Texans take pride in their competitive electricity market, a system designed to let the cheapest resources win. And that market is increasingly choosing clean energy, with wind, solar, and batteries dominating new generation. Nearly 40 gigawatts have been added in just four years, equivalent to the capacity of a mid-sized European country.
This market-driven boom has unequivocally lowered costs and improved reliability. But now, in a major ideological reversal, some Texas lawmakers are trying to stop it. Bills advancing through the legislature would override market signals, impose unprecedented restrictions on renewables, and cap economic growth in the eighth-largest economy in the world.
“People aren’t choosing renewables out of any ideology or just because they like it better or it’s clean or anything like that. It’s low cost and that matters a lot to the business community,” said Doug Lewin, who runs the Texas Energy and Power Newsletter and hosts the Energy Capital podcast.
Lewin joined Open Circuit to explain the high stakes in the Lone Star State. He describes how the oil and gas industry is increasingly inking power purchase agreements with wind and solar as they electrify operations. Data centers are flocking to Texas because of the attractive energy picture. And distributed energy is poised for explosive growth as virtual power plants come online.
So why are some lawmakers trying to slam the brakes on this economic engine? According to Lewin, it’s a mix of well-funded disinformation campaigns and social media algorithms that keep feeding anti-renewable content.
“There are people out there that are clearly not acting in good faith and are putting information out there that is really misinformation and they know it,” said Lewin.
Bills like SB 715 and SB 388 would require solar and wind to have backup and exclude batteries from being counted as dispatchable resources. Lewin calls this an attempt to tie Texas’ economic growth to gas turbine availability, “which just seems like a spectacularly bad idea.”
Modeling shows these bills could cause blackouts and add billions in costs for consumers. With the legislative session in its final weeks, the business community is pushing back — but Lewin says anything could happen.
Credits: Co-hosted by Stephen Lacey, Jigar Shah, and Katherine Hamilton. Produced and edited by Stephen Lacey. Original music and engineering by Sean Marquand.
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Transcript
Stephen Lacey: All right, we’re all going to clap at the same time.
Jigar Shah: All right.
Stephen Lacey: So 3, 2, 1, clap. No.
Doug Lewin: I missed it.
Stephen Lacey: Right on the-
Jigar Shah: I did it. I did it on the clap. I did it.
Doug Lewin: I was off. That was me. All right, do it again, Stephen. Here we go.
Jigar Shah: God damn it, Doug.
Katherine Hamilton: It’s like the family band, you know?
Stephen Lacey: So Doug, the Texas legislature meets every two years for a 140 day blitz. How do you prepare for that? Do you have to train yourself in the months beforehand?
Doug Lewin: Yes, it sort of looks something like a Rocky montage. That’s pretty much what it is.
Stephen Lacey: You have like a log over your back and you’re doing lunges in the mountains?
Doug Lewin: Correct. That’s exactly right. That’s how everybody prepares for a legislative session, I assume. That’s what people always told me. So that’s what I do. I think that’s what everybody else does.
Jigar Shah: (singing)
Stephen Lacey: From Latitude Media, this is Open Circuit. This week an energy showdown in the Lone Star State. Texans take pride in their competitive electricity market, a system designed to let the cheapest resources win, and that market is increasingly choosing clean resources, wind, solar, and batteries of dominated new generation Texas, with nearly 40 gigawatts added in just four years, equivalent to the capacity of a mid-sized European country. This market-driven boom has unequivocally lowered cost and improved reliability, but now in a major ideological reversal, some Texas lawmakers are trying to stop it. Bills advancing through the legislature would override market signals, impose unprecedented restrictions on renewables and cap economic growth in the eighth largest economy in the world. With the Texas legislature wrapping up, is one of the fastest growing clean energy markets about to fall out of the saddle? That’s coming right up.
The growth of renewables in Texas
Stephen Lacey: I’m Stephen Lacey, I’m executive editor at Latitude Media. Joined by my co-hosts Katherine Hamilton and Jigar Shah. Katherine is the co-founder and chair of 38 North Solutions. How’s it going?
Katherine Hamilton: It is going okay. I mean, the US Congress only has about 150 days in session a year, but man, is it a drip, drip, drip, and there’s a lot going on right now, so very busy time.
Stephen Lacey: Jigar Shah is a clean energy investor. He’s the former director of the DOE’s Loan Programs Office. Hello, Jigar.
Jigar Shah: Hello from sunny Seattle.
Stephen Lacey: You’re in a new state every time I talk to you. Have you spent any time in Texas yet?
Jigar Shah: No. I feel like we should let Doug take care of Texas and then I’ll come after he’s solved all the problems.
Doug Lewin: If you’re waiting for that, it’s going to be a while. But hopefully you’ll come before I’ve solved all the problems, Jigar.
Stephen Lacey: That Doug is Doug Lewin, he’s one of the go-to experts on the Texas market. He’s the president of Stoic Energy Consulting. He also runs the Texas Energy and Power Newsletter and hosts the Energy Capital Podcast where he dissects all the storylines shaping one of the most dynamic energy markets in the world. Hello, Doug. Thanks for being here.
Doug Lewin: Hey, thanks so much for having me. I obviously learned so much from you guys over the years and love this show, so thanks for having me. It’s a thrill.
Stephen Lacey: Yeah, we’re all big fans as well, and you have been on the podcast circuit lately explaining what’s going on in Texas right now. So Texas represents just one of the most high-stakes stories in American energy right now. It’s a symbol of the economic power of clean energy, but it’s also the epicenter of a pretty widespread and increasingly creative campaign to crush the industry. So the story of Texas tells us a lot about how powerful renewables and batteries are right now, but how the conflict over them is evolving.
