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Cradle of the US oil industry has become a hotbed for renewables

Although Texas has long been known for its vast oil and gas resources, investors are now harnessing its wind and solar generation potential too. “Energy companies want to become more sustainable and less dependent on fluctuating energy prices. Texas is the natural place for them to invest,” says Jason Giulietti, president of the Greater San Marcos Partnership, the lead regional economic development agency in San Marcos, Texas.

Right place, right time

Texas was the main US recipient of renewable projects in 2019, attracting a record 21 projects – a figure that rises to 30 with the inclusion of inter-state US projects (projects from companies based in other US states), according to greenfield investment monitor fDi Markets. If it were a country, Texas would be the fifth largest recipient of greenfield renewable energy projects in 2019.

With its large availability of agricultural land and resources, Texas is naturally suited for renewable energy generation, according to Robert Allen, president and CEO of Texas Economic Development Corporation. “The wind blows stronger at night while the sun is sharpest at midday, enabling Texas to avoid the peaks and troughs that are generally associated with the flow of renewable energy,” he says.

The state has its own unique internal competitive market, the Electric Reliability Council of Texas (Ercot). The grid was deregulated in 1999 by the then-governor, George W Bush, who said: “Competition in the electric industry will benefit Texans by reducing rates and offering consumers more choices” when announcing the legislature.

Ken Locklin, senior US policy advisor and director of Impax Asset Management, says: “Since Texas was an oil and gas state, the deregulated market was designed to make it easy to develop new oil and gas resources. The same rules make it easy to develop a new renewable resource. While the price for a solar panel or megawatt of storage is similar to California, it’s the lower regulatory prices that make Texas more economically advantageous.”