Renewable Power, Texas-Style

Does it take substantial governmental intervention to encourage the growth of renewable energy?  It certainly takes some, as renewables remain more expensive than conventional energy sources, but how much?

Last Sunday, the New York Times contrasted the efforts of California and Texas.  Both states have renewable energy mandates, but energy development is heavily regulated in California, while Texas is comparatively laissez faire.

the oil-and-gas state has nonetheless emerged as the nation’s top producer of a commodity prized by environmentalists: wind power. Eager developers are covering its desolate western mesas with giant turbines. The world’s largest wind farm began operations in Texas this month, and the state now has close to three times as much wind capacity as Iowa, the second-ranked state.

This achievement puts Mr. Perry’s state in odd company. The race for clean-energy leadership is on — and big red Texas is going head-to-head with the gung-ho greens of California. That state has thrown itself into solar power and now leads the nation by a huge margin; it has also aggressively pursued energy efficiency. . . .

Texas’s secret, besides strong winds and lots of land, is its lack of regulation. Wind developers rave about the fact that, in essence, they need few state permits to build a turbine farm. They deal mainly with local officials, who are generally permissive (energy, after all, is a well-loved commodity in Texas).

California, by contrast, has all but stifled wind developers. The state built several big wind farms in the 1980s — but has added very few since, because of the cost and delays of complying with stringent state environmental regulations. The early turbines killed thousands of birds, for instance, and that memory lingers.

Such snags are a key reason California has turned to solar power. It’s more expensive than wind, but plastering rooftops of homes and businesses with panels takes up no extra land. There is still plenty of paperwork involved, but rooftop solar largely avoids regulatory snarls . . . .

California is struggling to build large solar thermal plants in the desert, which are in some cases opposed by environmentalists — the very groups that are also hoping to combat climate change. In Texas, the birds and beasts may suffer, but the projects get built. Laying transmission lines — the wires necessary to carry clean energy to the cities — is much easier in Texas, analysts say, although Southern California is inching forward on some projects.

The comparison illustrates how regulatory policy can have a large effect renewable energy development.  Mandates can certainly force investment into renewable energy sources, but regulations can also stifle otherwise productive investments as well.  Indeed, as I’ve discussed before, some companies seeking to advance renewable energy sources have found environmental regulations to be among their greatest obstacles.  (a point I’ve made before).  Land-use regulations may frustrate large energy developments and transmission lines, as can concerns about various environmental impacts, such as the effect of wind turbines on birds, viewsheds, and bats.  In some cases, if government regulators would get out of the way, relatively modest governmental interventions would stimulate substantial investment in alternative energy sources and free up opportunities for greater energy innovation.  In short, when it comes to solving environmental problems, more regualtion is not always the right answer.  Indeed, sometimesexcessive regulation is part of the problem.