So I want to start first with just what’s going right in Texas and what it’s meant for the state economically and for reliability. So historically, liberal states have dominated the conversation around the expansion of renewables and batteries, and of course there’s a lot of Midwestern states that have dominated in wind. But in general, it’s been largely like a coastal state conversation around decarbonization and rapid expansion of renewables. And then in the last few years, Texas just moved in with the force of a Mack truck. So Doug make the case that Texas is one of the most important markets to be watching right now.
Doug Lewin: Yeah, look, eighth largest economy in the world, twice the renewable generation of the next largest state, California. We literally have twice as much. The only metric they’ve got is beat on right now is storage and distributed generation. But we’ll talk about how those are rising in Texas and I think that’s going to change too. And look, I think what really kind of defines Texas right now at this moment is there has been such a shift that has happened in the business community.
I would say 10 years ago when people were talking about renewables, it was kind of this fringe thing. And a lot of the big businesses, whether it be sort of manufacturers, chemical companies, oil companies, the statewide chamber, they would kind of either oppose anything that was renewables or just kind of shrug and sort of brush it aside as being kind of a very niche, unimportant segment.
And the difference to this day to actually see basically the entire business community get involved in support of, and I don’t even think they would at this point necessarily call it clean energy or anything. It’s just energy. We need the power wherever we can get it. The economy is growing at a clip that you can’t sustain unless you’re adding new energy sources. You guys have talked about it consistently on this podcast. Jigar, you’ve been a voice for this very consistently. If you’re going to grow the economy, you’re going to need wind and solar and storage and nuclear and geothermal, and you could go on down the list.
So that is really something that I think we have really seen emerge this session is what I would describe as kind of pragmatism over ideology, really led by the business community of, sure renewables have some challenges, but we’re going to work to integrate them and overcome those challenges, not actually try to stop their entry to the market because otherwise all of our electric bills are going to go significantly higher without it. And that is just something they obviously don’t want to see. It hurts the bottom line. So this pragmatism, while the headlines are driven by some of the ideologues, I think that in numbers there’s a lot more pragmatists, but that doesn’t necessarily grab the headlines.
Katherine Hamilton: So Doug, I wonder if some of that is because you have an energy market rather than capacity market. So the energy market actually rewards and pays for the characteristics, the services, what you can actually provide to the grid as opposed to just what you could provide, but what you do provide. And so that incentivizes folks to come in and prove themselves and then they get paid if they’re able to do it.
Doug Lewin: Yeah, that’s exactly right. And really, Texas has always had, for the entire history of ERCOT, it’s been economic dispatch, whatever the lowest resource is is going to win in the spot market. There was policy as a first mover. You go back to renewable portfolio standard in ’99 and it was increased in 2005, but then once renewables really came down that cost curve, wind first and solar in a major way the last four or five years particularly, you really started to see renewables start to put that downward pressure on prices. And that, again, the business community has really kind of rallied behind that because that really is one of the major inputs if you look at not just manufacturing, but definitely including manufacturing, right? Samsung announced a, whatever it was, $18 billion, whatever, investment in a new chip manufacturing plant in Taylor, Taylor, Texas, right where ERCOT is.
But you’ve also seen a lot of industrial electrification, a lot of the factories and some of the older school manufacturers, even like we have a steel manufacturing facility that’s grid connected, an LNG export facility that’s grid connected, oil and gas fracking rigs getting connected to the grid. We’re about to do a big transmission build out so that they can get more low cost solar and wind. And you’re absolutely right, that energy-only market is absolutely a defining feature, the competitive forces at play driving costs lower. So people aren’t choosing renewables out of any ideology or just because they like it better or it’s clean or anything like that. It’s low cost and that matters a lot to the business community.
Stephen Lacey: So let’s talk a little bit more about this growth, Jigar. What we’ve seen is the solar market going from a few gigawatts to 30 gigawatts in a very short period of time. We’ve seen batteries go from essentially zero to 11 gigawatts. So Jigar, what kind of activity have you seen push its way into Texas from the industry? What is so attractive about the market given what we’ve already talked about?
Jigar Shah: Well, I think that, as Doug suggested, because this is an energy only market, what has happened to the solar industry is that we have flooded the markets with solar power over the last few years. And so solar is now not worth deploying as a naked resource. Just putting in solar means that you’re basically selling the power in at negative prices in the middle of the day. And so ultimately every solar project is now paired with batteries because the time shifting is so critical. There are lots of times of the day where you actually can get paid for that power, but it’s not at the noon timeframe. In the same way that you can get free power in the middle of the night in Texas because of the excess wind, you can get free power in the middle of the day now because of the excess solar.
So we’re in this weird spot where the Texas grid is going from 86 gigawatts of peak load to 140 gigawatts, I think, of peak load by 2030, around the corner. And people are like, “Well, how are we going to do that?” And it’s because of these sweet, sweet batteries. The batteries are the ones who are actually providing capacity, and the solar is providing cheap fuel to fill up those batteries. And it’s just the most crazy, mind-warping thing that I think the renewable energy people can’t get their brain around and most certainly the natural gas people can’t get their brain around.
Doug Lewin: Yeah, and I just want to add to that, look, one of the proposals that is most sort of terrifying, again, to not just renewable energy developers though, including renewable energy developers, but the entire business community because the cost would be outrageous, is this, quote, unquote, “firming” proposal that would require all of this backup. And the way it’s written, it’s just clearly written by folks that don’t understand energy markets, which is what has everybody from the manufacturers and oil and gas industry to the statewide Chamber of Tech Association of Business to even thermal generators worried about this bill. And it’s unnecessary because of exactly what you said, Jigar. Like the market is delivering that we have 11 gigawatts of storage and we have 160 gigawatts of storage in the queue.
