Thomas White Global Investing
United States
September 5, 2008
A Postcard from the United States
United States: Oil Country Embraces Wind Power

Texas: Oil Country Embraces Wind Power Texas already meets 3.3% of its total energy needs from wind energy, three times the national average. If and when all the new projects go on stream, the state will produce more wind energy than most other states combined.

Spread over almost 60,000 acres near Abilene, Texas, 421 giant wind turbines tower over the flat land at Horse Hollow Wind Energy Center, the largest wind energy farm in the world. Each of the 262 feet tall turbines produce between 1.5 megawatts and 2.3 megawatts, for a combined generation capacity of nearly 735 megawatts, enough to power as many as 220,000 homes. Two other large wind farms in the area, Sweetwater Wind Farm and Buffalo Gap Wind Farm, have capacities of 585 megawatts and 350 megawatts respectively. With a total generation capacity of over 5,000 megawatts of wind power, Texas is no longer just oil country. The Lone Star state is now the undisputed wind energy capital of America.

Going by the large number of wind energy projects in the pipeline, Texas will retain that title for a very long time. The Texas Governor’s office expects investments of more than $10 billion in eight large projects to generate nearly 7,000 megawatts. That estimate was made more than a year ago and more projects have been announced. The largest of the proposed farms will have more than 2,000 wind turbines and will be spread over 200,000 acres. At an investment of $6 billion, the giant farm will generate over 4,000 megawatts at full capacity. In comparison, Horse Hollow will be a midget.

It is not enough that many more wind farms are added, the electricity generated has to be transmitted to major population centers. Frustrated by the slow growth in transmission capacity, some of the private wind power developers are planning to invest in distribution lines on their own. Waking up to the situation, the Texas Public Utility Commission recently approved a $5 billion project to build transmission lines from the western parts of the state to cities like Dallas, Austin, and Houston. The new lines will have the capacity to carry 18,500 megawatts, and will power more than 3.5 million homes.

Yet, all these plans will be in peril if Congress fails to extend a tax credit available for renewable energy projects. The 1.9 cents per kilo-watt-hour Production Tax Credit is set to expire by the end of this year and, if it is not extended, many of the wind power projects will become unviable.

The wind power boom in Texas and other states like California and Oregon will help the U.S. to gradually increase the share of renewable sources in total energy production and reduce the dependence on imported oil. Currently, just about 1% of the country’s energy needs are met by wind power. The U.S. Department of Energy says this share could rise to as high as 20% by 2030. If that happens, more natural gas produced in the U.S. can be diverted away from generating electricity to fuel cars. Texas has shown that way, America has to follow.

Image Credit: CopperCatStudios on Flickr under a Creative Commons License

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