Texas leads nation in wind energy production, Port of Beaumont plays vital role

The U.S. wind energy industry continues to grow at a surprising rate, with Texas leading the way and the Port of Beaumont playing a vital role.

According to Forbes, Texas produced about five times the amount of wind power as did California in 2017, while it generated about 29 percent more non-hydroelectric renewable power, such as solar, biomass and geothermal than California while California’s retail electric rates were 89 percent higher than Texas’ in 2017.

According to the American Wind Energy Association (AWEA), “Texas is the undisputed leader in wind energy, with approximately three times more wind generating capacity than any other state and nearly a quarter of American wind jobs. The state continues to expand wind power, becoming the first state to pass 20,000 megawatts (MW) of wind capacity (in 2016), which is roughly one-fourth of national capacity. More wind is on the way in Texas. Even with the 1,790 MW installed in the fourth quarter of 2016, there is still 5,401 MW under construction and another 1,288 MW in advanced development.”

“Wind power isn’t a red or blue industry; it’s red, white and blue,” said Tom Kiernan, AWEA CEO. “Low-cost, homegrown wind energy is something we can all agree on. States like Texas and Iowa are leading the way in terms of wind turbines and wind jobs.”

And the Port of Beaumont, as an importer of wind turbines and associated equipment, is an important partner in the state’s ability to continue to lead the nation in wind energy.

“Wind energy business has been an integral part of our business plan over the years,” said Ernest Bezdek, Port of Beaumont director of trade development. “The port and associated businesses have benefited greatly from the development of wind energy in not only Texas but also California, Iowa, Kansas, Oklahoma and other sites throughout North America.”

Bezdek said the port’s first contract was signed in 2006 with the world’s largest producer of wind energy equipment, Vestas Wind, headquartered in Aarhus, Denmark.

“Vestas has offices around the world and has installed wind energy projects in 75 countries across the globe,” he said. “They have been very reliable partners for the port and Southeast Texas. The port has also handled components for other wind energy manufacturers over the years.

“When we first handled wind energy equipment in 2006, we thought the business might last, at most, three years. Here we are 12 years later and still going strong with business booked through 2019. Over the past 12 years, they have been reliant on the production tax credit (PTC), which has been renewed annually. The PTC enables energy producers to install and develop wind farms with federal renewable electricity production tax credit (PTC), which is an inflation-adjusted per-kilowatt-hour (kWh) tax credit for electricity generated by qualified energy resources and sold by the taxpayer to producers during the taxable year. As of today, the PTC has been extended through 2019.”

Bezdek said wind turbines are mostly shipped by rail; however, about 25 percent of the port’s import wind business also moves via truck. The wind equipment is brought in mostly by chartered ships from Denmark, China, Spain, India and Brazil. Some wind energy equipment is now manufactured in the U.S. as well; and the port occasionally exports equipment.

 “We move wind energy equipment to final destinations in West Texas and across North America,” Bezdek said. “Most recently we are moving equipment to the Palo Alto Wind Energy Project in Palo Alto County, Iowa (northwest of Des Moines). We are also moving equipment to the New Frontier Wind Project in McHenry County, North Dakota (east of Minot).”

Wind energy business is certainly a moving market, Bezdek explained.

“The business fluctuates year to year; however, recently it has been fairly consistent and very busy. We anticipate this business will continue for at least another five years, probably longer.”

 “A typical year will see 400 to 600 wind blades, 200-300 tower sections and about 100 nacelles and associated parts,” he added. “A typical wind unit consists of three or four tower sections, a nacelle (the generator that sits on top of the tower), the hub (which will attach the 3 blades to the nacelle) and three wind blades (which measure in length from 150 to 200 feet long each). Most of this equipment moves through the port and to the job site quickly, but on occasion the equipment will be stored at the port for several weeks or months.”

In terms of revenue for the port, the wind energy business is a major partner and contributes 10-15 percent of its revenue base, according to Bezdek, and as far as actual tonnage, wind energy products are close to 10 percent of port imports.

The port has had as many as 450 wind blades at one time.

“That is not optimum for the port due to the amount of valuable real estate that occupies; however, on occasion we are asked to assist the customer when they have delays at the job site,” Bezdek said. “Wind energy customers realize this is an issue with ports, and they strive to help us in this regard.”

Ciara Matthews, deputy communications director for the Office of the Governor, told The Business Journal that Texas has become the leader in wind power due to a number of factors.

