Texas transmission and the Permian basin

Texas has long been an unlikely darling for the renewables industry, rocketing to leading positions in wind and solar deployment driven by a combination of a laissez-faire attitude towards permitting and ERCOT’s connect-and-manage system (where generators can connect directly to the grid without waiting for network-upgrade studies in a lengthy interconnection queue, but accept the risk of curtailment until the system can reliably integrate that new supply). The last leg of the stool is the trickiest – “managing” new generation requires planning and executing major transmission improvements.

Texas has been exceptionally successful in rolling out one of the nation’s most ambitious transmission projects, the roughly 3,600 miles of high-voltage lines that connected West Texas’s vast wind (and later solar) resources with cities further east under the CREZ initiative. Now the state has another ambitious transmission plan – bringing high-voltage lines back to West Texas, this time to supply oil and gas production (and likely data centers) in the Permian basin. Like CREZ, it’s faced opposition from landowners, in part because the state legislature streamlined its transmission review process in the interim.

Another part of what is making this challenging, beyond the streamlined siting process, is who’s benefiting. Part of what’s traditionally made it easier to plan transmission in Texas is ERCOT’s islanded grid – since the grid (roughly) shares the state’s borders, there are no interstate fights over how to split the cost of new infrastructure. However, state borders aren’t the only fault line on cost allocation. Under Texas’s current PUC rules (which the legislature has required the PUC to update by December), transmission costs are currently socialized across all ratepayers (including residential users, who have a harder time shifting their use to avoid charges), another hurdle for the planned rollout.