California, Hawaii, Idaho, Nevada, New Mexico, Utah, and Wyoming (Jennejohn, 2010; Slack, 2009) Other states such as Colorado, Florida, Louisiana, Mississippi, and Oregon will soon be

on the list As of October 2009, the U.S had a total installed capacity of 3,152.72 MW (Jennejohn, 2010)

Table 7: August 2009 U.S Geothermal Power Capacity On-line (MW)

• Enhanced geothermal systems (EGS), once called ‘Hot Dry Rock”, if proven commercially effective can allow significant expansion of and production from existing fields, as well as the utilization of geothermal energy in previously implausible locations This technology is referred to by scientists as any resource that requires artificial stimulation, either by being fully engineered or one that produces hydrothermal fluid (Slack, 2009) A study sponsored by the U.S Department of Energy concluded that geothermal energy could supply 100,000 MW or more in 50 years if EGS were to be used (U.S Department of Energy- Energy Efficiency & Renewable Energy, 2008c)

• Hydrocarbon/geothermal co-production involve using geothermal fluids, often found

in oil and gas production fields, and produce electricity with it The Southern Methodist University Geothermal Energy program has calculated that this co-production in the Texas Gulf Plains can supply 1000-5000 MW of power Interestingly, there is no geothermal energy production in that region (Jennejohn, 2010; Slack, 2009)

The geothermal heat pump (GHP) industry has been growing for the past four years While present in various states, the most significant resources are seen particularly in Texas and Louisiana (onshore and offshore) (Jennejohn, 2010) The Energy Information Administration (EIA) stated that heat pump shipments rose by 36% in 2007 to 86,396 units (Slack, 2009)

GHP have a high initial cost for installation, but those costs can be recovered within two to ten years through energy savings (Combs, 2008e) While these systems are usually more expensive than traditional heating and cooling systems, they are appealing through their high efficiency and continuous cost-saving potential (Slack, 2009) The GHP systems cost around

$2,500 to $5,000 per ton of capacity Conventional geothermal-generated electricity is sold for

five to eight cents per kWh and establishing a steam geothermal power plant costs around $1,400

to $1,500 per kW, including drilling and exploration However, for the systems that use existing oil and gas wells, exploration and drilling costs can be significantly reduced (Combs, 2008e) The costs of a typical geothermal power plant development are shown on Table 8

Table 8: Typical 20 MW Geothermal Power Plant Development Costs

Development Stage Costs ($/kW)

Exploration and resource assessment $400

Well field drilling and development $1,000

Power plant, surface facilities, and

transmission

$2,000

Other development costs (fees, working

capital, and contingency)

$600

Total development cost $4000

Source: (U.S Department of Energy- Energy Efficiency & Renewable Energy, 2008c)

Some Federal research programs are trying to promote geothermal energy In 2007, the Advanced Geothermal Energy Research and Development Act of 2007 authorized $90 million annually for fiscal years 2008 to 2012 for research and development (R&D) of technologies to identify and improve geothermal resources The bill also established a research program to identify potential harm that geothermal energy may cause to the environment and to test technologies to mitigate or avoid those adverse environmental impacts (Committee on Science and Technology- U.S House of Representatives, 2007)

III Texas

Due to its size and diverse climate, Texas has great potential to use clean, renewable energy resources It can develop more renewable energy than any other state in the country The State’s resources are large enough to meet all of its energy needs (SECO, 2008a)

The State of Texas established that by 2011, it must have 4,264 MW of renewable energy capacity and by 2015 the number should increase to 5,880 MW, about 5% of the state’s electricity demand Of the total renewable energy generated, at least 500 MW must come from a source other than wind power after September 1, 2005 (DSIRE, 2009) The most common resources of renewable energy in Texas are solar, wind, and biomass These sources not only protect the environment, but they can also be beneficial by creating new jobs for the local communities (SECO, 2008a)

Although Texas has large amounts of fossil fuels like coal, oil, gas, and uranium, the state has even more renewable energy potential Texas’ solar, wind, and biomass potential is equal to 4,330 quadrillion British Thermal Units (BTUs) per year, or about 400 times the annual amount

of energy used by the state Wind energy alone could provide eight times more the amount of power generated by the state’s electric power plants combined (SECO, 2008a) Thus, to meet the total energy demand, Texas just has to explore a small portion of its renewable energy resources

An argument against renewable energy sources is that it wastes too much land to be practical, but this is not always the case In Figure 19, each square represents the land area needed in millions of acres to produce enough electricity for the entire state Oil wells and wind power produce almost the same amount of energy per land needed (7 versus 9 million of acres) Solar energy on the other hand generates the same amount of energy per significantly less land needed

(0.7 million of acres) (SECO, 2008a, 2008c) Although biomass needs a larger amount of land to produce energy than other sources, a study found that photovoltaics use less land to produce energy than the amount required to produce food (ex: agriculture) The land required to produce food averaged 900m2, to produce energy from biomass sources 13,427m2, and from photovoltaics 151 m2 (Nonhebel, 2005)

