Texas state Sen. Bob Hall wants Texas to correct its energy marketplace before more problems arise.
Hall, a Republican from Rockwall, filed Senate Bill 1752, which focuses on renewable energy. The bill aims to reduce the amount of subsidies and tax abatements afforded to renewable energy generators in Texas.
Large amounts of subsidies, tax credits and other financial incentives given to renewable energy projects have been the subject of recent discussions in the Texas Senate. The Committee on Business and Commerce has held multiple hearings on a plan to redesign the state’s grid called the performance credit mechanism, or PCM.
Several state senators questioned whether these tax breaks have created an uneven playing field in the energy market and whether the state should take action to even things out.
In another hearing, senators pointed to the amount of renewable subsidies as the reason that the grid’s reliability needs work in the first place. The intermittent nature of renewables was highlighted as why those generators contribute to grid unreliability. The Austin Journal reported that intermittent sources of energy will account for “99% of all new generation.”
That’s dangerous, critics of the grid said, and why Hall placed this bill in the hopper, he told Lone Star Standard.
“Federal subsidies have shifted the market so much that renewable generators can sell their product at a negative cost,” he said. “This is problematic because renewables are not reliable and are often not available at peak times. Because of the distortion the subsidies have on the market, there is little to no incentive for the construction of new dispatchable generation.”
Hall said renewable energy and renewable energy generators do have a place in the Texas grid, but they are not being properly handled.
“Renewables have a place in the market as they provide low-cost sources of energy when the sun is shining and the wind is blowing,” he said. “Unfortunately, federal subsidies have skewed the market, and because of this, more renewable generation has been built than the market can sustain. It has negatively impacted the grid by making it difficult for dispatchable generation to compete without comparable subsidies."
SB 1752 is a step in the right direction, Hall said. It’s a step that needs to be taken as soon as possible.
“At the end of the day, Texas needs new dispatchable generation, and we need it yesterday,” he said. “We need to level the playing field and incentivize the construction of new natural gas, coal and nuclear plants. These generation sources provide reliable, dispatchable generation, unlike renewable generators.”
Hall said there are additional policy measures the legislature should take to correct the grid’s problems that have been on prominent display in the last two years.
“Senate Bill 1752 is a good start, and will provide needed incentives for the construction of new dispatchable generation, but I would like to see subsidies for renewables ended for good, and any future subsidy applied equally to all sources of generation,” Hall said. “It will take a while for the market to regulate. In the meantime, additional incentives will need to be made for dispatchable generators.”
He said SB 1752 is not linked to efforts to resurrect Chapter 313 and should not be linked to PCM and Chapter 313.
Longtime energy analyst Bill Peacock wrote a guest essay for Houston Daily in May 2022, saying Chapter 313, designed to promote economic development in the state, has been abused by renewable energy companies who turn a profit thanks to the program’s tax abatements.
It was not renewed by the legislature in 2021, but there are advocates trying to bring it back from the dead this session. Gov. Greg Abbott has said he would like to see Chapter 313 revived.
“Senate Bill 1752 doesn’t address Chapter 313 tax abatements,” Hall said. “As for resurrection [of] Chapter 313, I cannot speculate. Questions regarding the PCM would be better addressed to the PUC.”
Hall, 81, is a retired Air Force captain in his third term in the state Senate. He is chairman of the Senate Committee on Administration and a voting member on the Senate Committee on Finance, the Health and Human Services Committee, Local Government and Veteran Affairs.