There is so much storage coming. You don’t have to create these convoluted, heavy-handed regulatory programs and schemes to bring it. The energy-only market is showing yes, there’s a high price in these intervals and that is the signal that developers need to bring that dispatch ability onto the system. It’s all happening, it’s all working, and yet they want to fix it and they’re going to end up creating a million more problems if they fix it the way they’re trying to.
Stephen Lacey: Katherine, you’re a policy director for the Energy Storage Association from 2011 to 2015, and this level of growth that we’re seeing in Texas was almost unfathomable back then. What role are batteries now as a mainstream resource? What’s Texas proving?
Katherine Hamilton: Yeah, it’s just incredible. Back then it was like a science project and it was even called the Electricity Storage Association. And now batteries not only has the cost come down dramatically, but now they’re all different kinds of chemistries and technologies and use cases. So they’re long-duration storage. And of course Texas, they are just deploying like mad and it’s really changed the game and the market for batteries and brought those costs down tremendously.
The other piece of the equation that I have been very focused on for a bulk of my career is the distributed side. So distributed batteries certainly. So there’s a virtual power plant that’s been announced that it’s going to use distributed batteries from Sonnen to really become like mini power plants, and that’s going to really start allowing the customer side to become part of the equation and part of the resource mix.
And a program that I’m super excited about and watching, Doug, is this demand response program, which is not like your typical analog demand response program that’s been around since the beginning of time, but it’s really about how do you bring incentives to the retail providers that are there trying to manage the customers to really focus on the high seasonal net load hours, mostly in the winter and summer, your shoulder seasons aren’t as shouldery as they were before, but then making it really smart programmable devices that allow participation, purely voluntary, so you can save money every year. But it doesn’t just save money for the people who participate. It saves money on the whole system into every customer. And so I’m excited about what’s happening on batteries, both what you would call the supply side and the demand side, and also all the DR you’re doing.
Doug Lewin: I’m extremely excited about that as well. And that is another feature that when you ask what is going on in Texas, what is different in Texas, that competitive retail market is another thing. I mean, I’m almost ashamed I didn’t mention it in the opening answer, but there’s only so much you could fit in. But you’re exactly right. Those distributed batteries, Katherine, are coming to people through the competitive market. People in 75% of the state of Texas have choice. So you mentioned Sonnen, that that’s one example, Base Power, Zach Dell and Justin Lopas are leading that. I interviewed Zach for my podcast. Octopus Energy is there, David Energy, Tesla is offering batteries. And what that does then is that puts pressure on the big companies, the NRGs and Vistras that own Reliant, TXU respectively to offer those products to their customers or to get left behind.
Stephen Lacey: And NRG is, yeah, a gigawatt. They have a gigawatt that they’re planning in demand response with Renew Home.
Doug Lewin: And that is such a core solution. I don’t think Texas policymakers, and in fairness, not just Texas policymakers, I think a lot of people in the industry haven’t yet integrated into their understanding of grids and electric systems, how important the virtual power plants and distributed energy resources are going to be. Again, you guys have talked about this so much on the podcast and I’ve learned so much from listening to y’all. The way batteries have come down the cost curves, we’re going to have batteries all over the place in five to 10 years, maybe quicker. I mean, my parents lost a couple of refrigerators worth of food when there was a power outage not that long ago. And my mom started looking into getting a generator. I’m like, “You really should look at a battery backup for it.”
I think we’re getting to the point where you’ll start to see batteries integrated with appliances to make sure that those kinds of things aren’t happening and that you’re losing a whole fridge worth of food, but that battery can also be used throughout the year, unlike a generator that you’re basically only going to use when the power goes out, you’re going to use that battery all through the year. So this is coming and I do think Texas will lead that. Again, not because of any big sort of policy mover, though there can be policies that support that and there’s some good things happening at the legislature on that front, but because there’s a competitive market and people will want to choose to have more reliability and resiliency.
Stephen Lacey: Jigar, what’s your outlook on the VPP market in Texas?
Jigar Shah: Oh no, I think it’s just getting started. And I think as Doug suggested, the level of entrepreneurial energy that’s entered Texas to really bring the next generation of VPP solutions to Texas is just ramping up. So I think it’s extraordinary.
I think the real question I have for you, Doug, is that you go through this process of educating lawmakers every two years, and it feels like you have the same staff that you’ve had two years ago, the two years before that. With so much winning occurring in Texas, you’d think we would need 10x the staff to explain our story. And so are you seeing 10x the staff? I get the fact that the Chamber of Commerce and the oil industry and the manufacturers and all them understand that this stuff is important, but do the average Texans actually understand that we’re winning this much?
Doug Lewin: I actually think the polling suggests that the general public is really excited about the story of Texas leading… You could fill in the blank whether different words have different reactions with different audiences, but this energy expansion is really, I think, the way it gets talked about more in Texas. Because frankly, Texas, we’ll see what happens with tariffs and all that. We actually may get a reduction in oil and gas production, but that’s kind of a different but related conversation. But oil and gas, we’ve seen record levels of production over the last few years and we’ve seen wind and solar and we’re likely on the cusp of VPPs and geothermal and even advanced nuclear. We’ve got a great ecosystem of advanced nuclear companies. So generally when people are asked about this, they like this and they’re very supportive of wind and solar. They’re particularly supportive of wind, solar, and storage. I think people really understand intuitively that that is a fantastic mix.
Yeah, look, I just don’t understand why two years later, when you look at Texas today compared to where we were two years ago, the grid is far more reliable. We have far more energy production. We have a leg up on just about everywhere else to win this race, to attract data centers and the economic investment they bring with them, the economic investment from new energy development. I just still don’t understand why leaders in Texas aren’t just touting this as a great big victory. Just take the W. Like you’re winning, this is a good thing. Why would you want to fight against this?
