Why Is Texas Terrible at Producing Solar Power?

CHICAGO - SEPTEMBER 01: Solar photovoltaic panels generate electricity at an Exelon solar power facility on September 1, 2010 in Chicago, Illinois. The 10-megawatt facility located on the city's south side is the largest urban solar installation in the United States. The 32,292 panels can generate more than 14,000 megawatt-hours of electricity per year, enough to meet the annual energy requirements of up to 1,500 homes. (National Journal)

Texas is an energy superpower, and not just for fossil fuels. The Lone Star State produces more natural gas than any other state, but it also leads the nation in wind energy.

It's also a massive, Southern, sun-baked state that is so full of the wide-open spaces needed for solar panels that it rivals California for the nation's largest solar-energy potential, according to an Energy Department report. Texas, the report says, is home to a full 20 percent of total U.S. potential for concentrated solar power.

Only a tiny percentage of that potential, however, has been exploited. According to the Solar Energy Industries Association, Texas has only about 200 megawatts worth of solar-power panels installed. That's less than is currently firing in New Jersey, Massachusetts, and New York.

So why is Texas's solar sector floundering when other energy sources, even other fledgling renewable-energy sources, are surging? In short, because a confluence of policy choices and economic forces have stunted the state's solar growth — and few solar advocates see hope that the state landscape will change anytime soon.

"It's frustrating because you look and you think, 'Wow, this could be amazing,' " said Carrie Cullen Hitt, senior vice president of state affairs for the Solar Energy Industries Association. "Because it's a new market, you need some economies of scale going in and those states had some policies in place, be they rebates or tax incentives. Texas doesn't have those things "¦ and because of that, they have not had the market startup mechanisms in place."

But any push for such policies has a high hurdle to overcome: the hyper-partisanship of the nation's energy debate.

A decade ago, policies supporting renewable energy were largely viewed through the lens of investment, and as such had significant state-level success in attracting bipartisan support. Now — after a bloody congressional struggle over the cap-and-trade climate bill — such supports are increasingly viewed as a political statement. In deep-red Texas, there's little legislative appetite to restructuring the state's energy policies to find new support for solar.

And so Texas is likely to continue forward with a legal code that, thus far, has failed to significantly spur solar investment.

Texas is one of 29 states with a renewable-energy standard — a goal for getting a certain amount of its power from sources like wind, solar, and other fossil-fuel alternatives. When the standard was signed into law in 1999 it called for 2,000 megawatts of additional renewable power generation to be brought online within a decade. But within that standard, there was no specific requirement that any of those installations come from solar power. And without that requirement, developers overwhelmingly chose wind energy — which for investors was both more familiar and, as it frequently requires lower front-end costs, less risky.

Texas also lacks "net-metering," a policy that has helped solar flourish elsewhere. Net-metering allows residential solar customers to earn full retail credit for excess electricity that they sell back to the grid. It's a policy that's on the books in 43 states, but doesn't exist at the state level in Texas. Power providers there have the option to create solar-power incentive programs of their own, but fewer than one in 10 has done so, according to a 2011 report from the nonprofit consumer-advocacy group Public Citizen.

Solar's main support in Texas comes from a federal policy. The solar investment tax credit is a 30 percent tax credit made available to residential and commercial solar projects.

To be sure, not all of solar's Texas woes stem from state-level policies. The energy source has also taken a beating from economic forces. Electricity is typically dirt cheap in Texas, making it hard for any power plant to turn a profit, especially one with high up-front costs like a solar farm. And the fracking boom has stiffened competition for solar energy as the supply glut and resulting price dip in fuel prices has made natural-gas power plants a more attractive option.

But advocates insist that with the right policies, solar has strong potential in Texas — and they point to two cities where it has flourished: San Antonio and, to a lesser extent, Austin.

San Antonio has 90 megawatts of utility-scale solar online with another 15 megawatts from direct generation, and utility CPS Energy estimates there's another 385 megawatts coming online over the next two to three years. That's been enough to rank the River City sixth nationwide in solar capacity, according to an April report from Environment Texas, and has attracted solar companies to set up shop in the city.

Austin, meanwhile, has 16 megawatts online.

What sets them apart? Both cities have municipal utilities that had more freedom to set independent renewable goals and offer rebates than the deregulated markets elsewhere in the state. Lanny Sinkin, executive director of the nonprofit Solar San Antonio, said the ability of a municipal utility to "look at values beyond the bottom line" has made city-level initiatives more successful.

And from that, solar advocates see hope for broader progress.

"We have assumed that we had to develop a strategy that did not rely on state support," said Lanny Sinkin, the executive director of Solar San Antonio. "It was just never going to come and develop the strategy for how to get it. Now I think that with the rapid expansion of solar in Texas, there's going to be more and more political support."

And ultimately, solar's best hope in Texas likely comes not from policy, but from technology. The cost of solar panels is falling precipitously, as scientists develop more efficient manufacturing models and cheaper Chinese models hit the market. And even for a green energy source in a red state, it's difficult to argue with a lower price tag.