infrastructureGood for Texas Tour: Energy Edition

Comptroller reviews Texas’ complex, diverse energy profile

February 2024 | By Trinity Elkins, Sidney Pryor and Astrid Alvarado

With its growing population and reputation as a magnet for business, Texas requires a robust energy infrastructure to meet the needs of its citizens. Texas Comptroller Glenn Hegar recognized the importance of building on the strength of the state’s infrastructure in his Good for Texas Tour: Energy Edition which highlighted key energy components that keep the state economy running.

Although there’s work to do, there’s a lot to build on. Texas is the largest oil and natural gas producer in the United States, accounting for 42 percent and 27 percent of the nation’s total, respectively. Texas has 32 petroleum refineries, more than any other state, capable of processing more than 5.9 million barrels of crude oil per day, or 32 percent of U.S. refining capacity. Texas alone produces more than 12 percent of the nation’s total electricity. Additionally, Texas has nearly 25 percent of U.S. dry natural gas reserves, meaning natural gas that has a high concentration of methane and no liquefiable hydrocarbon. In 2021, Texas liquefied natural gas terminals accounted for 50 percent of U.S. natural gas exports.

Not only is Texas a national leader in energy production, but it also leads in energy consumption. In 2021, Texas consumed more than 14 trillion Btu (British thermal units, a measurement of heat content as energy), nearly twice that of the second-leading consumer of energy, California (Exhibit 1). Texas’ industrial sector, including chemical manufacturing, natural gas extraction and petroleum refining, is the largest energy user, consuming more than half of the state’s energy. As Texas’ energy demand is higher than ever, the need to update the state’s electricity infrastructure is of utmost importance. The availability of both fossil fuels and renewable energy is crucial for maintaining the dependability of the state’s electrical grid.

Exhibit 1: Comparison of Energy Consumption in Texas and California, 1960 – 2021 (Btu in Trillions)

Exhibit 1 Data

Comparison of Energy Consumption in Texas and California, 1960-2021 (Btu in Trillions)

Year	California	Texas
1960	3,449.9	4,416.2
1961	3,609.1	4,447.9
1962	3,724.1	4,640.7
1963	3,923.7	4,894.1
1964	4,219.6	5,012.7
1965	4,385.7	5,212.2
1966	4,645.2	5,557.3
1967	4,841.0	5,879.0
1968	5,115.1	6,268.9
1969	5,356.8	6,656.3
1970	5,499.1	6,921.8
1971	5,747.7	7,233.8
1972	5,872.0	7,623.2
1973	6,047.1	8,241.4
1974	5,816.3	8,093.7
1975	6,032.8	7,511.4
1976	6,186.3	7,835.9
1977	6,361.5	8,475.8
1978	6,472.7	8,941.1
1979	6,727.6	9,307.9
1980	6,540.5	9,385.5
1981	6,332.2	9,147.4
1982	6,076.1	8,471.2
1983	6,092.3	8,406.5
1984	6,533.2	8,946.2
1985	6,601.5	9,011.8
1986	6,501.1	9,007.6
1987	6,938.5	9,240.1
1988	7,143.8	9,811.8
1989	7,420.3	10,093.7
1990	7,439.3	10,091.8
1991	7,326.3	10,094.6
1992	7,307.6	10,253.1
1993	7,138.3	10,350.9
1994	7,273.0	10,663.3
1995	7,295.6	10,811.1
1996	7,405.3	11,579.0
1997	7,528.2	11,984.5
1998	7,806.3	12,161.3
1999	7,801.8	11,788.1
2000	7,893.2	12,141.6
2001	7,918.5	11,942.6
2002	7,963.2	12,241.0
2003	7,848.3	12,028.7
2004	8,216.6	12,074.3
2005	8,151.5	11,539.4
2006	8,246.6	11,677.4
2007	8,260.4	11,779.3
2008	8,074.8	11,263.8
2009	7,770.0	10,881.9
2010	7,647.6	11,604.3
2011	7,651.4	11,828.2
2012	7,447.7	11,861.2
2013	7,562.9	12,634.1
2014	7,477.1	12,624.2
2015	7,573.8	12,756.6
2016	7,703.8	12,989.1
2017	7,828.3	13,172.6
2018	7,925.8	14,017.5
2019	7,898.7	14,240.9
2020	7,052.6	13,495.5
2021	7,387.9	14,358.7

During his latest Good for Texas Tour series, Hegar visited energy sites across Texas to explore their innovative efforts to bolster the state’s diverse energy portfolio and meet the demands of a rapidly growing population and industry base.