Katherine Hamilton: Doug, it just seems like there’s so many groups, residential customers, community leaders, the Conservative Texans For Energy Innovation, Texas Land & Liberty Coalition, there are just all these groups that are very supportive of all this growth of renewables as economic drivers, right?
Doug Lewin: Yes. And kind of picking up on Jigar’s question too, Katherine, there are so many organizations that do have people that are working on this day in and day out. You mentioned a few like Conservative Texans For Energy Innovation. I don’t want to make a list because end up leaving somebody out, but there are dozens, scores of organizations that are just doing fantastic work to tell the story. And again, while some policymakers aren’t getting it and are taking actions and trying to pass policies that would just objectively hurt the state’s business environment, hurt Texas consumers, all of those things, for everyone one of those, there’s five others that I think do get it, they’re just not as loud. And they may be quiet about it, maybe because they don’t understand it well enough, maybe because they’re worried about political pressure in a primary or whatever, but they understand that… And there are some by the way that that are vocal.
Again, I don’t want to name people, I don’t want to leave some out. But there are a bunch of particularly West Texas rural Republicans that are quite full-throated in like, “This renewable boom has been amazing to my district. There are counties with a couple thousand people that have hundreds of millions of dollars of investment in the schools and the hospitals and the roads and for the landowners, and that’s a lot of what Land & Liberty and Conservative Texans For Energy Innovation, they’re trying to help tell that story that Texas’ farm and ranch legacy is being supported by this renewable boom. There are a lot of farmers and ranchers that could not hold on to their farm and ranch but for the lease payments from renewables.
So I do think that story is getting through. Still the volume is not turned up loud enough on it. And where I hope we can get to in the state of Texas is this is a great thing. And I know we’re going to talk about oil and gas and gas plants and all that. And again, I just think it’s wrong to view it as renewables are threatening to oil and gas. We can talk about this later, but oil and gas is going to be produced in Texas for a long time to come. This isn’t like you’re on team renewable or you’re on team oil and gas. Texas is an energy state, we’re going to produce all of it.
Stephen Lacey: Yeah, actually that brings me into the last piece that’s really critical to setting up the Texas story, and that is the load growth picture in Texas. And as you said, the oil and gas industry is really in favor of a lot of these cheap renewables as they electrify operations and expand, they’re increasingly inking power purchase agreements with wind and solar. And Texas has been experiencing really extraordinary low growth even before the data center boom. And now suddenly there are a lot of data center developers that are eyeing the market in large part because of the energy picture. And I think that I’ve heard you say that there are now 50,000 gigawatt loads that have been proposed recently in Texas, which is crazy. How has the load growth picture changed the conversation around capacity needs in Texas?
Doug Lewin: So first of all, and I think this point cannot be made often enough, the last four years we are over 5% CAGR annual growth rate in Texas for energy consumption. If that were to continue, not even increase with data centers and all that, just continue at that rate, that would be the highest since the 1960s. So load growth is already happening in Texas and there are many reasons why it’s happening. Industrial electrification is one of those. Oil and gas electrification is one of those. Manufacturing boom is one of those. Heat is another reason. Our summers are hotter. And Texas is famous for its air conditioning. We are huge fans of air conditioning in Texas, so load growth is absolutely happening.
The data centers, if you look around the country, where are they going to go, right? Virginia obviously is one of those kind of hubs. Not kind of, it is the hub for data centers, but it’s already a huge percentage of load. It’s something, I can’t remember if it’s 20, 25%, something like that of load already. Data centers are something like 5% of consumption in Texas. There’s a lot of headroom. And as you said in the opening, Stephen, 40 gigawatts of power added in the last four years, we’re on pace, again, if policymakers don’t mess it up, to add even more than that in the next four years. So you have access to affordable, reliable, clean energy, all of that in Texas that is causing those data centers to want to come here, and we’re already at 5% growth, I think we’re probably going to get to nine or 10% growth by the end of the decade. Who knows? It could be even more than that.
So yes, load growth is absolutely part of the discussion, and I would be remiss if I didn’t say, and I do think Texas is a leader on this and will continue to be a leader on this, that demand flexibility and load flexibility both on the residential side with virtual power plants, energy efficiency, those kinds of things, but more on the large load side as well. And we are seeing some bills that are positive. Senate Bill 6 contains now a House Bill 3970 that is a speed to power for load flexibility. If you have a flexible load, you bring your own generation, you can turn down at certain times, then you can get onto the grid quicker.
And I did a podcast with Tyler Norris from Duke who did that study that if you have 1% of the hours from large load that come online, you get 15 gigawatts of headroom, right? So I think all of that is there. It’s all possible. It all fits very well with a system that has a lot of variable renewables on the system. And it’s all about integrating those large loads in the right way. And I think Texas with its energy only market structure is set up and positioned to do that perhaps better than anywhere else in the country.
A legislative showdown
Stephen Lacey: So I think that sets us up really nicely to talk about the current political climate in Texas. And one really important plot point here that I think we need to talk about is the February, 2021 Winter Storm Uri, which took 50 gigawatts of generation offline. It left people without power in subzero temperatures for days and nearly brought the entire grid down. And that was a real turning point for the electricity system and for the current conversation about the role of gas and renewables. So why was that such a critical turning point?
