By Nathan Jensen, and Isabella Steinhauer
This changed the composition of owners. While renewable energy companies owned roughly half the projects at the application stage, by 2022, two-thirds of the projects were owned by utilities and energy companies with fossil-fuel assets.
The original developers may have benefited from the first year or so of the tax break, but the new owners are poised to reap the majority of the remaining years of the 10-year property-tax incentive.
The most common pattern of sales was a renewable-energy developer selling a project to an energy company or utility. For example, Duke Energy /zigman2/quotes/201480230/composite DUK -0.93% purchased a solar project originally owned by Recurrent Energy, and Alpin Sun sold a solar project to BP.
We found that ownership by self-described “venture capitalists” and other investors was rare before 2022. The lucrative and expiring incentive program likely led to a gold rush of applications, including by some companies with limited experience in renewable energy.
When renewable incentives become subsidies to fossil fuel companies
For example, the company with the most renewable energy projects subsidized under Chapter 313 from 2020 to 2022 is NextEra /zigman2/quotes/200558509/composite NEE +0.13% . NextEra is also the parent company of Florida Power and Light , a utility that has campaigned against rooftop solar in Florida and sued to block hydropower imports in Massachusetts. In Texas, however, NextEra lobbied for a continuation of Chapter 313 incentives.
Other major energy companies in the owner list include France’s Total Energy, BP, Duke Energy and Savion, which is owned by Shell /zigman2/quotes/201538663/delayed NL:SHELL -1.93% .
The data suggests some possible tensions within green-energy policy.
Environmentalists have long argued for federal and state subsidies for renewable energy as a means of combating climate change, including in the climate- and inflation-focused bill currently in Congress .
However, as our data analysis shows, the owners who benefit from renewable-energy incentives can in some cases be the same fossil-fuel companies that actively oppose a green-energy transition. The results of a 2021 study , using data released by energy companies on earnings calls, also suggest that energy company investments in renewable-energy projects are often simply diversification strategies—they aren’t replacing fossil fuels.
Our analysis is based on one program in Texas, but with the size of the Texas renewable-energy sector, and the companies involved, it can offer insights for broader renewable-energy policies.
Key to any subsidy program is clearly articulating the goals and tracking success in meeting them. If the goal is to reduce greenhouse as emissions, that means examining who is benefiting and determining if the subsidies are actually leading to a transition away from fossil fuels.
Our data begins to shine a light on the answer.
This commentary was originally published by The Conversation—Who benefits from renewable energy subsidies? In Texas, it’s often fossil fuel companies that are fighting clean energy elsewhere
Nathan Jensen is professor of government at The University of Texas at Austin College of Liberal Arts. Isabella Steinhauer is a master’s candidate and graduate research assistant at The University of Texas at Austin College of Liberal Arts.