Diverse Energy Profile

Both fossil fuels and renewable energy sources play an important role in Texas’ energy profile, which includes natural gas, coal, nuclear, wind, solar and biomass (Exhibit 2). Wind is the most-used renewable energy source in Texas; the state also ranks first nationally in wind energy production, accounting for 26 percent of the U.S. total, but it is intermittent by nature and thus cannot be relied upon as a sole source of power.

Fossil fuels such as natural gas provide the greatest portion of reliable, dispatchable energy and are particularly crucial when renewable energy is not available. (Dispatchable energy is composed of sources of electricity that can be programmed or adjusted on demand based on market needs.) Natural gas is abundant and is the state’s largest single source of power, providing 41.8 percent of Texas’ electric-generating capacity in 2023, according to the Electric Reliability Council of Texas (ERCOT). Texas leads the country in natural gas production, accounting for more than one-fourth of the nation’s natural gas production in 2022, and it supports the global economy with its natural gas exports.

Exhibit 2: Texas Net Generation by Source, Annual Total Electric Power Industry (GWh)

Exhibit 2 Data

Texas Net Generation by Source, Annual Total Electric Power Industry, GW Hours

YEAR	Coal	Natural Gas	Nuclear	Solar Thermal and Photovoltaic	Wind
2012	138.1	213.9	38.4	0.1	32.2
2013	149.4	203.8	38.3	0.2	35.9
2014	148.2	204.7	39.3	0.3	40.0
2015	121.6	237.7	39.4	0.4	44.8
2016	121.2	226.0	42.1	0.7	57.5
2017	134.6	204.5	38.6	2.2	67.1
2018	111.7	239.7	41.2	3.2	75.7
2019	91.8	255.6	41.3	4.4	83.6
2020	78.8	246.6	41.4	8.5	92.4
2021	88.8	233.1	40.2	14.9	99.5

In November 2023, Texas voters approved Proposition 7, a constitutional amendment to establish the Texas Energy Fund to support the reliability of the state’s electric grid, with a focus on natural gas. The Texas Legislature appropriated $5 billion to the new fund contingent on voter approval of the amendment. Senate Bill 2627, enabling legislation for the amendment, allows the Public Utility Commission (PUC) to award grants and loans to support Texas’ dispatchable energy fleet through construction of new natural gas power plants and improvements to existing natural gas power plants.

The effort of this amendment is twofold: to increase generation of dispatchable electricity to improve grid reliability and help reverse the trend of an aging dispatchable energy infrastructure. About 41 percent of Texas’ thermal power generation ― a category including natural gas, nuclear and coal ― comes from facilities that are more than three decades old according to information collected by ERCOT.

In addition to state-funded efforts to increase grid reliability, federal incentives such as Residential Clean Energy Credits have kicked off greater interest in battery storage capacity, which is particularly important to renewable energy. Battery storage is also receiving increased support from private projects, like the completion of battery developer Plus Power’s $1.8 billion financing package to incorporate renewables and stabilize the power grid including supporting the construction of 700 megawatts (MW) of batteries on ERCOT’s grid. Improvements in technology and further development of battery storage in Texas will play an increasing part in grid reliability as our state’s population continues to grow.  

Electric Reliability Council of Texas (ERCOT)

ERCOT is a nonprofit corporation that is responsible for the reliable and efficient transmission of electricity to Texas’ power grid, the Texas Interconnection, serving 26 million Texans and managing 90 percent of Texas’ total electrical load. It is overseen by the PUC and the Texas Legislature.

The Texas Interconnection is one of three main, mostly separate, electric grids spanning the U.S. Texas is the only state in the country with its own, exclusive electric grid, which comprises more than 52,700 miles of high voltage transmission lines across 214 of Texas’ 254 counties (Exhibit 3).