Doug Lewin: Well, just as you described, it was a critical turning point because it affected so many Texans, right? I mean, literally 10 million Texans at some point were without power, 4 million accounts, but two, three people per account, you’re well over 10 million Texans that… And literally millions of those, Stephen, were without power for days. I mean many people were without power four or five days. As you said, it was extremely cold. And it was everybody, right? It was your elected officials lost power, your business leaders lost power. Everybody across the state was affected by it. It wasn’t like with some other disasters, bad as they may be, or hurricane is fairly localized. This was basically statewide. There’s little parts of the state that are outside ERCOT, but otherwise it was statewide.
And it was just traumatic, right? I mean, it was very traumatic. People were deeply affected by it. I mean, I’ll never forget the experience of shoveling snow to melt water to be able to flush a toilet. This is nothing that I thought was something I would have to do in 21st century America, and yet there we were. So it was jarring. I was talking about chip manufacturing before, like Samsung had to just shut down an entire production line, which actually damaged some of their equipment. I mean the implications of that just reverberated across the system and it was kind of one of these epochal events, sort of like in general… We talk about COVID before and after, we talk about Uri in Texas, it was kind of like before Uri and after Uri.
Stephen Lacey: And it sets up this dynamic of renewables versus gas. And there was this very intentional campaign in the wake of Uri to blame renewables, including from Governor Greg Abbott. What did they claim happened and what was the reality according to actual market authorities?
Doug Lewin: It’s so interesting, there was the blackout in Spain recently, and when you see people rush to say, “This is what caused it,” I would hope that people… I think when people do that, they’re trying to make a point or promote a certain agenda. What we learned from Uri is there’s a certain amount you know and stick to what you know, but then you need the whole investigation to come out. And I just really wish that some of these policymakers that are pushing these various policies that cite Winter Storm Uri as the reason why they’re doing it. That, quote, unquote, “firming” bill, Senate Bill 715, House Bill 3356 is one of those, in the discussions they talk about Winter Storm Uri as why they’re doing it. Because they continue to say in 2025 the renewables caused those outages, which is just as an empirical matter false. Every single generating resource had problems. Gas, coal, nuclear, wind, solar, all were reduced in their output. But the lion’s share of what was reduced was from the gas supply system and gas power plants.
Now, Texas, I think a lot of credit should be given to the legislature and the PUC. I don’t maybe often enough give credit for… We all as humans have a negativity bias. We’re always going to talk about the bad stuff more than the good stuff. There was a requirement in Senate Bill 3 after Winter Storm Uri that required a weatherization standard be put in place. The PUC passed a very good weatherization standard led by Commissioner McAdams. He’s no longer a commissioner, but when he was a commissioner, he led that. Focused it on wind chills instead of temperature, and really I think got that right. And we have seen in winter storms since thermal power plants have had not as high a rate of outages.
What has not been fixed is the gas supply system, which is still very vulnerable. We see every time it freezes gas supply to the Permian drops and then demand. This is another thing that in the UT Energy Institute report, in the FERC and NERC report following Winter Storm Uri, demand was off the charts. That was really pushed higher, and there’s a problem throughout the South, it is a very big problem in Texas, resistance heat, an extremely inefficient form of heat, the same technology as a toaster oven or a hairdryer. We have 3 million homes that use that kind of heat that pushes demand up into the stratosphere where you cannot possibly meet that demand with the kind of supply we had available.
So I’ll just wind that down by saying there have been some good things post-Uri. We’ve added more supply. We have 50 times as much storage as we did back then. We have six times as much solar. And people forget this, but during Winter Storm Uri, once the front came through and the snow and ice came through and at the point where we were at the height of the outages, it was extremely sunny, solar would’ve made a very, very big difference during Winter Storm Uri had we had more of it. So there are things that have been done to fix it. But the legislators that are saying that these anti-renewable proposals would somehow fix a Winter Storm Uri situation, they have the diagnosis wrong, and when you have the diagnosis wrong, you’re likely going to get the cure wrong.
Jigar Shah: Ultimately, they are actually warping facts on purpose. I mean, that’s the thing that I just want to make sure we’re all crystal clear about. For whatever reason, people are giving people the benefit of the doubt when they don’t deserve it. It’s very obvious that people are basically saying, “We would love to have 100% natural gas grid. Can you please serve me up the least diverse, most vulnerable grid I could possibly get? And then after that occurs, then I’ll be satisfied.” Come on.
I think at some point we all need to get boxing gloves on and actually start fighting. There’s this notion where we’re like, “Well, they’re just undisciplined. They rush to conclusions.” No, this is a very well-funded disinformation campaign, who uses any single kernel of truth that they could find to malign and slander the industry. And I think that that is a homegrown industry in Texas. And that group, Robert Bryce and all of those people, Doug Sheridan, those guys love to slander our industry and we’re not even that big. That’s the thing that’s crazy. It’s one thing if we were 60% of all the electricity production in Texas, but we’re not. We’re just like this slow moving workhorse that’s trying to be productive and helpful.
Doug Lewin: Jigar, I think it’s a really important point, and there are a lot of folks out there. I am a person that likes to give the benefit of the doubt, and I like to look for common ground and all of that, and I never want to close off dialogue, even with somebody I disagree with on just about everything because there’s probably something if we look hard enough we could agree on. But I think you’re right. There are people out there that are clearly not acting in good faith and are putting information out there that is really misinformation and they know it.
I just hope they’re not actually persuading people and that people before they would vote to do something that every business entity in the state is telling them would raise costs, they would at least go back and look at just the executive summary, just one page of the FERC and NERC report and see what actually went on at that time. But I think you’re right, and I think that there are folks that are really just trying to mislead. A lot of this is led out of the Texas Public Policy Foundation, and as best I can tell, Jigar, their vision is kind of as you described, like a grid entirely run by gas. And what’s fascinating by that is the gas industry doesn’t want that.
Katherine Hamilton: I would love to talk for a second about the politics.
