‘Will severely restrict economic growth’

The Texas economy could be one of the biggest losers from the “Big Beautiful Bill” that became law earlier this year, according to Bloomberg.

As the state’s electricity needs surge, the bill’s cuts to renewable energy incentives are projected to cause higher energy prices and potential electricity shortfalls, per Bloomberg. The result is expected to be slower economic growth.

“We will severely restrict economic growth,” said Doug Lewin, an expert on Texas energy, per Bloomberg. “Because we can’t grow without energy.”

What’s happening?

Under the new law, wind and solar energy projects across the U.S. will only qualify for tax incentives if construction begins by July 4, 2026, or are placed in operation by the end of 2027, according to E&E News.

Previously, these programs were slated to last until December 31, 2032, according to the EPA.

This change is projected to have an enormous impact on the future of energy production in Texas, which presently relies on renewable sources for 30% of its electricity, per Bloomberg.

BloombergNEF has predicted that the number of wind, solar, and battery-storage facilities brought online annually in 2035 will be 23% lower as a result of the new law. It is possible the new law will help to spur along some projects faster, at least, but there is not yet any data to support that notion.

With peak energy demand in Texas expected to nearly double from 85.5 gigawatts in 2023 to 150 gigawatts by 2030, per Bloomberg, Texas needs all of the power it can get.

“We’re in an energy crunch,” Joshua Rhodes, an energy expert at the University of Texas Austin said, per Bloomberg. “We should be doubling down on everything we can build right now. Making things more expensive is antithetical to that.”

From 2020 to 2024, the Texas economy outperformed the U.S. as a whole, increasing its GDP by 51% versus 37% nationwide, according to Bloomberg. Much of this growth has been fueled by cheap electricity costs.

If new sources of electricity cannot be brought online fast enough to meet this growing demand, prices will increase, and Texas will lose its energy advantage.

Why does renewable energy production in Texas matter?

Expanding renewable-energy production is essential to meeting the nation’s rising electricity needs, which are projected to grow significantly in coming years as massive new data centers consume large quantities of electricity.

Dirtier, non-renewable sources of energy simply cannot be brought online fast enough to meet this demand. Presently, there is a five-year waitlist for the turbines used in natural-gas-powered plants, according to Bloomberg.

By comparison, a massive new solar-and-battery facility in California was brought online just two years after shovels hit the ground, a remarkable turnaround time for a project of that scale and complexity.

Even in oil-and-gas-friendly Texas, non-renewables have made up just 6% of new energy capacity since 2020, with the remaining 94% coming from new solar, wind, and battery-storage facilities, per Bloomberg.

Some companies operating data centers have explored small modular nuclear reactors, with one company specializing in it, Oklo, formerly chaired by OpenAI co-founder Sam Altman — though nuclear projects also take years to get going and bring non-trivial safety risks, even if their energy generation comes without directly contributing to greenhouse gas pollution.

The situation in Texas is representative of the rest of the country. Data centers, which are used to run power-hungry AI models, consumed 4.4% of all U.S. electricity produced in 2023. That figure is projected to reach 6.7% to 12% by 2028, according to the Department of Energy.

To meet this rising demand for electricity, energy production will need to expand dramatically and quickly. If the increase in demand outpaces the available supply, electricity prices will go up for everyone.

What’s being done about renewable energy?

Meeting growing energy demands will require an all-of-the-above approach to electricity production with an emphasis on the projects that can be brought online the most quickly. Relying on dirtier, nonrenewable sources of energy alone will be insufficient to the task.

While the challenge is massive, there are actions that individuals can take to make a difference. For example, by using your voice, contacting your elected representatives, and voting for political candidates who share your policy priorities, you can help to push for a return of the renewable-energy incentives necessary to meet rising energy needs.

Further, by installing solar panels on your home, you can reduce reliance on overtaxed energy grids while also ensuring that your home is powered by cleaner, renewable energy from the sun.

By pairing solar with a home-battery system, you can make your house more resilient in the event of a power outage while also potentially supplying power back to the grid when it is needed most, reducing the need for additional large-scale power plants.

EnergySage makes it easy to compare quotes from vetted local solar installers while also ensuring you take maximum advantage of tax credits and other available incentives, saving customers up to $10,000.

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