SEEING GREEN
CITY WILL PLAY KEY ROLE IN ENERGY EVOLUTION
Houston has a long history of energy innovation, from Howard Hughes Sr.’s rock drill bit to offshore drilling to the shale revolution.
The Houston Oilers abandoned the city 20 years ago, a move that was keenly felt and deeply lamented by the football team’s fans. But looking back, the departure may have represented an omen of the changes coming to the Houston’s energy industry.
Since the Oilers left for Tennessee, Houston has become a more diversified energy capital, a center not only of oil and gas development, but increasingly green energy, such as wind and solar. Companies like Pattern Energy, an independent power company, and even oil giant BP already run wind farms from operations centers in downtown Houston. SolarCity, the California company that sells and leases rooftop solar systems, is expanding into the region.
The Shell Technology Center in Houston is developing the latest biofuels and cleaner-burning motor oils. Exxon Mobil’s Baytown Technology & Engineering Complex creates thinner, stronger and more environmentally friendly plastics.
“Whatever the dominant themes are in energy, Houston will play a key role,” said Declan Flanagan, chief executive of Lincoln Clean Energy, a Chicago company building a 253-megawatt wind farm for Amazon.com in West Texas. “There’s a lot of renewable companies in Houston; it’s not just oil and gas.”
While most analysts expect oil and gas to remain major components of the energy mix, increasing concerns about climate change are driving a quickening adoption of cleaner and renewable energy sources. The U.S. Energy Department’s National Renewable Energy Laboratory estimates that renewable power could provide 80 percent of the nation’s electricity by 2050 — mostly through the growth of wind and solar installations and advanced energy storage systems.
In just over a decade, Texas has become one of the nation’s largest players in renewable power. It produces more wind energy than any other state, accounting for one-fourth of all wind power in the United States.
By next year, the state’s wind turbines will have the capacity to generate 20,000 megawatts of electricity, up from less than 2,000 megawatts a decade ago. (One megawatt can power at least 200 homes on the hottest Texas days.)
The solar industry, meanwhile, is beginning to take off with rooftop solar in Houston and small solar installations in nearby communities. Utility-scale solar farms are under development in West Texas and the Panhandle. By 2030, solar generation could reach about 14,000 megawatts of power — enough to power about 2.8 million homes — according to the state’s grid operator, the Electric Reliability Council of Texas.
“The pace of change is accelerating fast,” said Warren Lasher, ERCOT’s director of system planning.“We have a highly competitive market in Texas, and it’s a place where new technologies can come and compete.”
In 50 years, someone flying over Houston might see solar panels atop every home, electric cars zipping along freeways, and wall-mounted battery storage systems storing power in every garage. Buildings may be “smart,” computerized to control window, shades and thermostats to optimize energy efficiency and savings, and connected to each other via the internet to create a “smart city.”
The buildings would communicate with each other to share power, much of it from solar panels, such as when people are on vacation or offices are closed for the weekend, said Driss Benhaddou, associate professor at the University of Houston’s College of Technology.
Houston, of course, has a long history of energy innovation, from Howard Hughes Sr.’s original rock drill bit to offshore drilling to the so-called shale revolution, unleashed by the combination of hydraulic fracturing, or fracking, and horizontal drilling, the technique that cuts across shale formations to find oil and gas. Houston historically has been an early adopter of new methods and trends.
“At each turn — technology or market design — Texas makes the transition,” said Flanagan, the Lincoln Clean Energy chief executive. “Whatever the dominant themes are in energy, Houston will pay a key role.”
Oil demand is expected to keep growing over the next several decades, but the rate of annual growth will shrink from 2.5 percent a year to closer to 1.5 percent, said Mark Finley, BP’s general manager for global energy markets. On the other hand, renewables and natural gas will keep gaining ground. BP projects that renewables share of the energy mix will triple over the next 20 years, to about 9 percent from 3 percent.
“That’s a faster growth rate than any form of energy has ever experienced,” Finley said.
Among the biggest questions facing the industry is how fast electric vehicles will move from novelties to the prevalent means of transport, and when society will complete the “electrification of transportation,” Finley said. Almost half of all U.S. crude oil is used to produce gasoline.
Gasoline became the fuel of choice in large part because the early development of the automobile coincided with the first Texas oil boom in the beginning of the 20th century. The availability of cheap fuel allowed the internal combustion engine to beat out the competing technologies of the time, steam and electric motors.
As electric cars make a comeback, they will increasingly be powered from electricity generated by renewables and natural gas, analysts said. But it will likely take a few more decades for electric vehicles to dominate the market.
Bobby Tudor, chief executive of the downtown energy investment banking firm Tudor, Pickering, Holt & Co., said most energy sources — both fossil fuels and renewables — have bright futures because global demand for energy will grow. And the reality is developing countries will struggle to adopt cleaner but, in many cases, more expensive green power, he said.
“We will still need oil for an awfully long time,” Tudor said. “I feel very good about Houston’s position, but it will have to continue to adapt.”