Doug Lewin: Yeah.
Katherine Hamilton: Because I’m super curious, Doug, since you do know the Texas legislature so well, not only does Texas have a bi-annual legislature of its own, but it also sends people to DC to represent the state. And as Jigar was saying, there’s a big move to just destroy all of the progress that we’ve made on tax credits for wind and solar and other clean energy technologies. And what struck me is that there are 36 GOP House members that have sent a letter to the head of the Tax Committee in the House of Representatives saying, “We want to repeal all the tax credits.”
And in total, those 36 districts represent over 100 billion in announced clean energy investment, $100 billion. And of those people, oh, five of them are from Texas. So you’ve got Keith Self, Brandon Gill and Chip Roy and their districts, they’ve announced, oh, over a couple billion dollars in investment to date with many more billion coming on the grid. Lance Gooden has almost a billion in investment to date, 4 billion total announced. Pat Fallon from Texas’s fourth district has already 3 billion invested in his district, with another 6 billion announced.
I mean, these are thousands of jobs and these people are putting forth policies and voting against their own interests, their constituents’ interests, and I would love to hear from you, how do the folks in Texas think about that? We’ve already talked about how much support there is from community leaders, from residences, from businesses. How can they justify what they’re trying to do? And maybe you can dig into what they’re trying to do too. I’m just trying to understand the politics here.
Stephen Lacey: Yeah, I want to summarize the bills after. Why don’t you answer that, Doug, and then we’ll sort of go into the specific pieces of legislation. But you have clearly said that the oil and gas industry, the wider business community is all in favor of this diverse energy transition. It’s been really good for bills and the increasing of industrial electrification. So to Katherine’s question, what is really driving this?
Doug Lewin: It’s a great question and there’s no easy answer. The best I can do in sort of a pithy and short-ish answer is algorithms. I just think that people are just really just getting hit over-
Stephen Lacey: Our brains are infected by the internet?
Doug Lewin: Yes, they’re just getting hit over and over and over with story. Once you slow down scrolling on that story about how solar and wind are crashing the grid, the next time you’re on, whether it’s YouTube or Twitter or whatever, you’re going to get 20 more of those. And I think it’s that, and then I think it’s the consistent ideological funding that Jigar is talking about, well-financed campaigns that then sort of use those algorithms to continue. It’s hard for me to understand it any other way. Because again, the state of Texas should be so proud of it, we should be screaming from the rooftops like, “Come to Texas, we’re open for business. We are building more energy, producing more energy than any other place, and it’s all kinds of energy.” You don’t have to be anti-oil and gas to be pro-wind, solar and storage. There’s so many examples from around the state of folks that are actually taking that position that we actually can do all of this here. It shouldn’t be scary. And yet, you have a lot more elected officials going sort of the anti-direction than the pro.
And I just think we’ve just been so… And Jigar, it’s part of the reason why I think the discussion we were having is important because I think, yes, we have to recognize there are some people that don’t have good intentions on this and are misleading people. I also think it’s very important to try to build bridges wherever we can because this is the way the world is going. We are going to have a lot more solar and storage and the more people we can kind of bring in to kind of lock arms on this stuff and say, “Hey, there is a path here to a far more reliable and resilient and affordable and clean grid than we have right now.”
Stephen Lacey: We have to build the biggest possible tent while recognizing that there are some people out there that are just, like you said, trying to put this on page one and get as many people just amped up against wind and solar for just false reasons. So we have to combat that and try to build across divides as much as possible. It’s a difficult thing.
Katherine Hamilton: Doug, it’s like you need the Don’t Mess with Texas, which was the anti-litter campaign that became national and really viral. You need that again for renewables and for all of these resources that are helping Texas.
Stephen Lacey: I love that. And I do agree that the information environment is a huge piece of this, but I can hear the listener now saying, “Wait, what are you talking about exactly? What bills are we talking about?” So we’ve done all this set up, we’ve talked about the politics, but what pieces of legislation are most egregious? There are currently 170 pieces of legislation that target the state’s electric grid, and a huge number of those are designed to penalize renewables and storage. So how would you describe the current legislative picture? And maybe you can just summarize a few of them that are really standouts.
Doug Lewin: Yeah, I would say there are three bills that are the largest threats. We talked a little bit about Senate Bill 715, which is the one that would require solar and wind only to have backup when, again, we know from Winter Storm Uri and other winter storms that thermal resources have problems in those kinds of events as well. There is a firming provision in law right now, but it is more technology neutral and it’s prospective to 2027. The bill that is before the legislature makes it not technology neutral, just targets wind and solar and makes it retroactive. Which, again, has the business community extremely concerned because it’s probably unconstitutional, right? It ends up being a taking because you already have a contract and now they’re messing with that.
The two other bills of biggest concern, Senate Bill 819, which is a permitting bill, and speaking of folks that are just really big into the misinformation and all that, Dan Friedkin is really leading that effort. He’s set up a couple of groups that are sending around information about wind turbines killing birds and all that kind of stuff. The bills that he is pushing are opposed by the Audubon Society that actually works with the wind industry to reduce the amount of birds that are damaged by wind turbines, which of course pales in comparison to the number of birds hurt by buildings or cars or cats or any number of other things. Again, just a lot of misinformation floating around out there. So you’ve got Senate Bill 819, which is a permitting bill, would put in place one of the strongest permitting regimes, if not the strongest permitting regime in the country, worse than Ohio or Michigan or something like that in Texas, would really choke off that renewable development. Again, concerning to not just renewable developers, but a wide variety of different groups, business groups, environmental groups, et cetera, and-
Stephen Lacey: Essentially creating massive setbacks for renewables projects. And when you can build an oil and gas operation next to a daycare or a school, you have extreme restrictions on where you can build a renewable power plant.
