Texas and Wind Wildcatting

texaswind211.jpgThe New York Times got all excited about Texas wind power this weekend. The piece stood in stark contrast to a Wall Street Journal article last year that noted some of the contentious issues and rampant speculation surrounding the building of 20-story turbines in the middle of rural Texas.

While there are a few ranchers in the longhorn state that are worried about sight lines, Texas is no Cape Cod, as is clear from the article.

“Texas has been looking at oil and gas rigs for 100 years, and frankly, wind turbines look a little nicer,” said Jerry Patterson, the Texas land commissioner, whose responsibilities include leasing state lands for wind energy development. “We’re No. 1 in wind in the United States, and that will never change.”

Aside from the Texas boosterism, Patterson may be right. Texas not only has large stretches of windswept rural plains, but it has the kind of regulatory atmosphere that can make environmentalists shudder (unless those environmentalists are pushing wind farms).

Maybe it’s the fact that the state embraces its oil infrastructure and the profits it provides, so sees money from wind power as a cleaner way to keep energy earnings gusting along. It’s also home to a group of entrepreneurs such as T. Boone Pickens, who have made billions risking it all on oil, and are comfortable rolling the dice with wind.

Aside from its geography, people and regulatory environment, Texas power transmission lines are governed by one entity, making the process of delivering wind power from remote ranches to populated cities a bit easier to control and implement than in other states. As an added bonus, Texas sovereignty stretches further out into its coastal waters than other states, meaning it can control the placement and implementation of offshore wind farms as well.

However, wind power won’t meet the state’s clean energy needs, even if the entire thing is blanketed with turbines, mostly because wind energy isn’t always available. And as interest in clean energy rises, the cost of wind rises as well. The cost of producing the power doesn’t change, but the cost of the raw materials to build the turbines as well as demand for the turbines themselves are lifting the upfront costs of building a wind farm. The installed cost of wind turbines range from $1.4 million to as much as $2 million.

That includes the price paid to rent the land on which these turbines sit. The NYT story mentions a farmer who makes $500 a month for each wind turbine located on his property. With 78 turbines, that nets him some $468,000 a year. And he’s about to add 76 more. That’s a lot of money.

Based on the assumption that a 1.5 MW turbine (that’s currently GE’s smallest turbine and the only type in use in the U.S.) operating at an average 25 percent capacity produces 3.3 million kilowatt hours of electricity that is sold to utilities for between 4 cents and 7 cents per hour (Austin Energy pays about 6 cents per kilowatt hour for wind), an investment in wind still takes years for the turbine operators to recoup, but is a bonanza for the ranchers leasing their land. At 4 cents per kilowatt hour a turbine might generate $132,000 a year; at 7 cents/hour that amount rises to $231,000.

Of course, capacity fluctuates and these are 30-year investments, so the winds of change blowing over West Texas could stay an economic driver for decades to come.

You're subscribed! If you like, you can update your settings


Comments have been disabled for this post