Sunny Side-Up: The Lonestar Shift From Pump Jacks to Solar Stacks

Over the last decade, California has been the leading state in solar power generation in the U.S. (SEIA, 2024). Between 2014 and 2023, the state witnessed a solar power capacity growth of 27,864 Megawatts, representing 23% of the total national solar capacity growth (Climate Matters, 2024). Decentralized commercial and residential solar power generation was particularly taking the lead. By 2023, “electricity generated from small-scale solar operations accounted for around 41% of the state's total solar-generated electricity” (Climate Matters, 2024). However, in the last five years, Texas has emerged as the second-largest state for solar power generation in the U.S., following closely behind California. By 2024, the state accounted for 7.3% of the national solar capacity, with 49 active solar locations.

From 2019 to 2024, Texas experienced an annual growth rate of 26.7% in solar power establishments, and the industry’s revenue grew by a remarkable 22.7%, reaching $2.2 billion. Employment in the sector followed suit, growing by 24%, now providing jobs for over 530 workers. Wages also saw a significant increase of 24.8%, resulting in a total payout of $102.3 million.

But what’s driving this rapid growth and change?

Image source: https://www.texasobserver.org/solar-texas/

The coronavirus pandemic marked a pivotal moment for the energy sector in Texas, accelerating a transition from fossil fuels to renewable sources, particularly solar energy. The economic disruption caused by COVID-19, coupled with technological advances, policy incentives, and shifting corporate attitudes, pushed solar power to the forefront of Texas's energy mix. Authors of an article in the Texas Observer note that former cowboy Garland Richards’ solar farm in West Central Texas is a striking example of this shift, representing both the economic and environmental imperatives driving the change (Nusser, 2020).

In April 2020, oil prices across the US dropped into the negatives on the market. The collapse exacerbated an already strained oil and gas industry, making solar power an attractive alternative. Richards, who leased 1,300 acres of his ranch to construct a solar farm, epitomized the local response to this transition. His farm, with 709,000 solar panels generating 200 megawatts of electricity, powers about 40,000 homes. As Richards put it, “When oil is negative $47 a barrel, solar looks pretty good” (Nusser, 2020).

Shortly after, Texas, long known for its oil dominance, witnessed rapid solar development. The state’s free-market approach to electricity production, powered by technological advancement, had by then reduced solar farm development costs by 40% from 2015 to 2020. This was reflected in Texas’s growing solar capacity and swift transformation capabilities that followed in the post-pandemic recovery. Moreover, these developments aligned with broader trends in corporate sustainability. Companies such as ExxonMobil, Facebook, and Dow Chemical made significant investments in solar energy. In 2018, ExxonMobil agreed to power its oil extraction operations in the Permian Basin with solar and wind, marking a historic renewable energy deal. Facebook and Bank of America also committed to large-scale solar projects in West Texas, signaling a growing corporate embrace of renewables.

Solar technology costs decreased dramatically, from a high of $7.14 per watt in 2010 to just $2.50 per watt in 2021. This cost reduction is a major driver of the increasing adoption of solar power across the U.S. Yet looking ahead, Texas’ solar industry is expected to grow at an annual rate of 17% over the next five years, doubling its revenue to $4.9 billion by 2029. The number of solar establishments is forecast to increase by 21.7%, expanding to 131 locations. The workforce is projected to nearly triple, employing 1,263 workers with wages totalling $240 million. Nationally, solar capacity is expected to double in the next five years, placing Texas at the forefront of this energy revolution.

Interestingly, trade protectionism and shifts in American manufacturing policy are largely responsible for the forecasted manufacturing and technology adoption behaviours.

According to the International Energy Agency, China currently controls over 80% of all solar panel manufacturing stages – from ingots to microchips and modules. This reliance on international suppliers makes the solar industry susceptible to trade tensions and supply chain disruptions. However, recent policies, such as the Inflation Reduction Act, the CHIPS and Science Act, and the Infrastructure Investment and Jobs Act, provided financial incentives for solar power adoption by pairing them with strategic solar import tariffs. While it is obvious that tariffs on solar panels and semiconductors increase import costs, affecting immediate and short-term industry expenses, the new policies aimed to boost domestic production and reduce long-run costs by increasing solar manufacturing capacity at home.