Figure 19: Land Area Needed For Various Texas Energy Sources

Source: SECO, 2008a

The existence of federal and state incentives to the development of renewables has been crucial Although the state of Texas is a major producer of oil and gas, it has recently been taking action towards developing renewable energy The major incentive for construction and production of renewable energy is the federal production tax credit (PTC) set in 1992 at

$0.015/kWh Since then, it has been renewed and expanded several times, most recently in 2009, and is currently set at $0.02/kWh (Combs, 2008c; DSIRE, 2009; Union of Concerned Scientists, 2009) Texas does not currently have a tax exemption program that offers funding for renewable energy equipment on an individual basis, although it offers some tax exemptions Manufacturers, sellers, and installers of solar energy devices can benefit from a franchise tax exemption (SECO, 2008a)

The Texas Renewable Portfolio Standard (RPS) is also a major engine for the development

of renewable energy This program requires 5,880 MW of energy from renewables by 2015 and 10,000 MW by 2025 Of these 5,880 MW, 500MW should come from a renewable energy other than wind energy Wind accounts for nearly all the renewable energy in Texas (DSIRE, 2009) Additionally, the Public Utility Commission of Texas (PUCT) established a renewable-energy credit (REC) trading program that began in July 2001 and will continue through 2019 Under PUCT rules, one REC represents one megawatt-hour (MWh) of qualified renewable energy that

is produced and metered in Texas A capacity conversion factor (CCF) is used to convert MW goals into MWh requirements for each retailer in the competitive market (DSIRE, 2009)

The state offers a corporate deduction from the state’s franchise tax for renewable energy sources Companies can deduct from the company’s taxable capital the total cost of the system or take 10 percent of the system’s cost off the company’s income The state provides a 100 percent

property tax exemption on the value of an on-site solar, wind, or biomass power-producing equipment Additionally, companies may be eligible to take advantage of economic development credits for certain research and development expenses, payments incurred, qualified capital investments, and certain new jobs created in Texas on or after January 1, 2000 (See publication

96-686, Franchise Tax Credits for Economic Development) (SECO, 2008a)

The Texas Biofuel Incentive Program, which started in 2006, promotes the production of Bio

nchers were enc

State Incentives for Ren

iomass and Bio-energy

xas possesses many resources that can be used for biomass energy pro

feas

Figure 20: Texas Energy Resource Areas

Source: SECO, 2008a

fuel Producers can register and if qualified receive grants based on the amount of biofuel produced Eligible producers can receive 20 cents per gallon of ethanol or biofuel produced The limit is 18 million gallons produced per year for the first 10 years (SECO, 2008d)

A press release on December 11th, 2008 announced that farmers and ra

ouraged to go “green” by upgrading their farm equipment and replace older diesel or gasoline-powered engines and consequently reduce harmful air pollutants (Texas Department of Agriculture, 2008b) Todd Staples, Agriculture Commissioner, declared that $5 million was available to help farmers and ranchers improve production efficiency and air quality through the Texas Emissions Reduction Plan (TERP) TERP is operated by Texas Commission on Environmental Quality (TCEQ) (Texas Department of Agriculture, 2008b)

To access all kinds of grants and “green” programs, the Database of

ewable Energy (DSIRE) includes federal and state incentives for energy efficiency upgrades, construction of new energy efficient buildings, and purchases of energy efficient products or systems Businesses and individuals can easily have access to this database (SECO, 2008a)

B

As an agricultural state, Te

duction All crops that can be used to produce biomass are grown in Texas (Combs, 2008a) The areas with most potential are East Texas and parts of North and Central Texas (Figure 20) Currently, the state has 24 landfill gas energy projects and 57 additional sites that might beible for more projects All of the current projects, except two, are currently producing electricity generating at least 79MW (SECO, 2008d)

The best sources of biomass energy in the state are probably waste materials 72% of total biomass energy was used by the industrial sector, compared to the national average of 55% (Combs, 2008a) It has been estimated that using just half of the accessible biomass waste is enough to supply 10% of the state’s electric needs Below is a small description of each energy resource:

• Forests- The state of Texas has very productive forests with many available biomass resources at a low cost Sawdust and waste wood are two examples that when burned can generate steam and electricity at timber-processing plants (SECO, 2008a)

• Agriculture- When cotton, rice, sugar cane, and peanuts are harvested many waste materials are left behind These crop wastes can be used as a fuel (SECO, 2008)

• Urban Sources- All big cities produce biomass sources Sewage treatment facilities, furniture factories, food packaging plants, and landfill are some of the examples (SECO, 2008a)

• Energy Crops- Fast growing crops like cottonwood trees can be used as biomass sources Some believe that 25% or more of the state’s electricity and transportation needs could be met by using these types of sources if more trees are planted (SECO, 2008a)

Figure 21: Energy Potential from Texas Biomass Waste Resources