Exhibit 3: Texas Counties Served by ERCOT

Counties served by ERCOT

• Anderson
• Andrews
• Angelina
• Aransas
• Archer
• Armstrong
• Atascosa
• Austin
• Bandera
• Bastrop
• Baylor
• Bee
• Bell
• Bexar
• Blanco
• Borden
• Bosque
• Brazoria
• Brazos
• Brewster
• Briscoe
• Brooks
• Brown
• Burleson
• Burnet
• Caldwell
• Calhoun
• Callahan
• Cameron
• Carson
• Castro
• Chambers
• Cherokee
• Childress
• Clay
• Coke
• Coleman
• Collin
• Collingsworth
• Colorado
• Comal
• Comanche
• Concho
• Cooke
• Coryell
• Cottle
• Crane
• Crockett
• Crosby
• Culberson
• Dallas
• Dawson
• Deaf Smith
• Delta
• Denton
• DeWitt
• Dickens
• Dimmit
• Donley
• Duval
• Eastland
• Ector
• Edwards
• Ellis
• Erath
• Falls
• Fannin
• Fayette
• Fisher
• Floyd
• Foard
• Fort Bend
• Franklin
• Freestone
• Frio
• Galveston
• Garza
• Gillespie
• Glasscock
• Goliad
• Gonzales
• Gray
• Grayson
• Grimes
• Guadalupe
• Hale
• Hall
• Hamilton
• Hardeman
• Harris
• Haskell
• Hays
• Henderson
• Hidalgo
• Hill
• Hood
• Hopkins
• Houston
• Howard
• Hunt
• Irion
• Jack
• Jackson
• Jeff Davis
• Jim Hogg
• Jim Wells
• Johnson
• Jones
• Karnes
• Kaufman
• Kendall
• Kenedy
• Kent
• Kerr
• Kimble
• King
• Kinney
• Kleberg
• Knox
• La Salle
• Lamar
• Lampasas
• Lavaca
• Lee
• Leon
• Limestone
• Live Oak
• Llano
• Loving
• Lubbock
• Lynn
• Madison
• Martin
• Mason
• Matagorda
• Maverick
• McCulloch
• McLennan
• McMullen
• Medina
• Menard
• Midland
• Milam
• Mills
• Mitchell
• Montague
• Montgomery
• Motley
• Nacogdoches
• Navarro
• Nolan
• Nueces
• Oldham
• Palo Pinto
• Parker
• Parmer
• Pecos
• Potter
• Presidio
• Rains
• Randall
• Reagan
• Real
• Red River
• Reeves
• Refugio
• Roberts
• Robertson
• Rockwall
• Runnels
• Rusk
• San Patricio
• San Saba
• Schleicher
• Scurry
• Shackelford
• Smith
• Somervell
• Starr
• Stephens
• Sterling
• Stonewall
• Sutton
• Swisher
• Tarrant
• Taylor
• Terrell
• Throckmorton
• Titus
• Tom Green
• Travis
• Upton
• Uvalde
• Val Verde
• Van Zandt
• Victoria
• Walker
• Waller
• Ward
• Washington
• Webb
• Wharton
• Wheeler
• Wichita
• Wilbarger
• Willacy
• Williamson
• Wilson
• Winkler
• Wise
• Wood
• Young
• Zapata
• Zavala

ERCOT manages the flow of electricity from a variety of sources that make up the diverse fuel mix needed to support Texas. As of October 2023, ERCOT had overseen the transmission of more than 379 million megawatt hours (MWh) for the year.

ERCOT is planning to increase its budget by nearly 40 percent (PDF) in 2024 to help comply with new regulatory policy, lawsuits and employee benefits, and to fund independent market monitoring. The additional budget will be supplemented by increased administration fees, which is expected to cost customers an additional 15.5 cents per MWh (customers are usually billed in kWh, which is 1/1000 of a MWh). ERCOT’s expenditure cost growth rate is currently projected to grow faster than the load growth, meaning that the cost of operations will soon outpace load growth. If the electric load continually grows to accommodate increasing energy demand, then the cost of operations will soon be higher than ERCOT’s revenue. Because the system administration fee is projected to represent approximately 95 percent of ERCOT’s revenue, ERCOT says an increase in the fee is necessary to recover costs and to properly meet increasing power demands.

