After the extreme weather events of late February, Texas and its struggling power grid came to national attention. Many felt that the weaknesses revealed by freezing temperatures may be changing the story for energy—and renewable energy, especially—in the lower 48’s largest state.
This is not so, according to Peter Zeihan, author, political analyst, speaker and former resident of Texas, who states that, contrary to popular opinion, the Lone Star State is poised to see substantial growth in renewables in the coming decade.
Here’s what he had to say in a recent interview on FS Insider (see Texas Power Outage Will Accelerate Push to Renewables, Says Peter Zeihan for audio).
Why Texas Has a Bright Future
Texas has been in the headlines often lately, as new residents flee other states for economic and political reasons. Texas’ low cost-of-living, lack of a state income tax, and balmy weather continue to draw more people in.
Texas is also a bastion of energy production, both from fossil fuel sources—oil, coal and natural gas—and renewables such as wind and solar. Because of this, prior to the major power outage, electricity prices in Texas are consistently among the lowest in the country and the most steadily and readily available.
Within the United States, there is an ongoing search for cheaper and more affordable places to live, partly because of the ability to work remotely but also because Baby Boomers are settling into retirement and need to stretch their fixed incomes.
Along with the prospect of generally sunny, temperate weather, Texas continues to draw people and businesses in from around the country, Zeihan stated.
“Texas is probably going to be the state with the healthiest demography out of a country that has among the healthiest demographies in the world,” Zeihan said. “Texas is going to be the U.S. state that benefits the most from changes that are happening, both in the country and around the world, as regards to demographics and infrastructure, and the power transition, as well as the trend toward de-globalization.”
The Energy Debate and Push to Renewables
The recent historic freezing of Texas and resulting damage to its grid that left millions without power has reinvigorated focus on the intersection of climate, energy, and an aging infrastructure—specifically when it comes to the right energy mix and level of dependency on various energy sources.
Though many took this event to focus on one particular narrative—climate change, fossil fuels, or frozen wind turbines, for example—Zeihan said that Texas’ power grid failure will likely accelerate its push into renewables, but probably not for the reasons many would suspect.
For one, private insurers are likely to insist on some degree of weather-proofing or winterization of Texas’ energy infrastructure to help prevent a similar event from happening in the future. The cost of doing so will be cheaper for renewables since, in the case of wind turbines, this only requires a heating element and/or the application of antifreeze when necessary, where legacy fossil fuel systems require a much larger investment.
Furthermore, electricity generated through wind and solar is finally becoming cost effective, especially for a state like Texas with abundant amounts of wind and sunshine.
Wind turbines are increasing in size, up to 600 feet vertically, and as they become taller, they tap into stronger, more reliable and consistent wind patterns.
Solar power is not quite at the same point of widespread acceptance, Zeihan added, though it increasingly makes sense. We could very well see local power generation in the form of rooftop solar supplement the state’s energy needs in the near future.
“Texas utilities are now looking at wind power as a reliable source of power,” Zeihan said. “It’s a cost question. All of a sudden, wind is looking like the smart choice for a lot of players. Does that mean everyone’s going to go 100 percent wind? Of course not. That would be asinine … but if we fast forward 10 years, I have no doubt that Texas is going to be the No. 1 green state when it comes to generation. It already is when it comes to wind power.”
Are you investing around the growing push to renewable energy and the rebuilding of America’s infrastructure? If not, you may want to listen to our full-length interview with Peter Zeihan and why the Texas Power Outage Will Accelerate the Push to Renewables. If you’re not already a subscriber to our FS Insider podcast where we interview book authors, strategists and industry experts from across the globe 3 days/week on all things economics, finance and markets…