Texas Solar Power: A Game-Changer in America's Clean Energy Shift
At the most basic level, the story of the clean energy transition is simple. It is the shift of the global economy from fossil fuels to instead run on carbon-free energy. It is a narrative with immense stakes – the continuing viability of life on earth, for one – and no small number of good guys and villains.
Of course, this simplistic view of the narrative arc of the clean energy transition masks enormous complexity, nuance, and unexpected twists and turns. Take the global solar industry, for example, whose alternating moments of policy, technology, and market induced euphoria and terror have deservedly earned it the moniker of “solar coaster.”
In the U.S., it would be hard to choose which plot twists have been most surprising. One underlying surprise is just how dramatically solar prices have plummeted. When the U.S. Department of Energy (DOE) first announced the SunShot Initiative in 2011, its goal of slashing the price of utility-scale to $1 per watt was laughably ambitious. Today, that once ludicrously low-price tag would be appropriately deemed wastefully exorbitant.
The story of the clean energy transition will undoubtedly continue to surprise. But for companies and institutions active in it, it is impossible to understate the need to shape conversations proactively and intelligently across what is the most important and challenging transformation the world has ever faced.
Strong storytelling is what allows impactful clean energy technologies to attract the investments needed to scale. Powerful communications help products get to market quickly and accelerates awareness and adoption. Public policy and regulations bolster clean energy and decarbonization when they are well understood – which only happens with compelling and strategic communications. It is not hyperbole to say that communications have as vital a role in clean energy success as finance, technology, or product development.
The foundation of compelling communications is the legitimacy that can only come from knowledge and expertise. It is credibility that flows from a big picture understanding of the long-term trends shaping the clean energy transition and the ability to communicate how specific technologies, business models, and policies fit within and hopefully propel that narrative forward.
This is the first in a three-part series that will examine some of the nuances, complexities, and surprises in the ongoing clean energy transition. In this first blog, we will look at the rise of solar in Texas and some of the lessons the state can provide to boost solar’s growth across America. Future blogs will focus on developments in the wind industry and efforts to transform the grid for a clean energy future.
Incentive-driven no more
A consistent truism defined where vibrant markets emerged in the early days of solar. Put simply, where government policy and incentives offset the high upfront costs of solar modules and equipment, installations would follow. In some cases, like California’s pioneering Million Solar Roofs program, the incentives were structured to drive prices down over time and make solar a financially viable option for increasing numbers of people.
In other cases, overly generous incentives fed a boom-and-bust cycle in which solar installations skyrocketed until incentive coffers were depleted; Spain’s feed-in-tariff in the 2010s is a classic example.
Staggering price declines over the past decade, however, have helped explode the paradigm that solar can only survive and grow when incentives are rich. Texas proves that the story of solar in America has entered a new phase. Want proof? In 2023, Texas bested California as the largest solar market in the U.S. with over 6.5 gigawatts of new capacity compared to California’s nearly 6.2 gigawatts. Longer term trends for solar in Texas are even more bullish. The Lone Star State is expected to add another 100 gigawatts of solar over the next decade, outpacing the second largest market by a 2-to-1 margin.
Tackling permitting and interconnection Texas-style
It’s important to remember that Texas has not vaulted to the top of state solar markets entirely on its own. Like all solar markets around the globe, Texas has benefitted from the cost declines driven by market demand from large early markets, like California.
But Texas is both turbocharging solar’s competitiveness with several smart policies and unique advantages. For example, one of the most significant barriers standing in the way of solar growth is long grid interconnection wait times. A report by the Lawrence Berkeley National Laboratory last year found that grid interconnection grew by 40 percent in 2022 and that projects typically spend five years waiting to connect to the grid. Solar growth spurred by the Inflation Reduction Act’s (IRA) passage can be expected to balloon interconnection queues in the future.
Texas is both installing record amounts of solar and moving projects through the interconnection queue five times faster than other grid operators. This is because the Electric Reliability Council of Texas (ERCOT) has embraced what is known as a “connect and manage” approach to interconnection rather than the “invest and connect” process used by other independent system operators and regional transmission operators (ISOs/RTOs). In its simplest terms, a connect and manage philosophy requires far fewer grid upgrades than invest and connect – grid upgrades that add significant costs and time to project development.
Texas is also unique in how it approaches permitting and access to transmission grids needed to deliver clean power from remote locations to the populated areas that need it. Permitting and transmission access add costs and time to the construction of new solar projects. Texas, however, created Competitive Renewable Energy Zones (CREZ) nearly two decades ago to facilitate the construction of wind in West Texas and the panhandle. Other states and the federal government have embraced the idea of renewable energy zones to accelerate the buildout of clean energy projects.
The free market is also driving solar growth in Texas. The state lets individual homeowner’s select their energy provider, and many are choosing solar because it offers cheaper electricity than fossil fuels. Texas’s long history in the oil and gas industry also benefits solar because the state has many skilled workers able to build infrastructure projects.
As well positioned Texas is for continued solar growth, there are challenges. Everything in Texas is big, including hail, which can damage or even destroy large solar power plants. Locations that frequently get hail and other extreme weather events increase insurance costs for solar; across the industry, solar insurance premiums have risen between 15 and 45 percent. Politics also could jeopardize solar’s continued success. Last year, a group of Texas legislatures introduced a bill designed to severely restrict permitting for renewable projects.
Like most stories in the clean energy transition, the tale of solar in Texas includes plenty of nuances and challenges. But in the ways that matter most – scaling solar to tackle climate change and deliver economic benefits to people – the story is like the clean energy transition overall. And by focusing on the things that Texas is doing right, the rest of the U.S. clean energy industry can grow even faster.
Do you like what you’ve read? We’ve got more coming your way this spring! Part II and III of our Texas clean energy series will focus on renewables and the grid.
For more information on Silverline and its expertise in the clean energy transition (nearly
two decades!), please send us a note below: