Texas Senate Votes To Shred Renewable Energy Rules

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Last Updated on: 25th March 2025, 12:58 am

The fossil fuel industry in Texas loved ERCOT, the grid operator for much of the Lone Star State, when the only electricity generated in the state came from thermal generating stations powered by coal or methane. The founding premise for the current version of ERCOT, which was created in 1999, was that the cheapest electricity available at any particular time would get priority access to the grid. That worked swell until the levelized cost of renewable energy from things like wind turbines, solar farms, and battery storage facilities became lower than electricity from thermal generation. That has led to more renewable energy being installed in Texas than any other US state.

You know how the right-wing crazies are always screaming at the top of their lungs about how government should not be picking winners and losers in the marketplace? It turns out that thinking only applies if it benefits fossil fuel companies. As soon as it does not, they start singing a different tune, one that demands they be given priority even if their product costs more. The weird thing is they are not embarrassed in the slightest by their blatant hypocrisy. No need to hang your head in shame when you own the legislature, the courts, and the governor’s office. Then you can do whatever you want and never have to say you’re sorry.

Kowtowing to the demands of the fossil fuel industries, the Texas senate last week passed SB 388, which sets a target for 50 percent of new power plant capacity to be ​“sourced from dispatchable generation other than battery energy storage.” Power plant owners and utilities that don’t invest their money according to this political directive would have to buy credits to comply with the new regulatory bureaucracy, raising the cost of doing business in the ERCOT energy markets, Canary Media reports. The measure’s supporters contend it is needed to ensure grid reliability and counteract federal renewable subsidies. Its detractors maintain it would crush renewable development in the state, send electric bills soaring, and make it difficult for Texas to keep up with rising electricity demand from new factories and data centers, according to the Advanced Power Alliance.

“What this bill and several others like it are trying to do is to suppress the development and use of new renewables and batteries across all of Texas, even though these are the very resources that have made our grid more reliable and bailed us out in a number of very intense grid conditions over the last few years,” said Alison Silverstein, a Texas-based energy consultant. If passed by the House and signed by the governor, the new law would penalize renewables and reward a subset of dispatchable generators that politicians in Austin favor. Such a policy would upend the competitive system that has ruled ERCOT for two decades, one that empowers investors to build whatever power plants they think the market will reward. This design has made Texas a favorite place to do business for power plant developers, and unleashed innovative technologies and business models that are held back in other states by utility monopolies and restrictive regulations.

Disrupting Renewable Energy

SB 388 could be particularly disruptive because Texas has established itself as the most dynamic clean energy market in the country. Renewables and battery developers have thrived thanks to the wide open competitive energy market, abundant land, relatively easy permitting requirements, and the nation’s fastest timelines to interconnect projects to the grid. Texas is building more solar and battery capacity today than any other state, including California. On average, developers have connected about 1 gigawatt of new solar and batteries to the grid each month for the last year, according to Austin-based energy analyst Doug Lewin.

That rapid pace of construction mitigated power shortages during heatwaves last summer, and reduced the price spikes that consumers experienced in previous years. Building power plants quickly is exactly what is needed in the US to keep pace with the surging demand from domestic industry and AI computing. Lewin did not mince words about the potential fallout from the methane generation mandate and other proposed restrictions on clean energy in Texas. ​“The Texas Senate is the biggest threat to US energy security,” he wrote in his Texas Energy and Power newsletter last week.

The new package of laws are a delayed reaction to a massive grid outage that occurred in Texas in February of 2021 when a blast of winter air blanketed the state. Fossil fuel interests blame the outage on renewables, even though the cold temperatures knocked out the compressor stations on methane pipelines so power plants had no fuel to burn. Many wind turbines failed as well, not because they cannot function in the cold — there are wind turbines in Antarctica — but because the premium ERCOT places on being as cheap as possible meant no one wanted to spend the money to winterize them.

Grid experts say the renewable boom has stabilized Texas’ electric grid, even as the state set new records for power demand amid record-hot temperatures and a sizzling economy. Jim Robb, the country’s top grid reliability official, recently credited solar and batteries with “carrying the day” during a searing heat wave in 2023, but the fossil fuel interests have no interest in the truth. Their only concern is protecting their profits, the people of Texas be damned.

Methane continues to be the largest source of electricity generation nationwide, but it has slipped to just 7 percent of the new capacity expected to come online in 2025 according to the Energy Information Administration. Solar, batteries, and wind will deliver 93% of new gigawatts built in the US this year. This trend is particularly evident in Texas, where the queue of projects awaiting connection to the ERCOT grid skews heavily toward batteries and solar, with just a sliver of new methane-powered generation. That dynamic persisted even after Texas legislators, in their 2023 session, earmarked taxpayer dollars for a multi-billion-dollar loan fund to help private gas plant developers.

A 5-Year Wait For Gas Turbines

Part of the problem for gas plant owners is that renewables are producing more megawatt-hours cheaply, driving down the returns that gas plants make during hours that solar and wind produce a lot of energy. Texas gas plants looked to the peak summer hours to boost their profits for the year, but now solar and batteries are cutting into those hours. The challenges go beyond ERCOT’s market competition. While solar panels and batteries benefit from mass production, gas turbines are highly specialized, complex machines made by a limited number of key suppliers. Those manufacturers have warned of five-year backlogs for the equipment. Even if private developers wanted to overhaul their investment strategies based on the central directive from Austin, they’d have trouble finding the tools needed to comply.

Without hope of hitting the 50 percent threshold that begins in 2026, developers would have to buy ​“dispatchable generation credits” — fees that would result in higher energy bills but higher profits for the methane industry. Those profits can then be funneled to compliant members of the Texas legislature as bribes campaign contributions to keep the gravy train going. The new legislative text has no details on just how expensive these credits would be, leaving that to state regulators to decide.

Now the Texas House will get to weigh in, as will the business community that has grown accustomed to buying power from competitive markets without having to consider the preferences of elected officials. It’s unclear whether the governor will sign the bill; revamping ERCOT was not among the ​“emergency items” he prioritized in his February State of the State address.

Playing Politics With ERCOT

SB 388 is just one of about 60 anti-renewable proposals filed in the Texas legislature this year, said Judd Messer, vice president of the Advanced Power Alliance. Of particular concern is a proposal that would impose additional permitting requirements on wind and solar facilities. “The sheer volume of bills filed this session I’m not sure I could have imagined,” he said, and attributed the onslaught of anti-renewable legislation to a broader culture war, in which renewables are pitted against oil and gas.

In fact, Messer argued, the two industries benefit one another. Low cost renewables benefit the oil and gas industry, which needs cheap electricity to power its pump jacks and compressor stations. “I don’t think it has anything to do with the state of the grid or the fact that there’s some problem. I think it has to do with kind of a larger culture war against certain resources.” Translation: right-wing extremists want government to pick winners and losers in the marketplace if it will benefit them. Those people lack any sense of shame.