Texas was responsible for more than one fourth of all corporate renewable energy deals signed globally in 2019. During 2019, corporate renewable energy deals surged over 40 percent from 2018.
The deals reached over 19.5 gigawatts in new contracts. This enormous rise in corporate renewable energy deals are due to several factors, notably large corporations in search of renewable energy.
Texas has abundant resources and is one of the cheapest places to build renewable power, specifically solar energy. The Texas renewable energy market was, and continues to be, dominated by wind power, but nearly 80 percent of the corporate renewable energy deals are for solar energy.
Oil and gas companies are investing in renewable energy to position themselves for their proclaimed energy transition. Out of the eight largest oil and gas companies internationally, five of them have made significant investments in renewable energy.
This diversification into the renewable market can position these industry giants as energy companies instead of a traditional oil and gas brand. Some of these corporations include:
ExxonMobil secured 500 megawatts of wind and solar power in the Permian Basin of West Texas. This move is very characteristic of oil giants because it helps offset the emissions generated by their operations in the Permian Basin.
While the deal to acquire wind and solar energy in the Permian Basin is great for the renewable energy market, ExxonMobil continues to accelerate oil production in the same region.
“The size of the company’s resource base in the Permian is approximately 10 billion oil-equivalent barrels and is likely to grow further as analysis and development activities continue,” the company stated in a press release.
Corporations of all sizes are incentivized to invest in renewable energy in Texas. There are several corporate tax credits available for businesses operating in Texas and they are set to renew in 2023 unless they’re disapproved by Congress.
Two of the tax credits available to corporations include the Renewable Electricity Production Tax Credit and the Business Energy Investment Tax Credit.
The Renewable Electricity Production Tax Credit provides developers a tax credit for every kilowatt hour of clean energy they sell for up to 10 years. With this production tax credit, developers can deduct 2.4 cents per kilowatt hour from the price of their power. For large projects, this credit can add up quickly and provide significant savings.
The Business Energy Investment Credit helps developers deduct a percentage of their capital expenditure from their federal taxes. The percentage depends on the fiscal year that the project commences. For example, in 2019 the percentage of the tax credit for solar projects was 30 percent, with 12 percent for wind projects. In contrast, a project started in 2020 will have a 26 percent credit for solar projects and 10 percent for wind projects.
Specific states and cities have additional incentives for renewable energy projects. Some offer tax credit programs for residential homes. Homeowners who install a solar panel can get up to a 26 percent federal tax credit depending on the year of installation. If you’d like to learn more about the renewable energy market, check out Deloitte’s 2020 report here.
Dhoof Mohamed writes about energy and IT topics for various clients. His academic interests include solar energy initiatives and the future of sustainable energy. His articles have appeared on SiteProNews, ChooseFlorida and the office of the U.S. Embassy. You can reach him at firstname.lastname@example.org.