Tag Archives: Texas

Energy Jobs: Automation and Numbers – 2/10/17

If members of Congress and the new President are really dedicated to wringing more jobs out the energy sector, then they should make sure they’re looking for them in the right place.

Since oil prices collapsed in 2014, Bloomberg estimates that 440,000 jobs in the U.S. have been lost as a result of the downturn. As a result, the world’s biggest oil services companies have had to spend billions on severance costs and, now, few seem ready to risk a repeat of that huge expense. Many in the oil industry are increasingly turning to automation to replace many of the lost jobs, a trend unlikely to change as technology costs continue to fall relative to wages. The UBS estimates that the US oil industry will only need about half as many workers per barrel of oil produced post-2017 versus pre-2015.

That doesn’t necessarily mean that states known for oil output are heading for high unemployment rates. For example, Texas may have suffered greatly during the 1980’s oil price downturn, but its economy has since become far less dependent on the commodity thanks to strong growth in other sectors. In fact, Texas has had net creation of new jobs recently despite the severe oil price downturn.

Only about 2.5% of Texas’ employment was related to natural resource extraction before the crisis because oil was and increasingly is not a particularly labor intensive industry. Even now Austin and Dallas are thriving with job growth rates of 4.3% and 4.2% respectively because neither city is dependent on oil prices to drive economic growth. Overall, the biggest oil producing state in the U.S. has held together just fine despite the lower-for-longer oil prices.

Meanwhile, large number of new energy jobs are coming from the wind and solar energy industries. U.S. wind-farm developers and suppliers had more than 100,000 workers at the end of the year, compared to 65,971 coal mining jobs at the start of last year, according to the U.S. Energy Department.

Perhaps surprisingly, the top 10 congressional districts for wind energy are all in Republican-dominated red states such as Iowa and Texas, according to American Wind Energy Association CEO Tom Kiernan.

“We’re hiring workers in the rust belt,” Kiernan said in an interview. “We’re helping families keep farms they’ve held for generations. The lifeblood of our industry is in rural America.”

And the extension of two key federal tax credits by the Republican-controlled Congress at the end of 2015 along with the fact that the new Energy Secretary, Rick Perry, saw Texas become the largest producer of wind power during his term as Governor gives some cause for optimism in the renewable energy companies.

Solar’s Future: Probably Brighter Than You’d Think – 11/18/16

In his only major energy speech, the president-elect said he would rescind environmental regulations and revive U.S. coal, but the impact of his presidency on renewable energy may be limited. Solar’s position in particular is better than one might expect.

Rooftop solar in the U.S. is largely safe for two reasons: net metering policies are decided at the state-level and the federal tax credit to offset the cost of installations, first signed into law under George W. Bush in 2005, were extended by a Republican Congress last year. Nowadays, some of the most powerful GOP voices in Congress come from states like Texas that have benefited immensely from the rise of solar power. It would not be surprising to see more red states with economic incentive stand with blue states in support of solar.

by state

Texas’s economy has already benefited greatly from wind power development in the state and solar appears poised to make a similar performance in the state. According to Bloomberg New Energy Finance, Texas is one of the few states for which solar power is competitive with both coal and natural gas.

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With a combination of cheap land leases and abundant sunlight, the state has the potential to match even California for raw quantity of solar power capacity.

With a major powerhouse behind them, solar incentives should at least have enough support to keep current programs in place for their current duration. For the solar investment tax credit that duration extends slightly past the 2020 presidential election.

Solar panel prices have also dropped, on average, more than 15% a year since 2013. Even if all of the incentives and subsidies that support solar were suddenly removed, the industry would eventually recover as prices continue to fall. Economies of scale and other factors that have driven the price of solar panels down for decades, but only recently has solar power begun competing with fossil fuels, in major markets, purely on price.

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All in all, solar’s position is more stable than most would think with a GOP Congress and White House thanks to the fact that, for the first time in modern history, it has both environmentalist and capitalist support in both red and blue states.

