Renewable Energy Wind and Solar

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					                         Renewable Energy:                                                    Chapter | 19

                            Wind and Solar
❖	Can Texans harness the wind and sun and even the jobs that go with
    these energy sources?
                                                600-turbine development across 336,000
Introduction                                    acres of West Texas. Financed by Chinese
   In late 2009, German utility giant E.ON      banks, the development will feature new
constructed the world’s largest wind farm in    turbines made in China and will bring
the tiny West Texas town of Roscoe. The         300 temporary construction jobs and 30
Roscoe wind farm has the capacity to produce    permanent jobs to the area. Renewable
781.5 megawatts — enough electricity for        energy in Texas is new — and it has already
every home in Plano, McKinney and the           been globalized.
rest of the 265,000 households in Collin           These giant wind projects illustrate
County. The $1 billion project in Roscoe        two key trends: Texas is emerging as
took 21 months to complete and employed         the capital of renewable energy, and
500 construction workers, who built 627 wind    foreign companies are moving fast to take
turbines on the fields of 300 property owners   advantage. “People in Texas think it has
— land that once pumped oil.                    got to be conventional energy or renewable
   The wind turbines of West Texas spin at      energy. It’s not. It’s both,” said Michael
7 miles per hour. And one turbine produces      Webber, an engineering professor at the
about as much electricity as 350 households     University of Texas at Austin and associate
consume in a year. These economics are          director of the Center for International
attracting more wind turbines to the state,     Energy and Environmental Policy.
as Asian and European manufacturers of              Webber is one of a growing number
wind and solar technology push to sell          of Texas energy industry observers and
their products in the growing Texas energy      insiders who think the Lone Star State
market. For example, Lubbock will soon be       is now poised to dominate a new energy
home to giant 2.5-megawatt wind turbines        economy, as renewable energy sources
made by Samsung Heavy Industries of             become more evenly distributed alongside
South Korea. These new wind turbines            traditional sources, such as oil, coal and
are more powerful than the 1.5-megawatt         natural gas.
turbines that line the landscape of much of        “We’re poised better than any other
West Texas. Similar Asian-manufactured,         state in a carbon-constrained world. Texas
high-powered wind turbines are part of a        can have more wind, solar and natural
new wind farm in West Texas, which is           gas than anywhere else. And we can make
being developed by Austin-based Cielo           money from that the same way we made
Wind Power, one of the first companies to       money from oil,” Webber said. “Change
join the Texas wind industry a decade ago.      freaks people out. Change doesn’t have to
Cielo’s projects include a new $1.5 billion,    freak us out.”

“We’re poised better than any other state in a carbon-constrained world.
  Texas can have more wind, solar and natural gas than anywhere else.
 And we can make money from that the same way we made money from
   oil. Change freaks people out. Change doesn’t have to freak us out.”

                        — Michael Webber, University of Texas at Austin                                 19
                                                                                                CHAPTER 15   | 129
                                                   engineers, electricians, marketers and
  | What’s Happening                               specially trained wind-energy workers.
      The Texas renewable energy industries            Wind energy is also popular because
  are growing as they work to leverage the         it doesn’t displace existing industry.
  benefits and limit the challenges presented      Community leaders describe it as a value-
  by their energy sources. For instance,           added business. The turbines take up only
  wind is a free fuel, it doesn’t pollute and it   100 square feet of land — about the size of
  doesn’t consume water. The West Texas            a living room. Cattle usually graze around
  windy season is long, lasting from fall          the giant turbines. And natural gas and oil
  to spring. Two of the best locations for         wells are often spotted pumping out the
  producing wind energy in America are             remaining fossil fuels near the turbines. As
  the Texas panhandle and West Texas.              electricity transmission lines are developed,
  Still, neither wind nor solar energy is a        West Texas community leaders expect the
  consistent energy source. The wind doesn’t       number of wind turbines on the landscape
  blow all the time. The sun doesn’t shine all     to increase.
  the time. And unlike portable and storable          Solar energy also has benefits: it’s
  fuels, such as gasoline and coal, electricity    plentiful, it’s free and it doesn’t cause
  is an instant fuel that is difficult to store.   pollution. Some Texas companies are
     Despite its challenges, the renewable         trying to capitalize on solar energy by
  energy sector is growing in Texas. Located       changing the economics of the industry.
  about 200 miles west of Fort Worth, Nolan        HelioVolt Corp. in Austin is trying to
  County is referred to as the wind industry       eliminate the long-distance transmission
  capital of North America. The county             constraints by placing solar panels directly
  not only has hundreds of wind turbines           on consumers’ homes, factories and offices.
  across its pastoral landscape, but it also          B. J. Stanbery, cofounder and chief
  has expertise in many facets of renewable        strategy officer of HelioVolt, readily
  energy: Nolan County boasts a critical           acknowledges that current solar energy
  mass of attorneys, technicians, title agents,    technology generates electricity only when

