Jun. 16--TXU Corp.'s new renewable energy business, called TXU Renew, is in the market for power generated by eco-friendly means, such as wind.

The company issued a request Thursday for proposals from renewable generation firms for 200 megawatts of power generation capacity.

That's not a lot of power compared with the 18,300 megawatts of total capacity TXU owns or leases, or the 8,600 megawatts of non- renewable coal-fired capacity TXU plans to build.

Necessary credits

But TXU Renew's request represents about half or more of the renewable energy credits TXU needs each year to satisfy state law.

"The proposals will help TXU Renew remain competitive and flexible to meet the needs of our growing market," said Mike McCall, head of TXU Wholesale and TXU Renew, in a statement.

The company aims to boost its renewable energy capacity by 700 megawatts by 2011, doubling TXU's total renewable portfolio.

TXU doesn't operate its own renewable power generation plants, nor has the Dallas company announced plans to build any. TXU officials, however, haven't ruled out building their own renewable power plant.

But so far, TXU's plan is to build 11 new coal-fired power plants -- which don't qualify for renewable energy credits -- and to buy renewable power from other operators.

The company said in its request for proposals on Thursday that it wants renewable energy credits to be part of the deal.

Providing encouragement

As part of electricity market deregulation, Texas lawmakers set up the renewable energy credit program to encourage more renewable generation facilities, such as wind, biomass, solar or landfill gas.

The law requires retail electricity providers to buy renewable energy credits each year in proportion to the market share the provider serves, said Roy McCoy, manager of congestion and renewable credit for the Electric Reliability Council of Texas.

By law, retail electric providers cannot operate their own power generation plants, so they must buy those credits on the open market. It's not enough to buy the renewable power; the retailers must have the credits, Mr. McCoy said.

Power generation companies get a credit for every megawatt-hour of renewable electricity they produce. So, if TXU Renew can cut a deal to buy the credits now at a lower price than they will trade at in the future, the company can sell the credits later for a profit.

A 200-megawatt wind plant, which would operate about 29 percent of the time, would generate about 450,000 renewable energy credits, Mr. McCoy said.

In 2004, the latest year for which data are available, TXU Energy needed 775,407 of the 2.67 million renewable energy credits the state issued, according to ERCOT.

The number of renewable energy credits retailers must buy will gradually increase until Texas meets its goal of 2,880 megawatts of renewable power generation capacity by 2009. In 2005, Texas had 2,122 megawatts.

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