Texas leads the nation in energy production, primarily from crude oil and natural gas, and is rapidly developing its wind energy resources as well. Texas is second only to Alaska in total state land area and stretches some 800 miles at its widest points both east to west and north to south. The state’s climate varies significantly from east to west. Warm, moist air from the Gulf of Mexico sweeps westward across Texas, losing moisture as it goes. The result is a climate that is humid and subtropical along the coast, semi-arid on the high plains, and arid in the mountainous west.

Texas has the second-largest population and the second-largest economy among the states, after California. The state leads the nation in energy consumption, in all end-use sectors, accounting for more than one-eighth of the U.S. total. On a per capita basis, Texas is sixth in the nation in energy consumption. The state has many energy-intensive industries, including petroleum refining and chemical manufacturing, and its industrial sector accounts for the largest share of state energy use. The transportation sector accounts for the second-largest share of energy consumption, in part because of the distances across the state and the large number of registered motor vehicles. The Texas residential sector accounts for just one-eighth of state energy consumption, but Texas leads the nation in residential energy consumption. However, with the state’s large population, per capita residential energy consumption is in the lowest one-fifth nationwide.

Renewable Energy

Quick Facts

  • Texas was the leading crude oil-producing state in the nation in 2015 and exceeded production levels even from the federal offshore areas.
  • As of January 2016, the 29 petroleum refineries in Texas had a capacity of over 5.4 million barrels of crude oil per day and accounted for 30% of total U.S. refining capacity.
  • Texas accounted for over 27% of U.S. marketed natural gas production in 2015, making it the leading natural gas producer among the states.
  • Texas leads the nation in wind-powered generation capacity with more than 18,500 megawatts; in 2014 and 2015, Texas wind turbines produced more electricity than the state’s two nuclear plants.
  • Texas is the nation’s largest producer of lignite coal. About 40% of the coal burned for electricity generation in Texas is lignite.

In 1999, the Public Utility Commission of Texas first adopted rules for the state’s renewable energy mandate. In 2005, the state legislature amended the mandate to require that 5,880 megawatts, or about 5% of the state’s electricity capacity, come from renewable sources by 2015. Lawmakers also set a goal of 10,000 megawatts of renewable capacity by 2025, including 500 megawatts from resources other than wind. Texas surpassed the 2015 goal in 2005 and the 2025 goal in 2009, almost entirely with wind power. Renewable energy sources contributed one-tenth of the state’s net electricity generation in 2015, and that amounted to nearly one-sixth of U.S. electricity from all nonhydroelectric renewable sources. Texas produced more nonhydroelectric renewable generation than any other state in the nation.

Texas leads the nation in wind-powered generation, with nearly one-fourth of the U.S. total in 2015.

Wind accounts for nearly all of the electricity generated from renewable resources in Texas. The state encouraged construction of wind farms on its wide plains by authorizing Competitive Renewable Energy Zones (CREZ), a $7-billion effort in which transmission lines were built to connect to future wind farms. Texas leads the nation in wind-powered electricity generation, producing nearly one-fourth of the U.S. total in 2015. In 2011, Texas was the first state to reach 10,000 megawatts of installed wind generating capacity. At the end of 2015, Texas had more than 18,500 megawatts of wind capacity installed. Utility-scale wind facilities represented nearly one-sixth of the state’s total generating capacity and produced one-tenth of state net generation. More than 5,000 megawatts of additional wind generation capacity are under construction.

Texas is also rich in other renewable energy resources. High levels of direct solar radiation in West Texas give the state some of the largest solar power potential in the nation. Decreasing costs for solar photovoltaic (PV) panels and improved transmission access from the CREZ projects resulted in rapid increases in solar PV capacity in 2015, when installed utility-scale solar capacity within ERCOT grew by nearly half, to 288 megawatts. In early 2016, more than 1,700 megawatts of solar capacity were in development in ERCOT. In 2015, nearly one-third of Texas solar generation came from distributed (customer-sited, small-scale) facilities, and distributed capacity is increasing.

The agricultural and forestry sectors provide Texas with abundant biomass and biofuel resources. Currently, less than 1% of the state’s electricity is generated using biomass. Texas is expanding its use of biomass in the production of electricity. Texas has four biofuels plants in the agriculturally rich high plains region in the state’s northwest. The plants produce ethanol from corn and sorghum feedstocks.

Hydroelectric power contributes less than 1% to the electricity generated in Texas because the relatively gentle terrain and low rainfall throughout much of the state are not conducive to its development. Reservoirs are primarily used for water storage, with electricity generation as a secondary purpose, and water is usually not released from reservoirs solely to generate power. However, the state does have some untapped hydropower resources, especially for small-scale, low-impact technologies.

Texas has a unique untapped geothermal resource: its large network of crude oil and natural gas wells. Existing wells connect to deeper geothermal resources, many with water as hot as 200°C. More than 12 billion barrels of non-potable water are produced annually as a byproduct from the state’s crude oil and natural gas wells, and heat from that water could be used to generate electricity. On a smaller scale, Texas’ geothermal resources have been tapped to heat and cool homes and schools around the state.


Texas generates more electricity than any other state, almost twice as much as the second highest-producing state.

