Texas is a state blessed with abundant natural resources, including natural gas, coal and wind, which are readily available to power its power plants. Charles Perry (Lubbock-R), author of Senate Bill 28 and Senate Joint Resolution 75, has stated that the main objectives of the funds are to fix state infrastructure that leaks and breaks water, as well as to accelerate new and large water supply projects. Perry also mentioned that the funds would benefit desalination projects for brackish and produced water. A recent study by the Texas A&M Energy Institute revealed a significant reduction in electricity consumption that is strongly correlated with the increase in COVID-19 cases and social distancing, as well as with the decline in business activity. This could have a major impact on the behavior of the electricity sector in the future.
Governor Greg Abbott's decisions will also have a long-term effect on the oil and gas, renewable energy and energy sectors in Texas. The current structure dates back to 1999, when the Texas Legislature introduced retail competition to much of the ERCOT service area. Texas is currently the national leader in wind-powered electricity generation, producing nearly 30 percent of all US electricity. If signed into law, the Texas New Water Supply Fund would be used to fund projects that generate at least seven million acre-feet of new water supplies by December 31, 2033 (enough water to cover seven million acres of land at a depth of one foot). Experts say this change has made Texas power plants more vulnerable to extreme weather events such as those experienced last week.
It is also part of a series of cascading faults to protect the state's power grid from winter storms. Research is ongoing to determine whether these enormous volumes of produced water can be recycled for other beneficial uses instead of simply being discarded. This could have a significant impact on both the public and oil and gas industry in Texas. It will be important to monitor how the reformed tax exemption program affects the future trajectory of energy development in Texas. Legislators and regulators, including the PUC and the industry-friendly Texas Railroad Commission, have repeatedly ignored, dismissed or watered down efforts to address weaknesses in the state's extensive power grid, which is isolated from the rest of the country. While many cities, states and countries are competing for trillions of dollars in public and private green investments that are transforming the energy industry, many Texas leaders, including a powerful segment of its political leadership, oppose new opportunities.
This opposition to clean energy and climate policy challenges Texas' business-friendly reputation and threatens to delay its transition. Texans who live outside the ERCOT network or in areas served by municipally owned utilities (such as Austin Energy), electric cooperatives and river authorities rely on a single service provider. Sunny West Texas offers excellent potential for solar energy; as photovoltaic panel costs decrease and access to transmission improves, solar capacity in Texas is expected to increase significantly. The Solar Energy Industry Association places Texas second in terms of projected growth over the next five years. Two years ago, facilities owned or controlled by public utilities regulated by the PUC were exempt from legislation requiring the Texas Division of Emergency Management to “identify methods to strengthen public service facilities and critical infrastructure in order to maintain essential services during disasters”. Across the state, investments from new and current players are aimed at making Texas a world leader in green hydrogen, a clean way to store renewable energy.