“We understand and have responded to the complexities of managing a reliable and resilient electric grid by implementing new operational tools, conducting weatherization inspections of generating and transmission facilities, being more transparent in grid operations, and continuing ERCOT’s conservative approach to operations. As a result, the reliability and resiliency of the grid has been strengthened significantly.”

Dealing With Growth

Booming population growth and continued economic strength are good for Texas, but they put increasing stress on the state’s electricity grid. The addition of new fuel sources like wind and solar for electricity generation helps relieve some of that strain but also makes managing the grid increasingly complex (Exhibit 4). It’s clear that more must be done to ensure a reliable electricity grid: ERCOT has issued 11 calls to conserve power since June 20, 2023. Additionally, in 2023, ERCOT logged all-time record peak demand for electricity on 10 days.

Exhibit 4: ERCOT Electric Grid Flow, 2023

While Texas benefits from both renewables and fossil fuels, energy usage during peak times is still an area of great concern. Wind and solar provide an increasing amount of the fuel load for electricity generation, but they are not reliable enough to bear the burden on their own. Sufficient long-duration storage is not yet available to allow them to provide energy for electricity when the sun isn’t shining or the wind isn’t blowing. Winter storms Elliott in December 2022 and Mara in February 2023 resulted in wind energy production falling by about 20,000 MWh per hour and 10,000 MWh per hour, respectively. During these drops in wind generation, natural gas energy generation spiked to meet the demand.

Because of those challenges, dispatchable thermal generation is critical for grid stability, ensuring that no matter the conditions, Texans have the electricity that they need. But the aging of Texas’ current dispatchable thermal fleet causes concern for future grid reliability. And from 2008 to 2022, Texas dispatchable thermal generation added 22,485 MW of generation capacity to the grid and retired 20,925 MW of generation capacity. In total during the 14-year period, only 1,560 MW were added. As noted, the recent voter-approved Texas Energy Fund seeks to address these issues.

Investment in natural gas and other dispatchable energy sources is vital to Texas, with its energy demand growing annually by 3 to 5 percent. The U.S. Energy Information Administration (EIA) projects that in 2035, Texas’ generation by energy source will increasingly be supported by solar and wind energy (Exhibit 5). But even as Texas moves toward cleaner energy sources in the next 10 years, natural gas will continue be a major contributor to the grid.

Exhibit 5: Texas Generation by Energy Source, 2022 and 2035 Projected

Exhibit 5 Data

Texas Generation by Energy Source, 2022 and 2035 Projected

Source	2022	Projected 2035
Other	1%	2%
Solar	6%	25%
Wind	25%	28%
Battery	10%	9%
Coal	16%	4%
Natural Gas	42%	32%

Natural Gas

The state’s abundant natural gas runs primarily through underground pipelines, allowing for the distribution of natural gas to homes and businesses even in times of natural disasters that may result in widespread power outages, resulting in more establishments choosing to operate with natural gas backup generators as opposed to diesel tank-run generators. Electricity generated by natural gas in Texas over the past decade has been relatively steady, with more than 233 million MWh of power generated in 2021, an increase of only 9 percent since 2012 (Exhibit 6).

Exhibit 6: Annual Natural Gas-Fueled Generation, Texas (MWh in millions)

Exhibit 6 Data

Annual Natural Gas-Fueled Generation, Texas (MWh in millions)

Year	Annual Generation
2012	213.9
2013	203.8
2014	204.7
2015	237.7
2016	226.0
2017	204.5
2018	239.7
2019	255.6
2020	246.6
2021	233.1

The Montgomery County Power Station, owned by Entergy Texas, Inc., is just one example of natural gas expansion in the state. Located in the city of Willis, the plant opened in 2021 and has an installed capacity of 993 MW providing electricity to more than 500,000 Texans. Entergy Texas has pledged to invest more than $2 billion by the end of 2024 to replace outdated generation equipment, increase renewable output and improve grid resiliency.

Nuclear

In Texas, nuclear energy is the fourth most-used energy source and makes up 10 percent of the state’s energy generation. Texas is home to two nuclear power plants that have a combined installed capacity of 5,000 MW of electricity (Exhibit 7).

