Amazon Comes To Texas For Electricity

Texas Wind EnergyAmazon.com has become the latest big company to turn to Texas serve their green energy needs.  They recently announced they will be building a huge wind farm in the state – their largest renewable energy project to date.  The 253 megawatt wind farm will be located in the West Texas county of Scurry.  Amazon has committed to buying 90% of the facilities output of electricity.  It will be capable of producing up to 1 million megawatt hours of electricity per year when it goes on line late next year.

Amazon’s Web Service cloud data centers (AWS) are large consumers of electricity.  Amazon has committed to a goal of 100% renewable energy.  The new wind farm in Texas will bring the company’s renewable energy portfolio up to 2.6 million MWh annually.  Amazon estimates that 40% of its AWS infrastructure will be powered by renewable energy by the end of the year.

Amazon is far from the only large company to go big on Texas electricity. Johnson & Johnson recently agreed to purchase half of the output of a 200 megawatt wind project being developed by EON SE in the Texas panhandle.  In 2013 Microsoft signed a 20 year deal to purchase all of the output of a 110 megawatt wind farm near Fort Worth developed by RES America.  Texas is also home to the largest federally owned wind farm which was built in 2014 to power the Pantex nuclear weapons facility.

Texas has paved the way for these large projects by investing billions of dollars in infrastructure to support what is by far the country’s largest installed wind capacity.   Texas has an independent electric grid and is the largest deregulated electricity market in the country.


Infrastructure Upgrades Mean Texas No Longer Wasting Wind Power

According to a report by the Energy Information Administration, curtailments of wind generated electricity in Texas have dropped steadily and substantially since 2011 thanks mostly to the state’s completion of 3,500 miles of transmission lines as part of the Competitive Renewable Energy Zones program.  A curtailment refers to an event where a power plant is asked to slow or stop feeding electricity to the grid.  This happens when the supply of electricity greatly outweighs the current demand for electricity.  When this happens electricity production has to be reduced (curtailed) in order to keep an oversupply of power from causing a disruption of the power grid.

Because wholesale electricity prices in Texas are allowed to fluctuate based on real-time market demand, prices for wind generated electricity have in the past sometimes gone negative.  This creates the odd circumstance where wind power producers actually pay market participants to accept their electricity.  This is only really possible in the world of wind power because federal production credits pay wind producers for every kilowatt of power they produce and sell to the grid; even if they are selling the power for a negative price.  Instances of negative pricing have also dropped substantially since the CREZ project was completed.

Texas experienced a boom in wind capacity from 2006-2009 resulting in the production of over 7,000 megawatts of wind capacity.  Since most of these wind turbines were built in West Texas and most of the state’s population is in the eastern part of the state, Texas experienced what is known as transmission congestion.  There weren’t enough large power lines and transmission equipment to get the power from the western part of the state to where it was needed in places like Dallas / Fort Worth, Waco, and Austin.

In an effort to address this imbalance between the available supply in the west and the demand in the east, the Texas Public Utility Commission in 2008 created a plan which established 5 zones where there was a lot of wind power in place or the potential for a lot of wind power.  These were called Competitive Renewable Energy Zones.  They then authorized a large number of projects to build massive new power lines to carry this electricity to the state’s businesses and homes.

The projects completed in 2013 with a total cost of around $7 billion.  Now that the Texas grid has the capacity to effectively move West Texas wind power across the state, curtailments of wind power have been substantially reduced, and occurrences of negative pricing have all but disappeared.  For 2013 wind generation in Texas was up 13%.