Permian Basin: A Hotspot in U.S. Oil – 11/10/16

Price trends for land in the Permian Basin, a hot spot for oil and gas drilling, have investors worried about speculation. Despite oil prices being half of what they were before the 2014 price collapse, the price of drillable acres in the oil field has never been higher.

In recent weeks, some have paid upward of $40,000 an acre for drilling leases—about eight times what similar properties fetched two years ago, when oil was worth twice as much.

As companies rush into the area, fears of another boom and bust are palpable. The Permian region enjoys a good infrastructure and workforce, and the costs associated with drilling continue to fall, but there is no consensus that oil prices will rise. Given the difficulties facing the OPEC output cut deal and rising fuel efficiency, many analysts are worried that the expectations of investors are out of sync with fundamentals. Investment banks and the U.S. Department of Energy say any price increase could revive drilling operations in the U.S. which would effectively cap any further rally.

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According to the EIA, U.S. drilling activity is increasingly concentrated in the Permian Basin, which now holds nearly as many active oil rigs as the rest of the United States combined.

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Many of the larger M&A deals that have occurred since 2014 have involved Permian Basin assets.

Solar in Florida and Texas – 10/25/16

Though they’re getting cheaper, the cost of solar panels is still a huge expense for most households. As a result, rooftop solar users often look for leasing options that spread that cost across years so it can be offset by selling excess electricity back to the grid, but not all states allow third-party leasing.

Florida is one of five states that specifically prohibit the third-party ownership used in residential solar development. A proposed amendment in Florida could finally change that for the state, for a price. The amendment would allow leasing in exchange for allowing utility companies to charge solar panel consumers extra for keeping them connected to the power grid. Of course, giving utilities the option of charging extra maintenance fees targeting residential solar users can become a problem as was the case in Nevada.

The reason power companies have pushed for such measures comes from concerns about fixed costs. Utilities must pay for the distribution and generation infrastructure and argue that “all users pay a percentage in their bill to cover the cost of those systems,” says Jocelyn Durkay, the energy senior policy specialist for the National Conference of State Legislatures. “But having a solar rooftop system may result in a customer’s bill being virtually zero.” That loss of revenue came with less stress on the grid helping to keep down the costs of upgrading the grid to handle new demand; however, as more people install the systems, the cost of keeping fossil fuel power as a backup for renewable energy is outweighing the benefit.

Yet, with many states are trying to broaden their renewable portfolios, many utilities are starting to see the writing on the wall. Battery technology investment and interstate transmission projects are already in the works in many places where renewable energy has a foothold. Even the Florida amendment is a bit different from Nevada’s. The measure offers a compromise: Allow people to lease in exchange for giving utilities a way to recoup some of their losses. The only question is how “fair” extra fees would be when utilities are balancing rising environmentalism and operating losses.


Texas is facing its own conflicts over solar power.

Developers are expected to build about 4GW solar capacity in the state by 2020, according to a report by Bloomberg New Energy Finance. Cheap solar energy from the noon sun threatens to depress electricity prices during peak midday hours when generators profit from higher electricity demand.

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Solar power also puts more pressure on coal- and natural gas-fired power producers already hurt by historically low gas prices, competition from wind power, and stagnant power demand.

Solar is expected to lower power prices by about $2.58 per MW-hour during peak hours by 2020 in Texas’s west hub, the report by BNEF found.

How Clean Can An Electric Car Actually Get? – 10/13/16

How much cleaner can an electric car get compared to one running on conventional fuels? The answer is important, especially when controversies like a study finding that a Prius could be dirtier than a Hummer add to the confusion. To answer the question you have to look at the life cycle of the product from manufacturing to usage to disposal.