Doug Lewin: Exactly. And permitting authority to the PUC, up or down on renewable projects. It is a big government approach, right? It’s like literally you’d probably have to have a new floor of an office building for the PUC to start regulating all these projects. Just cuts against landowner rights, light regulatory touch. I just interviewed Glenn Hamer, the CEO of the Texas Association of Business, I’ve interviewed Governor Rick Perry and Secretary Perry in the past, and they both talk about Texas’ light regulatory touch being part of the reason why we’ve had the economic growth we have. That kind of a bill just cuts entirely the other way, right? Very big government, heavy-handed, heavy regulatory kind of approach.
Stephen Lacey: So let’s wrap up the legislative conversation and talk about, I can’t remember if you mentioned Senate Bill 715, but Senate Bill 715 and Senate Bill 388 are two really important pieces of proposed legislation. 715 would retroactively require existing solar and wind facilities to provide backup power, so unprecedented retroactive legislation. And then 388 specifically excludes batteries from the definition of dispatchable resources. So it’s like redefining terms to contradict grid engineering realities. So just summarize these two bills.
Doug Lewin: Yeah, so let’s start with 388, we haven’t talked about that one at all yet, and it’s actually the most straightforward to explain because basically what it does is say for every one megawatt of wind or solar you build, you have to have a megawatt of gas with it. Technically they would allow nuclear or other things, but of course that’s not coming for any time soon. And of course the point is it’s really hard, again, as you guys have talked about a lot in this podcast, it’s very hard to get a hold of a gas turbine right now. So effectively what you’re doing is you are tying Texas economic growth to the availability of gas turbines, which just seems like a spectacularly bad idea, and again, why the entire business community and even thermal generators don’t like this bill. So that’s 388.
715 we talked about a little bit, and it is hard to explain. But it basically requires back up as you said, Stephen, for wind and solar. I would just say, again, this was considered two years ago, a form of it passed. But it was prospective starting in 2027. It was not anything retroactive and it also applied to thermal plants. I will say that at that time, ERCOT CEO, Pablo Vegas in 2023 told the Senate Business and Commerce Committee, where that bill was being heard, that it would be a tax on consumers, that this would raise costs for everybody and that it was unnecessary. Because as anybody who works in energy markets know, you buy back up reserves as a system.
The PUC leadership has even said this. The deputy executive director said, “We back up the system based on risk, not on resource type,” right? “We don’t say nuclear plants 1,200 megawatts, if they trip off, that could cause a frequency excursion.” So every nuclear plant needs to have its own frequency reserve, its own contingency reserve service, its own four hour reserves, that becomes insanely expensive and causes resources to drop off the system.
Again, I hope at this point, because there has been a lot of discussion around this around the legislature that folks are now, the legislators, particularly the representatives, are starting to understand that these various bills would put a massive cost onto consumers and significantly slow down economic growth and really for not any reliability gain. That is one of the key points. This doesn’t actually improve reliability. You’re really putting in a lot of pain for no benefit.
Katherine Hamilton: And what are the odds, Doug… I’ve read about all of these bills. I’ve listened to you for hours and hours on end discussing them, which I never get tired of, but what are the odds of these getting through? Are there some that have already been signed? What’s the prognosis here?
Doug Lewin: Yeah, and I get asked this question all the time. I think people get frustrated with my answer because I genuinely do not know. Legislative sessions are extremely unpredictable, and last session there were all sorts of… And this happens every single session in the waning days, there’s a lot of things that are discussed and traded off, and we ended up with a complete reorganization of ERCOT on the third to last day of the 2021 session on a motion to go outside the bounds. There was no hearing, nobody saw that bill before it was passed. Crazy stuff happens at the end.
I don’t know what’s going to happen. All three of those bills, 715, 819 and 388 have passed the Senate. They have all come over to the House. The House has about a week left to pass bills out, by the time this comes out, it’ll be a few days to pass bills out, to make it onto a calendar and to actually pass on the House floor. But even after those deadlines pass, all sorts of shenanigans can happen. And so until June 2nd, which is sine die, the 140th and final day, we just really won’t know. And I am loathe to handicap because I don’t know.
A bad scenario for Texas
Stephen Lacey: So Jigar, what happens if one or all of these bills passed? Describe what that would do to some of these large development platforms that are targeting Texas that have a huge pipeline in the state. What functionally happens to those companies?
Jigar Shah: Well, what functionally happens is that the state of Texas loses economic growth. So data centers who wanted to come to Texas no longer come to Texas, that large loads decide that they’re going to leave the state of Texas and go find another economic development place that’s more friendly to their technology. I think what people don’t understand is, as Doug said, this is not clean electricity. This is just electricity. And if you want electricity at the speed that Texas wants it, right? Texas believes very credibly that they can get to 140 gigawatts of peak load from 86 today by 2030. The only physical way to do that is clean energy. There is no other way for them to do it.
So if they do anything that actually makes it more expensive for those guys to do their job, then what will happen is that either the people of Texas will pay that extra cost and say, “Screw it. We still want the economic development and the only way to do it is through these clean energy generators,” or they will forego the economic development. And that is why Doug has been so successful at getting literally everybody in the state of Texas, outside of these misinformation wackos, to be against these bills.
Stephen Lacey: Then there’s this more existential challenge, Doug, to wrap this up, and that is the potential for rolling blackouts, right? If you don’t have the resources that you need. If you’re retroactively hurting projects. An increase, a dramatic increase in power prices. There’s been some modeling on this. What does the modeling say could happen to power prices and potentially to cause blackouts in Texas?