Exhibit 7: Texas Nuclear Power Plants, 2022

Texas Nuclear Power Plants, 2022

Power Plant	Operator	County	MWe	Licensed MWt	Reactor Type
Comanche Peak Nuclear Power Plant, Unit 1	Luminant Generation	Somervell	1,218	3,612	Pressurized Water Reactor
Comanche Peak Nuclear Power Plant, Unit 2	Luminant Generation	Somervell	1,207	3,612	Pressurized Water Reactor
South Texas Project, Unit 1	STP Nuclear Operating Co.	Matagorda	1,251	3,853	Pressurized Water Reactor
South Texas Project, Unit 2	STP Nuclear Operating Co.	Matagorda	1,251	3,853	Pressurized Water Reactor

The South Texas Project Electric Generation Station (STPEGS) is operated by the STP Nuclear Operating Company and owned by the city of San Antonio (CPS Energy, 40 percent), the city of Austin (Austin Energy, 16 percent) and Constellation Energy (44 percent). STPEGS is located in Matagorda County and has two reactors, each of which produces about 1,250 MW of electricity.

Wind

Texas has produced the largest amount of wind energy in the country for the past 17 years. In 2022, Texas produced 40,556 MW of energy from wind, accounting for more than a quarter of all U.S. wind production. Wind is the second-largest energy source in Texas, with 239 wind projects and more than 15,300 wind turbines across the state. The 10 largest wind farms in Texas, located in the northwest and southern parts of the state, have a combined installed capacity of 6,571 MW (Exhibit 8).

Exhibit 8: Ten Largest Wind Farms in Texas, by Capacity
(As of Nov. 2023)

10 Largest Wind Farms in Texas, by Capacity (As of Nov. 2023)

Name	County	Installed Capacity (MW)
Los Vientos Wind Farm I-V	Starr and Willacy	912
Roscoe Wind Complex	Fisher, Mitchell, Nolan and Scurry	782
Javelina Wind Energy Center	Webb and Duval	749
Horse Hollow Wind Energy Center	Taylor and Nolan	736
Capricorn Ridge Wind Farm	Coke and Sterling	663
Peñascal Wind Farm	Kenedy	605
Sweetwater Wind Farm	Nolan	585
Buffalo Gap Wind Farm	Nolan and Taylor	523
Spinning Spur Wind Ranch	Oldham and Potter	516
South Plains Wind Farm I & II	Floyd	500

The Roscoe Wind Farm Complex is the seventh-largest wind farm in the nation, spanning approximately 100,000 acres across North Texas. Roscoe’s 627 wind turbines are capable of supplying energy to nearly 234,000 Texas homes. Since 2008, the Roscoe Wind Complex has remitted more than $92 million in local taxes to its area, highlighting the importance of renewable energy to the state’s economy.

Other Energy Sources

Other, smaller energy sources in Texas include coal, solar, hydropower and biomass.

Coal has a long history of energy generation in Texas. However, while coal accounts for 10.8 percent of the state’s energy-generating capacity, the use of coal as an energy source has declined significantly. Coal produced 88.8 million MWh in 2021, nearly 50 million less than the 138 million MWh of coal produced in 2012. Six Texas coal power plants closed between 2018 and 2020 alone, resulting in a loss of 6,400 MW.

Solar is a growing source of energy for the state, contributing 6 percent of the state’s energy generation in 2022, making Texas the nation’s second-largest producer of solar power. Solar generation increased by 75 percent from 2020 to 2021 due to the construction of large solar farms. Solar, like wind generation, faces issues such as a lack of battery storage and inadequate transmission capacity, making it less reliable than dispatchable energy generation facilities that can be more easily collocated near areas of high demand (Exhibit 9).

Exhibit 9: U.S. Solar Photovoltaic Installation and Price Trends

Exhibit 9 Data

Year	Installed Solar Capacity (MWdc)	Residential	Commercial	Utility
2010	922	$6.65	$5.92	$4.40
2011	1,945	$6.25	$5.03	$3.56
2012	3,377	$5.39	$4.37	$2.54
2013	5,084	$4.77	$3.83	$2.06
2014	6,916	$3.66	$2.42	$1.74
2015	7,842	$3.65	$2.19	$1.57
2016	15,233	$3.28	$1.83	$1.26
2017	11,107	$3.08	$1.62	$1.14
2018	10,731	$3.05	$1.55	$1.03
2019	13,539	$2.92	$1.44	$0.92
2020	19,910	$3.00	$1.37	$0.88
2021	24,109	$3.00	$1.59	$0.91
2022	21,081	$3.21	$1.66	$0.96

Hydropower is generated from the force of moving-water-spinning turbines that subsequently generate usable electricity. Texas has 26 hydropower plants that contribute less than 1 percent to the state’s electricity generation. While accounting for a small part of Texas’ energy portfolio, hydropower is a low-cost, clean source of energy.

