Increasing the Texas Renewable Energy Standard

A growing number of states have taken steps to increase their use of renewable energy sources like wind, solar, and bioenergy. Eighteen states, including Texas and the District of Columbia, have enacted renewable energy standards—also known as Renewable Portfolio Standards (RPS)—that require electric companies to increase their use of renewable energy. Fifteen states have created renewable energy funds, which provide financial resources for renewable energy development. Five states have revisited initial standards and have subsequently raised or accelerated them.

In 1999, Texas enacted its RPS—requiring 2,000 megawatts (MW) of new renewable energy capacity by 2009—as part of legislation that restructured the state's electricity market. Today, the Texas RPS is one of the most effective and successful in the nation. The state is ahead of its annual requirement schedule with nearly 1,200 MW of new renewable energy already installed.

Given the success of the existing law and the state's vast renewable energy potential, at least two proposals have been made to increase the state's standard. The Texas Renewable Energy Industries Association (TREIA) and a coalition of Texas environmental organizations are advocating for a long-term 20 percent by 2020 RPS, with one percent of the requirement set aside for distributed resources like solar energy and farm-based technologies.1 The Texas Energy Planning Council (TEPC) is recommending a more modest increase of the standard to 5,000 MW by 2015 (500 MW from non-wind renewable resources), with a goal of 10,000 MW by 2025. We project that the TEPC proposal would yield approximately 8 percent renewable energy in 2025.

The Union of Concerned Scientists analyzed the costs and benefits of increasing the current Texas RPS based on the proposals made by TREIA and the TEPC, using the Energy Information Administration's (EIA) National Energy Modeling System. Under the more likely scenario that primarily utilizes renewable energy technology cost projections from the Department of Energy's national laboratories, we found that both the 20 percent proposal and the 10,000 MW proposal would result in significant new benefits for Texas' economy and environment (Table ES2). Under the 20 percent proposal, economic development and environmental benefits would be much greater because it stimulates more renewable energy development—a total of 17,820 MW by 2025.