Access to inexpensive and reliable energy has helped make America the most prosperous nation in the history of the world, with Texas front and center in this effort.
Our state was originally powered largely by renewable fuels: water, wind, and biomass. It wasn’t long, though, before renewables were replaced by more efficient coal and kerosene, and later by gasoline, aviation fuel, natural gas, and nuclear power.
This natural transition was made possible by markets which allowed consumers and producers to choose the most efficient way to fuel Texas—America’s leading economic engine.
But in recent years, renewable energy has been making its way back into the fuel mix. And, unfortunately, Texas is once again leading the nation in this effort.
This change has not been market driven. Just the opposite, in fact. It has been accomplished only by taking billions of dollars from individual taxpayers and giving them to multi-billion corporations. And this has not been the only cost. The reliability of the Texas electricity grid has been greatly compromised in the process.
As part of its effort to restore sanity to Texas energy markets, the Texas Public Policy Foundation has researched the full cost of renewable subsidies in Texas. We estimate the total cost to taxpayers of these subsidies from 2006 to 2029 to be $36 billion. These dollars are spread across multiple subsidies and multiple companies.
The biggest single subsidy in Texas is the federal Production Tax Credit (PTC) at just over $16 billion dollars. But Texas state-level subsidies equal almost $18 billion. Texas subsidies include the CREZ transmission lines ($14 billion), Chapter 312 and 313 property tax abatements ($2.5 billion plus), and grid interconnection costs ($1 billion).
Generators doing business in Texas that have received subsidies include NextEra Energy (leading the way with eligibility for $5.7 billion of tax credits nationally since 2008), NRG Energy ($1.1 billion), E.ON ($1.1 billion), BP ($913 million), and Exelon ($528 million).
This $9.3 billion worth of tax subsidies has gone to generators with $318 billion of market capitalization. And these subsidies are only from the PTC. These same companies come to Texas with their hands out asking for state and local subsidies, too.
When looking at the total amount of subsidies going to wind and solar farms, it is clear that few, if any, of these would have been built if not for the subsidies. Almost one in every three dollars, 28.8 percent, that renewables earn in Texas comes from some type of subsidy. They just can’t compete without them.
Anyone pointing out these simple facts runs the risk of being called out for “slandering renewable energy.” In fact, doing anything that supports an affordable and reliable energy market might land you in the spotlight for criticism by advocates of renewable energy.
Just ask Midland oil and gas engineer Keith Uhles who was recently called out for supporting his own industry.
But there is some truth in that American-Statesman piece, which notes that “wind energy has transformed over the last few decades from a boutique alternative energy source to a full-blown, big-business competitor to fossil fuels.” A transformation that has increased significantly the cost of energy in Texas.
Wind and solar farms in Texas are big business with billions of dollars of investment at stake. Renewable energy subsidies are not about saving the planet, they are about enriching executives and shareholders—and their bankers—in the renewable energy industry, all at the expense of taxpayers and consumers.
The Texas Legislature has a chance to correct this before it adjourns on Memorial Day. It should do so by ending state and local renewable energy subsidies.
Bill Peacock is the Vice President of Research at the Texas Public Policy Foundation.