Solar power push faces challenges in Texas
- 28 December 2011
- From the section Business
Welcome to Texas, the lone star state. People here use more energy than anywhere else in the United States.
In fact, since oil started flowing here more than a century ago, energy has been at the very heart of the state's economy.
And oil remains key to Texas energy production; not only is it the biggest oil-producing state in the US, but one of the two leading global benchmarks in global oil pricing carries its name - West Texas Intermediate.
But while oil and Texas may be inseparable in the popular imagination, the state is increasingly embracing renewable energy technologies.
It is already the largest generator of wind power in the US, a country which itself generates more wind power than any other.
The Panhandle, the Gulf Coast, and the Trans-Pecos regions of Texas have some of the nation's greatest wind-power potential, and plans for substantial new capacity are under way.
On top of this, the state has some of the highest solar power potential in the US, though this is only now being developed.
Three miles from downtown Austin, Texas, lies a small community that's at the cutting edge of the future of energy.
At first glance, this looks like any other American neighbourhood, but it's actually a remarkable living experiment that could have big implications for the future of energy use everywhere, not just in the US.
Homes here have some of the highest densities of solar panels in the US, and as result, some of the lowest energy bills. In fact, some people pay nothing at all.
But it's not just domestic capacity that Texas has invested heavily in. A massive new solar farm is due to begin generating electricity shortly.
The Webberville solar farm has just been completed and will start generating power within weeks.
For environmentalists, then, Texas, the oil state, could in theory provide something of a blueprint for the rest of the nation - if Texans can be weaned off oil, then surely there is hope for the rest of the country?
But this vision is under serious threat, for despite the proliferation of renewable energy production in Texas, serious questions are being raised about whether clean energy investment can continue at such a pace.
The first threat is cuts in the very subsidies that sparked renewable energy production in the first place. Hoping for a boom in green energy jobs, the US government introduced grants to encourage investment in clean energy.
But the jobs were never created in quite the numbers intended.
In fact, while Chinese firms flooded the market with cheap solar panels, US firms were unable to compete, with many being forced out of business.
The biggest casualty was Solyndra, which went bankrupt in August after receiving about $500m in government loans.
The US Commerce Department is investigating claims against Chinese Solar manufacturers that they "dumped solar panels on the US market below market cost.
Solarworld, which was one of the firms which brought the complaint, says US solar manufacturing jobs are at risk from cheap Chinese imports.
China has rejected the complaint. Indeed the Chinese solar industry has now asked for an investigation into US subsidies for polysilicon, which is used to make solar panels and which is exported to China in vast quantities, leading Chinese firms to complain they cannot compete with the cheap imports.
US firms representing installers have also opposed the mounting trade war. For them cheap solar panels create jobs selling and installing the panels.
Whatever the outcome, subsidies are falling and solar energy investment is no longer as attractive as it once was.
There is, however, another potentially more serious threat facing the US solar industry - the underlying economics of renewable energy technologies are coming under strain.
Gas prices have been falling, due in large part to the discovery of large deposits of shale gas.
The impact of shale in the US cannot be underestimated - in the past 10 years, it has come from nowhere to supply about a quarter of the country's natural gas, a proportion that some believe could rise to 50% in the next 25 years.
As a result, investors in large renewable projects - including wind and solar farms - are now wondering if the numbers still add up. If gas is cheap, why bother investing in more expensive alternatives, even if they are cleaner?
So for some, then, the story of energy in Texas has come full circle, with oil and gas again reigning supreme. For others, the rise of renewable energy has passed the point of no return.