For most people, when they think about the state of Texas two things come immediately to mind…. Oil & Gas and Cowboys. And yes, indeed, Texas is the largest producer of oil in the United States. The state produces 41% of the total production of the country1, followed by North Dakota with 12% and New Mexico with 7%. And the expectation is that production will continue to grow in the coming years.
Given this, it will come as a surprise that Texas is the #2 state in the USA in the development of renewable energy only behind California. Surprised? Well, actually, Texas is also the #1 state for the number of wind energy installed GWs and #3 for the amount of solar photovoltaic farms. In 2021, the American Clean Power Association reported that Texas installed 7,300 MWs of new wind, solar, and energy storage versus just 2,700 MWs in California2.
State of Texas’ 2050 Vision for the Energy Transition – 2021 3
The US Energy Information Agency, otherwise known as the EIA, released its Short Term Energy Outlook in early December 2022. Among the overall positive news about the state of renewable energy projects in the US, the real shocker in the report actually concerned Texas. It predicted that wind and solar farms had provided 37% of the electricity generated in Texas, up from 30% in the previous year. At the same time, natural gas ended up generating 36% of the State’s power demand. So, for the first time in history, renewables had outpaced gas in the Lone Star state.
So, how can this be explained? Particularly in light of the professed partiality that a number of Texan Politicians have for Oil & Gas? In one simple explanation, mostly it comes down to Economics. Dr Rhodes, an energy expert from the University of Texas at Austin explains that companies have been adding massive amounts of renewable energy because it “makes financial sense” and not for strictly environmental reasons. Texas, after all, has a steady stream of strong winds and bright solar irradiance year-round. Surely this will sound familiar to a country like Argentina?
A set of private companies have found a fertile medium for investing in renewable power farms in the State due to the stable financial and legal conditions provided by its massive economy and the lower costs that scale is bringing forth. A Texan economy that thrived and continues to do so thanks to the funds that come from exporting their oil and gas not only to other states of the union but also overseas. As examples of successful companies in the space, EDP and Pattern Energy manage more than one hundred wind farms which are controlled from operational centers in Houston. But also keep in line peak-demand thermal assets based on natural gas, which can be nimble, run less often with higher margins and be used as redundant power sources to balance the problems of intermittency, redundancy and connectivity presented by renewables3.
It is certainly interesting to observe how Natural Gas Power Plants and Renewable Power are able to coexist and even cover each other backs in an isolated Texan Grid such as the one ran by ERCOT (the Texas Power Regulatory Organization). Those of us who live in Texas learned about ERCOT and the isolated nature of Texas’ power grid back in February of 2021 when winter storm Uri pummeled the state with sub-freezing temperatures for a full five days. Many in the state suffered massive blackouts, particularly given that renewables are not particularly productive in winter weather and sub-zero conditions as well as a lack of winterization for existing, older coal-based power plants. The situation could have turned catastrophic, scenario that was avoided thanks to the natural gas-based backup power stations which came to the rescue together with a growing amount of battery farms that have been sprouting across the state4.
In 2022, out of a statewide peak demand of 80 GW, approximately 60 GW (at peak… not accounting for intermittency) can already be provided from local solar and wind farms. And there is an estimated 21 GW of already installed Battery Parks that charge up at times when energy demand is low and renewable energy production is high. So, in a sense, they also act as a short-term peak shaver for renewable energy. Now, since these batteries tend to drain in a few hours, there is still need in the future for redundant systems such as those provided by Natural Gas and, potentially, Green Hydrogen in a not-so-distant future (but that’s another story for a future article) 4.
Howdy Argentina, y’all comin’ along?
Argentina, just like Texas, has access to multiple energy sources and evermore. From high solar irradiance at upwards of 4 kWh/kWp, one of the best in the World as it is among the top 20 countries5, to both high quality onshore and offshore wind resources as well as hydro and geothermal, the country is sitting on ample renewable watts ready for development… not only to meet its own internal demand for energy security but as a source of export to bordering countries as well.
Furthermore, Argentina has ample hydrocarbon resources both of the conventional as well as the unconventional types. It possesses the 4th largest shale oil and the 2nd largest shale gas reserves in the globe. The country has still a lot of exploratory potential for its upstream, particularly offshore, given the geological parallels with West Africa6. It also has a unique current opportunity, due to the global macroeconomic situation, for developing its downstream in such a way that it may become a net exporter of not only energy (LNG, Green H2, Oil) but also petrochemicals and fertilizers for a World that is avid of such commodities.
Very much like in the Lone Star example, the country has an opportunity to finance the growth of its energy transition projects by tapping on these oil & gas related exports together with its capacity to also export food products and protein as well as its ample fresh-water resources. It also is part of the Lithium triangle, with all that this implies. And in its geology, it harbors the potential for finding many of the required Energy Transition Metals such as Copper, Cobalt, Nickel and rare earths as well7.
The fleeting objective of attaining Argentina’s energy security is completely plausible, were its polity to make a concerted decision to follow a multi-year, non-partisan strategic plan fashioned after the examples of Norway’s or even its neighbor’s, Chile, and choose the path of political correctness and proper management of a long term national grand strategy.
If only it were to follow in a Texas Two-step…
References
- S. Crude Oil Production by State 2021 – Statista
- American Clean Power Association – Cleanpower 2022 Exhibition Report (Oct 2022)
- Inside Clean Energy: Texas is the Country’s Clean Energy Leader, almost in Spite of itself. – Dan Gearino – Inside Climate News (Feb 2022)
- Leveraging Houston’s Financial and Human Capital for Sustainable Energy Transitions – Center for Energy Studies – Baker institute, Rice University (April 2022)
- Suri, Marcel et al.; Global Photovoltaic Power Potential by Country (English). Energy Sector Management Assistance Program (ESMAP) Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/466331592817725242/Global-Photovoltaic-Power-Potential-by-Country
- Argentina – Country Commercial Guide (Energy – Oil & Gas); International Trade Administration (August 2022) https://www.trade.gov/country-commercial-guides/argentina-energy-oil-gas
- Argentina aiming to become key mineral supplier for the energy transition – Bnamericas (Sept 2022)
Guillermo J Hitters
Mr. Hitters is the President and Founder of Luxmath Consulting, an organization that bridges the North American and Latin American’s energy ecosystems since 2016. A member of the Board of Directors at the Instituto Argentino del Petroleo y Gas de Houston (IAPGH) since 2013, he held the presidency in the 2015/16 period.
Mr. Hitters has a Chemical Engineering degree from the Instituto Tecnologico de Buenos Aires, a Master of Business Administration from the University of Texas at Austin and a Master of Arts in Diplomacy and International Relations from the University of London. Besides his roles at Luxmath and IAPGH, he is co-founder of Fysikes Biosolutions, company which helps bring carbon-capture technologies to market.
In the United States, Guillermo is also known as William, and in the Texan Oil Patch under his nickname: GJ.
The views and opinions expressed in this article are those of the author and do not necessarily represent those of the IAPG Houston or its members.