Starting with disposal, there is no significant difference in emissions between electric and non-electric cars at this stage, which sees minimal emissions relative to making and driving the car. The main environmental problem in disposal comes from the battery. Part of the issue with older electric hybrids like the Prius from the study was their reliance on lead acid batteries rather than the lithium-ion batteries used in newer electric car models like the Tesla Model 3 or 2017 Chevrolet Bolt. In addition to not dealing with the toxicity of lead, the rarity of components in the newer batteries has prompted extensive recycling programs to avoid shortages of cobalt, nickel, and lithium.

Next, usage. An electric car is only ever going to pollute indirectly i.e. charging the battery using electricity from a power plant that burns coal. In the past and in certain areas that still rely heavily on coal, the emissions from those plants were hardly better than those put out by burning gasoline. Nowadays, however, the US grid is being inundated with electricity from natural gas (at about 50% the pollution than traditional coal plants) and renewables.

That switch to cleaner power sources means a lot for electric vehicle (EV) emissions, as the graph from Bloomberg New Energy Finance (BNEF) shows.

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  • for context, emissions free nuclear power supplies most of France’s electricity as opposed to heavy coal use in China.

Those cars may run twice as clean when they’re charged in a place that gets a lot of power from green energy, but the same car driving in a coal-burning region may yield a gain of just 20%, according to the Union of Concerned Scientists, based in Cambridge, Massachusetts.

Of course, fuel-efficiency standards are also pushing car makers to make engines that use less fuel.

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What this means for their emissions relative to EVs is depends heavily on the state or country you’re in.

In France, the gap has to narrow in the coming decade because regular engines are getting cleaner and the energy mix can’t get much cleaner.

In Japan, emissions from driving electric vehicles may actually rise as nuclear power plants are replaced with natural gas and coal in the wake of the Fukushima Daiichi nuclear disaster.

For the US, the state you live in matters a lot for this discussion as shown in the BNEF map of the carbon intensity of power for each state.

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Note the difference between coal state Wyoming and hydroelectric powerhouse Oregon.

For an idea how that map might change, look at what energy sources each state was installing in 2015.

by state

Finally, manufacturing.

A study done by the Union of Concerned Scientists found that making an EV results in 15% greater emissions than in manufacturing a similar gasoline vehicle. However, the same study was optimistic even this could be reduced and paled in comparison to the savings gained in the usage stage.

Assuming a grid composed of 80% clean electricity — France currently derives about 75% of its electricity from nuclear energy and about 14% from hydropower — the analysis would have a EV see at least a 25% reduction in emissions from manufacturing and an 84% reduction in emissions from driving. That combination would result in an overall reduction of more than 60% compared to today’s EVs, which are already about 40-50% cleaner than those running on gasoline or diesel.

So, basically, an electric car can get pretty darn clean, especially when the power grid that fuels it is running on renewable energy.

Clean Power: Slow 2016 Obscures Strong Potential – 10/11/16

Following the surprise extension of tax credits for wind and solar last December, growth in the clean power industry appears to be stalling… until you look past the surface.

In 2015, the number of long-term power-purchase agreements (PPAs) signed by corporations reached a record high for wind and solar.

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Now prices agreed on in such agreements have fallen to all-time lows, according to Bloomberg New Energy Finance (BNEF).

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But the clean power being slightly cheaper in 2015 than in 2013 doesn’t explain why the number of agreements spikes so violently in 2015. For that explanation we return to the tax credits and way that companies and developers handle such incentives.

First and foremost, the extension of the tax credits was unexpected. Without action by a Congress known for partisan deadlock, the tax credits were set to expire. Yet, a strong lobbying effort and support from red states benefiting from clean power like Texas made it possible. Developers and their clients had no idea that would happen; they treated 2015 as their last chance to get in at the full subsidy level.

“Many companies that signed those deals in 2015 were afraid that there wouldn’t be a tax credit again,” said Jacob Susman, vice president at EDF Renewable Energy. “That’s a big reason why 2015 was so big.”

It is not unusual for people to act at the last minute when it comes to spending money. Sometimes its procrastination, sometimes they want to hold onto their money as long as possible, and sometimes they just want to see if maybe prices will go down further.