130 |    CHAPTER 19
the sun is shining and that battery storage           Having supplemental energy during
is expensive. To address this, HelioVolt           working hours is attracting attention. In
is working to develop small solar panels           late 2009, the city of Austin and its utility
that can be placed on any building to              company, Austin Power, contracted to
supplement other electricity sources. If the       build a private solar farm outside the city.
company’s products become popular with             Gemini Solar Development will build a
the mainstream public, then the company            30-megawatt solar farm on 320 acres by the
can alter the business model of renewable          end of 2011. The farm will supply enough
energy and help make solar energy easy and         electricity to the city to power about 5,000
affordable for consumers, he said.                 homes.
    HelioVolt recently opened an 85-worker
factory in Austin to make thin glass panels        | The Data
filled with semiconductors that help
convert rays of sun to electricity. The               Texas, with its vast vistas of land over
panels are about the size of a standard            which wind blows under sunny skies, is
roof shingle and can attach to the outside         attracting companies from the solar and
surface of a building. “Ultimately, the            wind energy industries. In 2009, Texas
supply chain for solar is going to change          generated about 7,100 megawatts of
dramatically,” Stanbery said. “Right now           electricity via wind — or about 30% of all
solar panels are installed by specialized          wind energy in the nation. For Texans,
technicians. In 5 to 10 years, solar panels        about 5% of their electricity is coming
will be part of the normal construction            from wind. All of this makes Texas the
process. It will be plug and play.”                leading state for wind energy production,
                                                   according to the American Wind Energy
   Currently, HelioVolt is shopping
for incentives to open its next factory,
which will employ 200 workers. While                  In solar energy production, Texas ranks
HelioVolt’s growth up to this point has            sixth in the nation, generating about 1.7
been financed primarily through venture            megawatts of solar energy — less than 1%
capital and equity investments, the national       of the solar energy in the nation as of 2007.
credit crunch has limited those resources.         Though small, this amount has more than
To continue expanding, HelioVolt is                doubled each year since 1998, according to
looking to the U.S. Department of Energy           the Energy Information Administration.
for loan guarantees to help the company
borrow money at 4.75% interest to fund             | So What?
upcoming expansion.
                                                     “Here in Texas, we are still the central
   Stanbery is confident about the growth          nervous system of the energy industry.
prospects for the solar industry and               Houston is still the energy capital of the
companies such as HelioVolt as more
                                                   world,” said Skip York, lead consultant at
consumers discover the advantage of a
                                                   Wood MacKenzie in Houston, a global
supplemental yet direct energy source
                                                   energy industry company. “Texans know
during daylight hours. “Solar gives you
                                                   more about energy than anybody. If Texas
energy during the peak demand hours,” he
                                                   does not become a major cog in the solar
                                                   and wind industry, it’s because Texas

     “Texans know more about energy than anybody. If Texas does not become a major
            cog in the solar and wind industry, it’s because Texas screwed up.”

                                               — Skip York, Wood MacKenzie

                                                                                                   CHAPTER 19   | 131
                     screwed up. Nobody is going to beat us to      natural gas–fired power plant starts at $3
                     dominating the wind and solar industry; if     billion, whereas the price for a wind or
                     we don’t take advantage of it, then it’s our   solar farm starts in the tens of millions,
                     fault.”                                        according to the U.S. Energy Information
                        While the business case for renewable       Administration.
                     energy is still being defined, the renewable      The low costs are thanks to newer
                     energy industry is growing in Texas.           technology, which has made wind turbines
                     Though California pioneered wind               more durable, easier to erect, cheaper to
                     energy in the United States, Texas has         maintain and less expensive than traditional
                     used a “second mover advantage” to take        power plants. Wind power now costs
                     advantage of technological improvements        about $2 million per megawatt to produce,
                     and now take a dominant position.              according to studies by the American Wind
                        Much of the growth has been fueled          Energy Association. For investors to see
                     by federal stimulus money and tax              financial viability, a modern wind farm
                     credits, as well as by curious investors and   needs to generate at least 20 megawatts.
                     consumers, according to both supporters        The average single wind turbine can
                     and detractors of renewable energy. The        generate about 1.5 megawatts. So, to start
                     American Recovery and Reinvestment             a farm and achieve financial viability,
                     Act of 2009 (the stimulus plan) extended       investors need to fund at least 13 turbines
                     federal tax credits for alternative energy     at an initial cost of about $40 million. With
                     sources through 2012. The stimulus plan’s      these lower barriers to entry, European and
                     30% tax credit for wind investments built      Asian companies are entering the Lone Star
                     on the alternative energy tax incentives       State’s renewable energy market.
                     of the Bill Clinton and George W. Bush            Among the nation’s biggest buyers of
                     administrations, which helped continue         wind-generated power are Texas utilities,
                     the momentum in the renewable energy           including Luminant in Dallas, CPS
                     industries.                                    Energy in San Antonio, Reliant Energy in
                        In February 2009, President Barack          Houston, Austin Energy and the Lower
                     Obama said that renewable energy               Colorado River Authority in Austin. More
                     entrepreneurs need to play a significant       than 2,000 wind turbines are spinning in
                     role in leading the United States away         40 communities across Texas to supply
                     from its dependency on oil imports. “We        electricity to those utilities — with many
                     can remain the world’s leading importer of     more on the way. This number doesn’t
                     foreign oil, or we can become the world’s      include the West Texas wind farms
                     leading exporter of renewable energy,”         discussed earlier.
                     Obama said. “We can allow climate change           Texas has also been stepping up
                     to wreak unnatural havoc, or we can create     its incentives for utilities to use solar-
                     jobs preventing its worse effects.”            generated power, including incentives for
                        The cost of entering the renewable          consumers who set up solar projects on
                     energy field is lower than the cost of         their property. These incentives became
                     entering traditional energy industries.        available to most Texans in 2010.
                     The price tag to build a modern coal- or