Biomass, organic material that is converted into electric and thermal forms of energy, provides less than 1 percent of energy generation to Texas. There are 16 biomass power plants in the state with a combined installed capacity of 376 MW.

Energy Industry Jobs and Training

During his Good for Texas Tour: Energy Edition, Comptroller Hegar visited Quanta Services’ Lazy Q Ranch in La Grange. This training center is geared toward safety education, skill development and certification that currently offers 19 different training opportunities taught by subject experts.

“Our nation’s energy and telecommunications sectors are growing rapidly and so is the need for skilled workers. Meanwhile, the workforce in these industries is aging and beginning to retire,” says Dave Wabnegger, senior vice president of Quanta Advanced Training Center at Lazy Q Ranch. “Quanta Services is dedicated to attracting and training new, young workers for these well-paying professions to meet the infrastructure expansion challenge in the coming years. Reliable energy and telecommunications infrastructure require a skilled workforce of men and women willing to prioritize safety, teamwork and execution in the field.”

Texas energy industry workers totaled more than 936,000 in 2022, representing 11.5 percent of all U.S. energy workers and 7 percent of Texas’ total workforce. The demand for workers in the energy industry is growing. In 2022, more than 50,000 energy-related jobs were created, a 6.3 percent increase from 2021. Industries related to mining and oil and gas extraction activities, as well as to electric power generation utilities and electric power transmission, control and distribution utilities, contribute an estimated 244,000 jobs to Texas with an average annual wage of $145,068 (Exhibit 10).

Exhibit 10: Employment and Average Wage of Texas Energy Industries, 2022

Employment and Average Wage of Texas Energy Industries, 2022

Industry	Employment	Average Annual Wages per Worker
Mining and Oil and Gas Extraction Activities
Crude Petroleum Extraction	48,397	$234,200
Natural Gas Extraction	11,723	$179,227
Coal Mining	1,302	$119,482
Support Activities for Mining	125,847	$111,876
Utilities: Electric Power Generation
Hydroelectric Power Generation	1,077	$173,424
Fossil Fuel Electric Power Generation	6,059	$125,570
Nuclear Electric Power Generation	1,694	$175,140
Solar Electric Power Generation	1,572	$109,943
Wind Electric Power Generation	3,773	$110,002
Geothermal Electric Power Generation	3	$139,605
Biomass Electric Power Generation	64	$147,666
Other Electric Power Generation	396	$141,199
Utilities: Electric Power Transmission, Control and Distribution
Electric Bulk Power Transmission and Control	2,780	$139,418
Electric Power Distribution	30,614	$119,237
Natural Gas Distribution	8,490	$150,034

Energy Industry Education Requirements

As Texas’ energy workforce grows, Texans should be aware of the training and opportunities available to prepare them to perform in energy-related jobs. These jobs usually require some sort of certification or degree; for example, an individual must be certified to operate machinery at a nuclear power plant.

Certificates, degrees and licenses can be earned through different avenues. There are currently more than 25 different energy-related programs available at community colleges across Texas, most of which offer associate degrees and certifications. Texas public universities also offer many degree paths that prepare students to enter careers with higher paying salaries.

Position of Power

As more plants and facilities are coming online and increasing capacity in the state, Texas is diversifying and solidifying its energy portfolio. More must be done, however, to ensure a steady supply of electricity to Texas’ citizens and businesses into the future. State leaders, including Hegar, and lawmakers are working to elevate and address this issue, which is crucial to Texas’ continued success. FN

Watch the Energy Tour Wrap-up video.

To learn more about innovators adapting in the face of growing demand, check out these resources from the Comptroller’s Good for Texas Tour: Energy Edition.