The strong winter front that brought North Texas its second white Christmas of the past few years also helped the state set a new record for wind generated electricity. While the storm had people turning up their heat from the Panhandle to DFW, it also delivered enough wind to have the wind turbines of West Texas turning at near capacity. At 3:11 p.m. on Christmas day wind energy was contributing 8,638 MW of power to the Texas electricity grid. That’s enough energy to power over 4 million homes.
Texas has long been a leader in wind energy production. According to statistics by the government run Energy Information Agency, the wind energy output of the state of Texas dwarfs that of any other state. In fact, Texas would rank near the top globally when ranked against other nations.
The success of the wind energy sector in Texas is no accident. Texas electricity is open to competition. The Texas electric grid is separate from the rest of the U.S. electricity infrastructure and is one of the largest electric grids in the world. It is a potentially lucrative market for energy producers made more profitable by federal subsidies paid to wind energy producers.
Government Wind Subsidies
The federal government has long backed wind energy with public money. For decades energy producers have received subsidies for producing electricity from wind. The federal Production Tax Credit pays a fixed amount of money for every kilowatt of electricity that is generated from wind turbines and sold to electric grids. Without these subsidies it is unlikely that wind could have competed with other cheaper sources of generating electricity such as coal or natural gas.
After a decades long run the Production Tax Credit was set to expire at the end of 2012. Any facilities that began producing electricity prior to the end of the year would remain eligible to receive the tax credits for the next 10 years. Understandably, this made 2012 a busy year in the industry as producers rushed to come online and take advantage of the federal money. Nationwide, almost half of all new electricity production in 2012 came from wind.
New wind energy projects were expected to all but end in 2013 absent intervention by congress to renew the tax credits. Because of the budget drama unfolding in Washington, it didn’t look likely that any such extension would be passed. A last minute deal, however, extended the federal tax credit into 2013 setting up another potentially banner year for wind in 2013.
In Texas most electricity is still generated using natural gas. The low cost and abundance of natural gas brought about by new drilling techniques has helped keep electricity rates in Texas low in the past few years. While wind has become a larger part of the state’s electricity portfolio, it has done so mostly at the expense of coal.