San Antonio Renewable Energy – Texas winds farm along US 377 at sunset. Credit: Edward A. Ornelas for The San Antonio Report
Texas is known for heavily promoting the oil and gas industry, but it is also the country’s No. 2 producer of renewable energy behind California. In fact, by 2021 more than a quarter of all wind energy produced in the United States will be generated in Texas.
The project benefits from a lucrative state tax incentive program called Section 313. The incentive program expires on December 31, 2022, and it is fast to apply for wind and solar energy projects to receive incentives before the deadline offer a rare window. corporate identity
By reviewing property applications and documents, we can track whether much of the country’s renewable energy was built and actually owned, when and how those properties changed hands, and by whom. benefit from tax incentives.
The results will surprise you. Most of the solar and wind projects in Texas are not owned by companies that focus on renewable energy; they are owned by energy companies or utilities known for fossil fuels, including some that have opposed renewable energy and climate policies in other states. and country
The policy implications of these findings are complex. While these subsidies may induce some power companies to reduce their greenhouse gas emissions, they allow power companies to continue to invest from existing fossil fuel assets while they taking advantage of grants.
Section 313 limits the amount that a company must pay in property taxes for schools if the company builds infrastructure and agrees to create a project. The Texas Legislature passed a law in 2001 when several large companies, including Intel and Boeing, considered Texas as an investment location.
Businesses using this system can save billions of dollars in local property taxes. However, studies have shown high costs for the project and low requirements for companies. The state’s school funding system is also suffering.
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This program is not renewable, but companies that apply for incentives by August 1, 2022 can grandfather the investment of ten years of tax benefits. This leads to many applications, including wind and solar projects.
We analyzed 191 wind and solar project applications submitted for 2022. If built, these projects would nearly double the number of renewable energy jobs in Texas.
It is difficult to track down the owners of renewable energy projects in the US, as most are structured as limited liability companies or LLCs. However, the Texas incentive application requires not only information about the owner, but also a signature from the individual representative of the owner. It provides an overview of the potential impact of grants and who benefits.
We found that more than a third – 69 of the 191 proposed projects – are owned by renewable energy companies such as Denmark’s Ørsted and Canadian Solar’s Recurrent Energy.
More than half of the proposals -101- submitted by energy companies are known for oil and gas or utilities with fossil fuel assets. These include the renewable energy subsidiaries of oil majors such as Total and BP and utility owners EDF, AES and Engie, all of which are major global players.
Some of the project materials come from investment groups such as DeShaw Group, Cardinal Investment Group and Horus Capital. Apex Clean Energy, the renewable energy subsidiary of investment leader Ares Management, is often featured in the applications.
The proposed project shows the image of the founder of renewable energy projects, but what happens after the project is built?
To investigate, we will also look at all renewable energy projects participating in the Section 313 incentive program in 2020 and 2021.
Surprisingly, almost half of the projects built in 2020 or 2021 have changed hands by 2022. Some of these are due to corporate acquisitions. There are many other projects for sale.
This changes the composition of the owner. Although renewable energy companies own about half of the projects in the utility sector, by 2022, two-thirds of those projects will be owned by utilities and power companies with fuel assets. fossil.
The original developer may take advantage in the first year of the tax year, but the new owner stands to receive most of the remaining years of the ten-year property tax incentive.
The most common sales model is a renewable energy developer selling the project to a power or utility company. For example, Duke Energy bought a solar project originally owned by Recurrent Energy, and Alpin Sun sold a solar project to BP.
We found that ownership by self-described “business developers” and other investors before 2022 is rare. Profitable and comprehensive incentive programs can create higher demand for gold, including from a few companies with limited experience in renewable energy.
Many of the owners who benefit from these subsidies are major industries with high carbon emissions and a history of anti-climate policies.
For example, a company that has renewable energy projects funded under Section 313 from 2020 to 2022 is NextEra. NextEra is also the parent company of Florida Power and Light, a utility company that has campaigned against solar in Florida and sued to block hydroelectric imports in Massachusetts. But in Texas, NextEra is lobbying to continue Section 313 incentives.
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Other major energy companies on the list of owners include France’s Total Energy, BP, Duke Energy and Igba, which owns Shell.
Environmentalists have advocated for federal and state subsidies for renewable energy as a way to combat climate change, including in climate- and inflation-based bills currently in Congress.
However, as our data analysis shows, homeowners who benefit from renewable energy incentives may in some cases be fossil fuel companies opposing the green energy transition. The results of the 2021 study, using data released by energy companies during their earnings calls, show that energy companies’ investment in renewable energy projects is often a diversification process, not a replacement. for fossil fuels.
Our analysis is based on one system in Texas, but given the size of the Texas renewable energy sector and the industries involved, it can provide insight into broader renewable energy policy.
The key to any grant program is to clearly state goals and track success in achieving them. If the goal is to reduce greenhouse gas emissions, it means looking at who benefits and determining whether subsidies are driving the transition away from fossil fuels.
Nathan Jensen (2002, Yale Ph.D.) is a professor in the Department of Government at the University of Texas-Austin. More from Nathan Jensen
Isabella Steinhauer is a Candidate of Public Affairs and graduate research assistant at the University of Texas. More by Isabella Steinhaue As solar power becomes more common worldwide, millions of acres will be covered with the many panels needed to generate electricity. While some worry about losing valuable farmland, others see an opportunity. (November 4)
A California power company plans to invest $1.15 billion in Caldwell County over nine years to build and maintain two plants near Kyle and San Marcos that will combine solar generation and battery storage.
Chem-Energy Corp. It will hire at least 400 full-time employees in the first year of business operations, with an average annual salary of $53,200, according to a tax incentive agreement approved by Caldwell County.
Economic development officials have heralded the deal along Interstate 35, a multi-region stretch that stretches south from Austin to San Antonio — called the Texas Innovation Corridor — as the largest region by dollar value in its history. .
“This is a seismic development for our community that will create some new opportunities in our community,” Caldwell County Judge Hoppy Haden said in a written statement.
Under the county’s incentive agreement, Chem-Energy will receive up to $27.2 million in property taxes over nine years. Even with the compensation, however, officials said the two projects are expected to increase Caldwell County’s net income over the next decade by a total of $22.4 million.
The first plant will be built on 3,518 acres at Caldwell Valley Ranch near Uhland, east of Kyle, with construction beginning next spring and the facility expected to be operational in 2023, according to Chem-Energy . The second plant will be located near Martindale, east of San Marcos, and construction is expected to begin after the first plant is completed.
Caldwell County is south of Travis County and east of Hays County, with Lockhart County being the county seat. It extends from the northern point around Mustang Ridge to the southern part of Luling. The population of Caldwell County is estimated to be 45,883 in 2020, and the median household income is $54,152, according to data from the U.S. Census Bureau.
Executives at Chem-Energy — which sells petroleum products, refines crude oil and develops energy projects — say the company has, too.
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