The implemented Inflation Reduction Act and the CHIPS and Science Act provide tax credits for clean energy adoption, including a 30% residential clean energy credit for solar panel electrical work, batteries, permits, and labour until 2032, and a 10% credit for purchasing American-made hardware. In addition, the Home Energy Rebates Program offers up to $8,000 in rebates for energy-efficient home upgrades, including solar panels, to incentivize residential adoption. For Texas in particular, the Infrastructure Investment and Jobs Act is crucial. It allocates significant funds to bolster electrical grid resiliency and energy efficiency, devasted by the growing risks of climate change.

The IIJA includes funding for Grid Resilience: $5 billion to reduce the impact of extreme weather, wildfires, and natural disasters on the electric grid; Rural Transmission: $1 billion for transmission upgrades, GHG emission reductions, microgrid development, and energy efficiency in rural areas; Transmission Facilitation: $2.5 billion to construct and upgrade power transmission lines; and Energy Storage: $355 million dedicated to energy storage solutions.

All together, the solar import tariffs and the national green energy and manufacturing investment policies have spun up the Lonestar solar revolution.

Image source: https://www.reuters.com/world/us/biden-vetoes-legislation-block-solar-panel-tariffs-waivers-2023-05-16/

For Texas, the transition to solar energy isn't just about keeping up with national trends, it’s about ensuring a stable and resilient energy future. The state's reliance on oil and gas made it vulnerable to the volatility of those markets, affecting energy prices and economic stability. With its decreasing costs and abundant natural resource base, solar power offers a predictable and sustainable energy source.

Above all, Texas’ pivot toward solar energy marks a significant shift for the broader U.S. energy landscape. Texas is the largest national energy consumer, driven by its fast-growing population, expanding industries, and booming manufacturing sector (ranking 2nd next after California). By harnessing its abundant sunlight (Texas averages 5 hours of peak sunlight per day), the state is tapping into a renewable resource that has the potential to meet the rising energy demands of all its industries and residents (Thompson, 2021).

Moreover, as climate anomalies like heatwaves, floods, and wildfires strain the U.S. power grid, the reliability of traditional energy sources has come into question. With its distributed generation capabilities, Solar power offers a way to increase grid resilience and reduce the risks of blackouts, especially in regions prone to extreme weather events like Texas.

Despite its growth, the solar industry in Texas and the U.S. faces several challenges. The U.S. still relies heavily on imported solar panels, particularly from Southeast and East Asia, and notably, the solar industry competes with traditional energy sources like oil and gas which remain cheaper and more accessible in many parts of the U.S. However, innovations like solar-enhanced oil recovery methods, which help reduce carbon emissions while maintaining oil production, demonstrate that solar technology can complement, rather than compete with traditional energy sectors.

Conclusion

As Texas continues its remarkable growth in solar energy, the state's transition is more than just a response to short-term economic pressures or policy incentives—it's a long-term strategy for energy resilience and sustainability. With declining costs, vast natural resources, and innovative federal policies, Texas is positioning itself as a leader in the solar revolution.

This shift not only ensures a stable future for its industries and communities but also redefines the energy landscape of the entire nation. The Lone Star State is no longer solely defined by its oil wells and gas fields—it's becoming a solar powerhouse, leading the charge toward a cleaner, more sustainable energy future. Texas is proving that solar isn’t just the energy of the future; it’s the energy of today.

Despite it all, many questions remain. Will Texas, a state long defined by its oil and gas heritage, fully embrace solar energy as its future? Can the U.S. and Texas maintain their momentum in the renewable energy race and overcome the challenges that come with it? And finally, what role will solar power play in reshaping the American energy landscape?...

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