“The first and most important reason is Texas’s regulatory efficiencies,” she said. “The majority of Texas’s electricity consumers are served by an isolated electricity grid. New generators come here because they know that they will have to work with only one, first-rate regulatory agency, which is the Public Utility Commission of Texas. Compare this to having to deal with multiple state regulatory agencies, as well as the Federal Energy Regulatory Commission, and the advantage is clear.

“The second reason is Texas’s commitment to proactive investment in infrastructure. In 2005, the Texas Legislature authorized a program to cause the construction of transmission lines to connect the wind-rich regions of West Texas to the heavily populated economic centers of central and East Texas. In just a few years, Texas built 3,600 miles of transmission lines, adding more than 18,500 megawatts of wind energy generation capacity to Texas’s grid.

“The third reason is the growth in the demand for electricity due to the overall growth of the economy of Texas. Texas has enjoyed the No. 1 spot in new and expanded facilities for six years in a row. The fact is many of wind’s largest customers, such as Facebook and Amazon, want to be in Texas.”

According to Texas economist Dr. Ray Perryman, not only does Texas have more capacity to generate electricity from wind than any other state, the state’s capacity of 22,799 megawatts is triple that of second-place Oklahoma and is larger than most countries around the world. The Lone Star State also tops the list for capacity currently under development.

“It’s no accident,” Perryman told The Business Journal. “While Texas has abundant land with the right wind speeds, much of it is located in areas with sparse populations. The key to tapping this resource was finding a way to move power from regions able to supply the right mix of land and wind to areas with large and growing populations and a demand for electricity. Smart policy decisions decades ago have been the key to the development of the Texas wind power industry.”

Perryman said as the electric power market was opened to competition in the late 1990s, legislation creating Competitive Renewable Energy Zones and setting renewable portfolio standards for power companies helped spur initial investments and encouraged development in a logical and systematic pattern.

Texas Comptroller Glen Hegar told The Business Journal, “Diversity is a huge component of the dynamic Texas economy and wind energy has been an important part of that diversification.

 “Most people know Texas is the biggest producer of oil and natural gas in the United States, but many people don’t realize that we are also the largest producer of wind power. Texas is blessed with a topography that has been very conducive to wind generation, and our ports of entry, including the Port of Beaumont, have been key to ensuring the infrastructure can get to the areas where wind production is prevalent.”

AWEA estimates that more than $42 billion has been invested in Texas wind farms.

These investments create jobs during construction and on an ongoing basis through operations and maintenance. The industry also supports business activity across a spectrum of related industries including manufacturing facilities, transportation companies, and many others, Perryman said.

Landowners receive royalties in excess of $60 million per year, according to AWEA estimates, enhancing incomes and consumer spending. Wind farms also increase the property tax base, generating additional fiscal resources for communities and schools.

Wind now provides almost 15 percent of the state’s power needs on average, with a much higher proportion at some points in time, according to statistics supplied by Perryman.

“The benefits for electric power customers include lower prices and more choices,” he said. “Because Texas’ electric power market is open to competition, if wholesale power prices fall (whether because of the supply of wind power or for other reasons such as a decline in natural gas prices), savings are passed on to customers as retail providers compete to keep and grow their customer bases. The marginal cost of wind energy is essentially zero (no fuel cost), so periods in which wind supplies all needed power (which often happens in the spring and summer) reduce average costs.”

Looking ahead, Texas is likely to continue to lead the way in wind power, with 4,395 megawatts under construction and 1,921 megawatts in advanced development, according to the AWEA.

In addition to the economic benefits of the industry itself, wind generation capacity works to reduce electric power prices for customers in the state, Perryman said.

“The environmental properties of wind are also greatly reducing the need for water for power generation as well as emissions,” he said. “The ability to supply power from renewable sources is also a competitive advantage, with some corporations in high growth and desirable sectors specifying the ability to purchase clean power as a location criterion.”

Perryman said other regions of the state are also positively affected by the wind industry.

“Manufacturing facilities are located in a number of areas across the state, and components are shipped through ports including the Port of Beaumont,” he said.

Matthews added, “the Port of Beaumont is extremely important to Texas, not only in its ability to help facilitate the production of wind power, but in its ability to facilitate growth in all sectors of the Texas economy.”

“With continued focus on the need to reduce emissions on a global scale, renewable energy sources such as wind will take on added importance,” Perryman said. “With the right mix of potential wind farm sites, transmissions lines, and a competitive framework, Texas should continue to lead the way for decades to come.”

— Photo courtesy of Port of Beaumont