                     Much of the growth has been fueled by federal stimulus money and tax
                      credits, as well as by curious investors and consumers, according to
                              both supporters and detractors of renewable energy.

132 |   CHAPTER 19
Chapter 19                  | Suggested Strategies
   Think Globally, Plan Regionally                      Abilene, Dallas and many small towns around
                                                         Sweetwater, as well as in Europe and Asia.
   “As the rest of the nation drags its feet on
renewable energy, Texas is moving forward,”                 Creating sustainable jobs in the renewable
said Webber at the University of Texas. “And             energy field, particularly in Texas, remains
Texas could sell renewable energy outside the            a critical and unresolved issue. Executives at
state, but our electric grid is not hooked up            Applied Materials publicly lamented that the
outside the state. Texas is going to do for solar        high-tech equipment the company designs
what we’re already doing for wind. Solar has             in Texas is used inside solar panels that are
been held back by high prices for its technology,        manufactured in China — and later sold in the
but those prices are coming down really fast.”           United States. As a result, American workers
                                                         are not fully benefiting from rising American
    Market forces, along with select state and local
                                                         demand for renewable energy. To address this,
government policies, will certainly play a big role
                                                         Applied Materials has a plan called fab2farm,
in determining which renewable energy sources,
                                                         which calls for a city or an existing high-tech
if any, will flourish.
                                                         manufacturing company to set up a factory
   A major focus of the alternative energy               to build solar panels using components from
industry is expanding the infrastructure.                Applied Materials. The solar panels, which can
Recently, construction began on electric                 be installed in local solar farms, would provide
transmission lines to link rural West Texas to           power to nearby cities, or they could be sold in
San Antonio. The $5 billion cost of this project         North America.
— more than $1 million a mile — will be passed
                                                            “We’ve lamented the loss of manufacturing
along to Texas consumers for years. These new
                                                         jobs in this country,” said Steve Taylor, director
transmission lines will have a big impact on the
                                                         of government affairs for Applied Materials.
Texas wind industry because they can transmit
                                                         “But this concept is about creating large-scale
a whopping 18,500 megawatts of power, almost
                                                         solar panel manufacturing and solar power for
doubling the amount of wind-generated energy
                                                         communities in this country. This could be
in the nation, according to the American Wind
                                                         localized manufacturing. We’d like to see the
Energy Association.
                                                         ‘Made in Texas’ brand on solar panels.”
    This is a significant increase in the state’s wind
                                                            Federal and state incentives for wind and solar
power capacity, and even more dramatic growth
                                                         energy will expire in a few years. Executives in
is possible. The Texas Panhandle offers even
                                                         these industries say such incentives are vital to
better winds than West Texas. Yet the Panhandle
                                                         continued expansion in this country as well as
still needs transmission line connections, as wind
                                                         in Texas. The Texas renewable energy market
proponent T. Boone Pickens pointed out. Such
                                                         has been growing, thanks to sunny days, blowing
infrastructure expansion is necessary for Texas
                                                         winds and the creation of expertise in wind and
utilities to diversify their electricity sources with
                                                         solar energy. Continued growth of this industry
more wind and solar energy in major metro
                                                         depends on expansion of electric distribution,
                                                         adoption of more renewable energy by more
   A thriving wind and solar energy sector               utility companies, expanded energy engineering
also can attract new investment in Texas.                programs in Texas universities and community
Components for the wind turbines in West                 colleges, creative economic development
Texas were built in factories in Round Rock,             strategies and stepped-up talent development.

                                                                                                              CHAPTER 19   | 133

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