Energy storage and renewables are expanding rapidly in Texas’s free-market system, building resilience, lowering costs, and drawing comparisons with Alberta, its Canadian counterpart.

Renewables and energy storage capacity has skyrocketed across Texas, despite its history and culture steeped in oil and gas. Home to the Permian Basin, the largest oilfield in the United States, Texas produced over two million barrels per day in 2023, and has long been a leader in the oil and gas sector.

But today, it is also a leader in fossil fuel alternatives, hosting the second-largest capacity for energy storage in the country, after California.

“Texas’ investment in energy storage and clean power has fundamentally transformed its energy grid,” writes [pdf] the American Clean Power Association (ACPA) in a recent report. The results are “undeniable”: Storage and renewable capacity growth outpaced demand increases in 2024, providing greater resilience in the form of fewer emergency alerts, reduced reliance on fossil fuels, and significant cost savings for the system and for consumers.

To illustrate: Back in the summer of 2023, Texas’s grid operator issued 11 notices for residents to cut back electricity use to avoid blackouts when record heat drove increased air conditioner use. Texas added one gigawatt of energy storage later that year, then issued another two energy conservation notices amid winter storm Heather in January 2024.

But the next summer, 2024, was a different story. Texas had added another four gigawatts of storage capacity and made it through the season without any conservation notices. By retaining a wider buffer between supply and demand, the extra storage also kept electricity prices down.

Much of Texas’ renewable energy and storage gain can be attributed to the state’s unique deregulated energy system that—though it made the grid vulnerable during some extreme weather events, like blackouts amid the lethal 2021 deep freeze—has also let the technologies proliferate on their strong economics, sidestepping divided opinions on climate action in a solid Republican state.

The added renewables infrastructure is a win for climate advocates, but it comes at a cost: in the absence of regulations tying energy storage to decarbonization, operators can be agnostic about their fuel source, leading to an emissions increase when fossil fuels are burned to supply energy storage.

Texas’ renewables and storage boom has drawn comparisons with Alberta, the state’s Canadian counterpart with an oil-centred economy, with ample wind and sun for renewable energy generation and a deregulated energy system that is unique in its country. But in contrast, Alberta has slowed its renewables deployment, its seven-month project moratorium in 2023 leading to the cancellation of 53 new wind and solar projects, unsettling the renewable energy sector, and undermining investor confidence. Further restrictions enacted after the seven-month ban on renewables dampened chances of a revival.

The Alberta government’s policies skewed the playing field enough to push renewable and energy storage investors elsewhere—including to Texas, writes Globe and Mail reporter Jeffrey Jones. Companies like Quebec-based Innergex Renewable Energy—which has three projects in Texas, and operates elsewhere in the United States, Canada, and Europe—do not see Alberta as a safe place to invest.

Apart from differences in weather conditions, Jones suggests Texas may have gone “full bore on renewables” while Alberta pumped the brakes due to the way the oil industry feeds the public purse in each jurisdiction. The royalties Alberta receives from oil and gas companies on the majority of the land where they operate have a “direct impact on provincial revenue,” but that’s not the case with wind and solar. In Texas, all wind, solar, and oil developers lease directly from landowners.

“There are taxes that go to the state and to the federal government, but most of the money, the direct money from the royalties, is not going to the state of Texas,” Kristen van de Biezenbos, a professor at California Western School of Law, told Jones.

“You don’t have the same reliance, true reliance on fossil fuel revenues in Texas that you do in Alberta—the only change is going to be who’s making money from what.”