Whatever the reason, the tax credit expiration date created a dam where demand could build up at the expense of later years. Without that blockage, the flow of orders would have spread out more evenly over time instead of coming out in force during 2015 and, to a lesser extent, 2014. Now the more sustainable flow looks slow in comparison as developers and customers pace themselves again.

“There was such a flurry that people may be taking a breather,” said Pete Dignan, CEO of Renewable Choice Energy. “But there’s significant activity ahead.”

Mr. Dignan was referring the fact that, even with the slowdown, demand for clean power is still relatively high. That demand is reflected in the scheduled electric generating capacity additions for 2016, illustrated by the EIA graph below that shows new wind and solar capacity will rival or surpass that of natural gas this year.

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And, as the chart from BNEF suggests, the trend towards favoring renewables is expected to continue.

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So the clean power industry will continue to grow based on strong fundamentals though likely not at the frenzied rate of 2015. Of course, with the tax credits extended another 5 years, a repeat of the current situation may be not be too far off.

Texas: Clean Power Powerhouse – 9/12/16

The Texas electricity market hit a milestone in Feburary when nearly half the power flowing onto the grid came from wind turbines demonstrating what a clean powerhouse the Lone Star state has become

Though it is still a leader in the oil and gas industry, a key player in hydraulic fracturing adoption, Texas has dominated in wind energy like no other. The state added more wind-based electric generation capacity than and all other states combined. It surpassed even California in total renewable energy generation added with its wind alone.

by state

Wind turbines accounted for 16% of the state’s electrical generating capacity as of April, but now Texas is anticipating a huge surge in solar power as well.

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The fight over climate change and the necessity of clean power may still be going on, but Texas’s free-market-based electricity system doesn’t seem to be paying it any mind. Even state officials, who favor the hands-off approach, say wind and solar are set to play a major role in the state’s energy future even when federal subsidies begin to decline.

The road that took Texas to its current transformation was a free market-oriented deregulation. Deregulation cost many utilities their monopoly power over generation, transmission and retail sales of electricity, and introduced competitive auctions for wholesale power. The deregulation plan was signed by former President Bush, and included a government-imposed requirement to have at least 2,000 MW of renewable generating capacity by 2009.

Texas blew past that goal in 2005, as well as a new goal of 10,000 MW by 2025 set by then Gov. Perry; it passed the 2025 goal in 2011.

Texas officials ignored global warming when presenting the program. Instead, they framed it as a jobs producer and a means of getting more money flowing to rural counties. In the end, it did that much and more as Texas retail electricity prices have fallen the average U.S. price over time. The state now has more than 100,000 people working in renewable energy, according to the Texas Workforce Commission.

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Yet, the change hasn’t come without some trouble. Early on, electric-system users spent billions to build transmission lines from windy West Texas to cities. There was also the problem of integrating a intermittent power supply when the grid requires a balance of supply and demand at all times. In addition, wind projects get hefty federal payouts for whatever they generate meaning that they can undercut the business model of fossil-fuel generators. Critics point out that the decommissioning fossil-fuel plants prematurely could lead to instability if infrastructure cannot keep up or if declines in subsidies have a greater negative impact than expected.

Federal subsidies are scheduled to shrink, but the falling costs of solar and wind technology have done as much, if not more for adoption rates. Solar costs are down 48% since 2010, according to the Solar Energy Industries Association. Those reductions are expected to continue consistently with technological advances and greater economics of scale.

Texas grid operator, ERCOT, expects explosive growth in solar with one analysis suggesting that the recent extension of the federal solar tax credit could lead to as much as 19,000 MW of solar capacity being built within 15 years. Texas could go from 10th place among states in solar capacity to second in the next five years, according to the Solar Energy Industries Association.

“The cost has come down to the point where people can really see the value,” said Cris Eugster, the chief operating officer for San Antonio’s utility, CPS Energy.

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