Texas produces more electricity than any other state, generating almost twice as much as Florida, the second highest-producing state. More than three-fourths of the state’s electricity is generated by independent power producers and industrial generators. Half of the electricity generated in Texas in 2015 came from natural gas-fired power plants. Coal-fired power plants historically accounted for about one-third of net electricity generation, but, in 2015, with older coal plants reducing operations or closing, coal supplied about one-fourth of generation. Two nuclear plants supply nearly one-tenth of the state’s net electricity generation, and the rest is powered by renewable resources, primarily wind.

Texas is the largest electricity consumer of any state, and both electricity demand and power supply have been growing. Most new generation is fueled by either natural gas or wind. The main Texas electricity grid is operated by the Electricity Reliability Council of Texas (ERCOT). The ERCOT grid serves about three-fourths of the state and is largely isolated from the interconnected power systems serving the eastern and western United States. This isolation means the ERCOT grid is not subject to federal oversight and is, for the most part, dependent on its own resources to meet the state’s electricity needs. Among the contiguous 48 states, Texas is the only one with a stand-alone electricity grid.

The largest share of retail electricity sales in Texas goes to the residential sector. Close to three out of five households in the state use electricity as their primary heating fuel, and demand for air conditioning is high during the hot summer months.

Natural Gas

Texas leads the nation in natural gas production and holds more than one-fourth of the nation’s proved natural gas reserves. Almost one-third of the 100 largest natural gas-producing fields in the United States are located, in whole or in part, in Texas. Like crude oil production, the state’s marketed natural gas production reached its peak in 1972. From that peak of 8.6 trillion cubic feet, yearly production declined to about 6 trillion cubic feet before stabilizing in the mid-1980s.

One-fourth of the nation’s proved natural gas reserves are located in Texas.

Since 2004, however, natural gas marketed production levels have rebounded and, by 2014, reached 7.95 trillion cubic feet. Production dropped slightly in 2015 and 2016 in the face of lower natural gas prices. Much of the last decade’s rise in production is the result of drilling in the Barnett, Eagle Ford, and Haynesville-Bossier shale formations. Advances in horizontal drilling and hydraulic fracturing technologies, coupled with increased natural gas prices in the late 1990s, led to significant drilling activity. The Barnett and Haynesville/Bossier formations produce mainly dry gas. The Eagle Ford Shale produces substantial amounts of petroleum and natural gas liquids, along with natural gas, from more than 20 fields in 26 counties stretching across southern Texas. Additional natural gas is also coming from shale formations in the Permian Basin in west Texas.

The development of pipeline systems in the mid-20th century to move natural gas to distant markets resulted in today’s expansive network of interstate natural gas pipelines. Natural gas is shipped from Texas to markets across the nation and into Mexico, and pipelines carry natural gas through Texas to and from other states. The state’s largest net receipts are from Oklahoma and the federal offshore producing areas. There are more natural gas market hubs in Texas than in any other state. Because the natural gas infrastructure in Texas is well connected to consuming markets throughout the country, two liquefied natural gas (LNG) import terminals were built along the state’s Gulf Coast. The state’s first LNG terminal at Freeport became operational in April 2008. Another LNG terminal, Golden Pass, started up in 2010. Owners of both terminals are developing capability to export LNG, and other export terminals in Texas are also in development.

Natural gas storage capacity in Texas is among the largest in the nation. Just over half of the state’s 36 active storage facilities are in depleted oil and gas fields converted for storage use, and the rest were developed in salt caverns. Those facilities allow Texas to store natural gas when demand is low and to ramp up delivery quickly when demand increases.

Texas leads the nation in natural gas consumption, accounting for about one-seventh of the nation’s total usage. The industrial and electric power sectors dominate Texas natural gas demand and together account for nearly nine-tenths of in-state consumption. The Texas industrial sector is responsible for about one-fifth of the nation’s total industrial sector consumption of natural gas. The amount of natural gas used for electricity generation in Texas is greater than in any other state and accounts for one-sixth of the U.S. total used for electricity generation. More than one-third of state households rely on natural gas as their primary heating fuel, but Texas residential natural gas consumption per capita ranks in the lower third of states nationally.

Source: U.S. Energy Information Administration (Jan 2017)

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Customers under the Electric Reliability Council of Texas (ERCOT) have the ability to choose an alternative electricity supplier. ERCOT covers areas Dallas-Ft. Worth, Houston, Corpus Christi and much of West Texas. The utilities in ERCOT are Oncor (Dallas-Ft. Worth), CenterPoint (Houston), AEP Texas Central (Corpus Christi), AEP Texas North (Abilene area), Texas-New Mexico Power, and Sharyland. SWEPCO (AEP), El Paso Electric, Entergy, and Southwestern Public Service (Xcel) are not currently open for competitive supply. Customers how do not choose an alternative supplier in ERCOT are supplied by an “Affiliated Retail Electric Provider” (legacy utility provider). Legacy providers charge rates determined by the market.

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Commercial customers in Texas that use at least 3,650 Mcf of natural gas per year, per meter (an average of 10 Mcf/day) – are eligible for alternative natural gas supply. Customers who choose not to purchase natural gas directly from an alternative supplier pay for “bundled service” from the local utility. When a customer buys natural gas from a competitive gas supplier, a portion of the utility’s rate components are unbundled and charged separately.

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