Doug Lewin: Yeah, there’s some great modeling done by Aurora Energy Research. Encourage folks to check that out. I know y’all are familiar with Aurora. They do great work. They got a big awesome office. They’re doing a lot of stuff globally, but including in Texas. They have very modest load growth projections. They do not buy into ERCOT’s 140. They think we’re going to be 100, 105, which is still 20 gigs of peak demand growth in five years, and probably a much higher percentage of consumption at the actual megawatt hours. But still a lower load growth projection. And they still believe that if a Senate Bill 715… They did theirs sort of generally, they didn’t look at any specific bill.
They said if you choke off renewable development and start actually retiring some renewables because of these retroactive provisions, you would end up in a situation where you could see two to three gigawatts of load shed in the summertime. You would see $5 billion in extra costs in the market. That breaks down to $6 million for 100 megawatt industrial customer every year, which again, to Jigar’s point, could be determinative and really hurt economic development in the state. $225 per household. There are other studies, Josh Rhodes at University of Texas and his firm, IdeaSmiths, have done some studies for Texas Consumer Association, similar kinds of findings, some of them as high as 2030 gigawatts of shortfall if you’re looking at a higher level of load growth, if you’re up more like in 120 to 140 kind of a range, you’re looking at much bigger shortfall.
So the modeling is showing these bills would be extremely damaging. ERCOT CEO, Pablo Vegas been talking about this. I think one of the fundamental points here is all resources contribute to reliability. They contribute differently, obviously. But you need every electron you can get right now, you need every megawatt you can get, and we know that these would reduce that, and that would lead to, in extreme conditions, higher probability of outages, and under any conditions, higher costs for consumers.
Jigar Shah: Can I add just one other point in here? One of the other things is that if you want nuclear power where they’ve got two or three really great startups like Aalo and others in Texas, guess who’s on the board of those companies? The CEOs of major solar and battery storage developers, because they’re the ones who know how to get this done.
The thing that I find shocking by all of this stuff is that the people who are the most competent at doing whatever it is that you want to do, whether it’s building a transmission line into the Permian Basin so they’re not burning diesel engines all day, or whether it’s people who are building new nuclear plants, it happens to be the people who are actually extraordinary at solar and battery storage development, because they’re the ones who actually know how to get shit done right now. So that’s the thing you are also sacrificing is if you piss them off, then they leave the state of Texas, so do all those nuclear plants.
Doug Lewin: This is what is so maddening about this right now, Jigar, is like Texas has so much opportunity in front of it, right? There is a bill to really kickstart the nuclear industry that Governor Abbott, to his credit, put together a working group on, Commissioner Glotfelty led, they made all these recommendations. That bill’s kind of languishing. It’s not getting the attention it probably should, it’s House Bill 14. We even talked about that. We’ve been talking for how long, we haven’t even brought up HB 14 because there’s all these attacks on renewables. We could be doing more with DERs, with energy efficiency, with geothermal, with nuclear, with carbon capture. There are so many different areas Texas could be a leader in if we could get out of our own way and quit trying to beat up on renewables and actually focus on winning in the future. So frustrating to me about it, all of this ends up being a massive distraction from Texas really just grabbing that mantle of 21st century energy leader.
Stephen Lacey: Katherine, what does the Texas story tell us about the national picture or the sort of era that we’re in?
Yeah, I was thinking as we were having this conversation that when I was a little kid playing in my grandmother’s backyard in the summer, stuffing fresh tomatoes in my mouth, my grandfather was a utility exec and there was a ransom fund for utility execs because costs were going up so quickly and so high because air conditioning was starting to come online, demand was skyrocketing. And since that time, we have come up with so many more solutions. And just hearing about heat pumps being able to replace resistance units in Texas, that is a huge opportunity that you don’t have to switch out gas, you’re just changing from electric to electric.
There are all these electrification opportunities. There are all this distributed energy opportunities, demand response. And the supply side is full of clean energy opportunities as well. And I feel like, I was living in Virginia at the time and we resolved it and are continuing to have to resolve it as demand is now peaking again, and Texas has it. And it’s like Texas should be our model, right? Texas should be the model for Spain. Texas should be the model for everyone. And I hope, Doug, and I’ll send you all the warm thoughts that I can about your work having success because it does enable the rest of us to learn.
Jigar Shah: And it is where this needs to go, right? That the federal government is not going to be showing leadership in this moment. It will have to be the states, right? So whether it’s Washington State and their $1 billion a year cap-and-invest program, or the state of California or Texas or the great work that’s being done in Virginia or other places, the states actually have to figure out how we take all these extraordinary technologies that we have now fully commercialized and actually deploy them at scale.
Stephen Lacey: I think that’s a good place to end it. Doug Lewin runs the Texas Energy and Power Newsletter. He hosts the Energy Capital Podcast. He is the president of Stoic Energy Consulting. He was with us from Austin, Texas. Good luck in the last couple of weeks of this session, Doug. Thanks for being here.
Doug Lewin: Thanks, Stephen. Thanks, Jigar, Katherine. This was great. Appreciate it.
Katherine Hamilton: Absolutely.
Jigar Shah: Thank you.
Stephen Lacey: Open Circuit is produced by Latitude Media. The show is edited by me. Sean Marquand is our technical director. Anne Bailey is our senior podcast editor, and the show is hosted by Latitude Media. We’re supported by Prelude Ventures. And for more in-depth reporting on the topics we cover on this show, sign up for Latitude Media’s daily, weekly, or AI Energy Nexus newsletter. We’re covering the Texas Data Center market quite a bit there. Go to Latitude Media and hit the subscribe button. And you can find this show anywhere you get your podcasts. And do us a favor and give us a rating and review. We’ll see you next week. Thanks for being here.
