Why one town in oil-rich Texas is ditching fossil fuels

Georgetown, Texas, is set to become the first city in the state to rely entirely on renewable energy sources for fossil fuels – but not for the reason one would think. 

Georgetown, Texas, has many of the hallmarks of a Lone Star State community: down-home barbecue, square dancing, and a love of classic trucks. A monument honoring Confederate soldiers adorns the entrance to the courthouse.

But this suburban city is about to make a rather un-Texan leap. Georgetown is going green. By 2017, the city will become the first city in Texas – and potentially the second in the nation – to rely entirely on electricity generated by renewable energy sources.

The decision to transition away from fossil fuels may seem counterintuitive given Texas’s reputation as the home of Big Oil where practically “everybody has an oil derrick in their backyard,” as Georgetown Mayor Dale Ross puts it.

But do it they did, signing deals that should make the move complete by 2017 – and not for the reasons one might think.

Burlington, Vt., the first city in the nation to go 100 percent renewable, made the change with an eye toward curbing greenhouse gasses that contribute to climate change. That rationale may resonate in nearby Austin. However, Georgetown – and the wider Williamson County – is a starkly conservative enclave with little interest in pioneering progressive policies for environmental reasons.

When news broke of Georgetown’s decision, it was popularly billed as a pragmatic decision. The town was looking for a way to combat volatile fossil fuel prices, a surer way to control energy costs, and a means to conserve water – an ever-present concern in drought-parched Texas. The other environmental benefits of reduced emissions remain an unintended consequence.

For Georgetown, the drivers behind the switch are purely economic, says Mayor Ross.

“Make no mistake, this was a business case,” he says.           

For one thing, the deals for solar- and wind-powered electricity are actually cheaper than the previous, fossil-fuel dependent deal. But beyond that, Ross and fellow city officials are hoping the switch to renewables will draw new companies with green mandates and missions to the area.

Georgetown has just the right mix of circumstances to be able to pull this off: a regional abundance of wind and sun; a relatively unusual blend of regulated transmission lines and a deregulated energy market at the state level; and a unique position of localized market control at the city level.

The Southwest’s warm climate and wide-open spaces present ideal conditions for both wind and solar power generation. The Panhandle region and the western portion of the state bear one of the most robust solar profiles in the country. Texas is also the nation’s top wind producer, generating a full 10 percent of the state’s electricity.

The decision may have been largely economic but the move will undoubtedly bring tremendous environmental benefits as well. For one thing, solar and wind farms do not generate any greenhouse gas emissions.

However, perhaps more significant in Texas, is the reduction in water used for power generation. Fossil-fuel generation plants heat massive quantities of water to produce steam that turns turbines that generate electricity. That's in addition to extensive supplies of water used in hydraulic fracturing to tap oil and natural gas reserves.

As drought tightens its grip on large swaths of the United States, water is not necessarily the free resource it once seemed to be, notes Slate contributor Daniel Gross.

“This is one of the first times I’ve seen water cited as a reason to purchase green energy. But it makes sense,” Mr. Gross writes. “People, businesses, and governments across the country are already facing pressure to use less, to pay more for the amount they’re using, and to figure out ways to be more water-efficient.”

The city of Georgetown is in a fortuitous position to capitalize on the abundance of renewable energy because of a rather unique regulatory environment, says Fred Beach, assistant director for policy studies at the University of Texas’s Austin Energy Institute.

“What is happening in Texas cannot necessarily happen everywhere in the US,” says Dr. Beach, who is also a Georgetown resident. “One of the things I think is essential for the US utility going forward is we need more deregulation throughout the other states to enable these kinds of things.”

In a regulated market, the state sets the price for electricity, which tends to discourage competition between energy providers and leaves little room for alternative energy sources to gain a share of the market. Deregulation opens the door for competitive projects and allows consumers to make choices about where their electricity comes from.

Free market advocates point to deregulation of energy markets as an alternative to government-mandated investment in renewables. If consumers are interested in alternative energy, then they can create demand for it in an open market.

However, in Georgetown, it’s not the individual ratepayers creating the demand, it’s the city. That’s because the city operates its own utility, a local monopoly in the wider context of Texas’s deregulated marketplace. So the city essentially acts as a reseller to ratepayers. Georgetown isn’t the only municipality in Texas that has this kind of arrangement, but the situation is rare.

The deregulated marketplace likely helped to promote an environment that encouraged proliferation of renewable projects by creating a mechanism for consumer demand. However, it was a $7 billion taxpayer investment in state-regulated transmission lines that made it possible for those alternative energy projects to deliver electricity across the state to users, says Chris Foster, Georgetown’s manager of resource planning and integration.

“We have huge lines out there, we can move power from west Texas to here in a very short amount of time with very little losses, and that enables people to build generation in areas that are very far away, where the land is cheap and the resources are good, and it holds the prices down,” Mr. Foster says.

Since announcing the move, Foster has fielded calls from other communities in California and Maryland that are looking to shift their energy profile to include a larger percentage of renewable sources but have so far found costs to be prohibitive, according to Mother Jones.

Without established infrastructure and the unique confluence of market conditions, Georgetown’s model could be difficult to replicate.

The city had previously been locked into a contract with another energy provider, Jim Briggs, interim city manager and one of the chief brains behind the switch. Concern over a projected market tightening, a lack of price control, and inability to influence fuel sources led to a negotiated early release in 2012.

The decision to go with renewable energy suppliers came after extensive analysis of risk, Briggs says.

“Price is one of those elements,” he says.

Concerns over price nearly drove the city to forgo the solar portion of the package in favor of a natural gas deal, until it became clear that federal tax subsidies would mitigate the cost associated with the solar project, Foster says.

In the end, the city signed a 25-year deal with SunEdison for 150 megawatts from a new solar farm in west Texas. The city secured an additional 144 megawatts from a wind farm near Amarillo through a deal with EDF Renewable Energy.

As for the residents, many are game to give the new plan a shot, but others are wary of casting the entire town’s lot into projects that are dependent on intermittent power supplies.

The older, more conservative residents tend to make up the lobby who view the sort of change heralded by the arrival of renewables with a wary eye, says Kelly Ann Carney, co-owner of a boutique clothing store just off the city square.

“I am all for it,” says the native Californian, who moved to the area for her husband’s job. “But I am more progressive than most. The older generation are more skeptical than the younger ones, though that goes with a lot of the change that is happening here.”

Shelby Little, the lone guard at a monument that honors Confederate soldiers who died in the Civil War may typify that older guard.

“I am supportive of the initiative in theory. It is the way of the future but I would like it to be secured with some sort of back-up,” syas the retired army veteran. “I know they have done this on a small scale but I don’t know of any town this size that has gone over [to renewables] totally.”

Still the city planners involved are confident that the move is the right decision for Georgetown.

As Briggs told Mother Jones:

“We didn’t do this to save the world. We did this to get a competitive rate and reduce the risk for our consumers.”