Renewables Taking Over the Texas Grid

The Electric Reliability Council of Texas (ERCOT), the entity that operates the Texas electric grid, last week projected record-high demand this summer because of hot, dry weather and Texas’ continued economic growth. ERCOT projects that demand could reach as high as 77,144 megawatts (MW) this summer. But says with a projected 86,862 MW of generation capacity, there should be enough electricity to handle the load.

One caveat to ERCOT’s projection of adequate supplies is the intermittency of wind generation. While total installed wind capacity in Texas is more than 25,000 MW, ERCOT is only relying on 6,700 MW of that during peak demand hours during the late summer afternoons.

Basically, ERCOT is saying that if everything goes right, we should be okay. Yet, everyone thought all would be okay only a few days before the worst blackouts in Texas history occurred this past winter. Blackouts that might have been prevented if it were not for the mal-investment in renewable generation in Texas.

To get an idea of where challenges might come from, ERCOT provides three extreme scenarios that could lead to trouble. All of them include wind output dropping, and two of them include low solar output. In evaluating these scenarios, it is important to understand that significant drops in output from renewables–particularly wind on hot summer afternoons–is not an extreme occurrence, but a regular one.

This means the first thing Texans should be concerned about is whether renewable energy performs up to expectations. We already have low expectations for renewables in the summer, especially wind. The total installed wind capacity in Texas is more than 25,000 MW. However, ERCOT projects that only 6,700 MW of that will be available during the late summer afternoons, when electricity demand is at its highest. And in ERCOT’s “extreme” scenarios, wind output would drop by more than two-thirds to about 2000 MW.

So while Texans don’t have to worry about blackouts under average scenarios, in real-time conditions the possibility increases. There could be trouble if we experience near-record highs this summer, not unlike the near-record lows that hit us this winter. Thus, if the not-so-uncommon low output from renewables combines with extremely high–but not unheard of-levels of Texas heat, it could be difficult for Texans to keep the lights on this summer.

Of course, one does not need a report from ERCOT to understand that the primary cause of our problems with grid reliability in Texas is renewable energy. As we have already noted, even on their best days wind and solar generation falls far short of its full capacity. At any one time, only a fraction of the almost 30,000 MW of total installed wind and solar capacity is available. If all that generation was from coal, nuclear, or natural gas, Texas would be swimming in reserve, or backup, generation this summer and there wouldn’t be a problem. We probably could have even kept the lights on this past winter as well.

This begs the question. Why are investors putting their money into wind and solar farms when they don’t provide the reliability Texans need?

The sad truth is that Texas state and local policymakers, along with their federal counterparts, have set up a system where investors keep chasing renewable energy subsidies and don’t really care what happens to the grid. Their focus is not reliability, efficiency, or even profit–in the traditional sense. Everything is about subsidies. And no wonder.

Robert Bryce estimated that the renewable industry has invested about $66 billion in Texas. As they have been investing, they have received subsidies, i.e., payments, tax credits, tax abatements, and subsidized transmission costs, totaling $21.7 billion. So essentially one-third of their capital costs have been covered by taxpayers or ratepayers. That  is a pretty powerful “competitive advantage” which provides some insight into why investors are basically ignoring other less expensive, more efficient means of generating electricity.

The result of this is that wind and solar generation is driving reliable generation out of the Texas market. Since 2018, 77% of new generation capacity has come from renewables; either wind, solar, or batteries. New natural gas generation is only 23% of the total. And there has been no investment in coal or nuclear. Texas does not have a very diverse mix of generation coming online.

Even if the lights do not go out this summer, renewables are still a problems for Texans because of their high costs. Renewables are both intermittent–they don’t produce electricity all the time–and inefficient–renewables generate much less electricity than the same investment in coal and natural gas would produce. This will get worse as the renewable share of the grid grows, because Texans will be forced to pay Elon Musk for even more inefficient and expensive batteries.

Renewables often claim that wind and solar are now cost-competitive with other generation. But what they forget to tell you is that you need to check your tax bill along with your electric bill to fully understand the cost of renewables; taxpayers will fork over about $1.65 billion this year to renewable energy companies operating in Texas.

Renewable advocates also conveniently forget that a lot of the money people pay for renewable energy is not through the electricity they purchase but through the transmission costs that are added to their electric bill. This year Texans will pay about $742 million dollars in transmission costs because of powerlines built to serve wind and solar farms.

Adding that $2.4 billion to the cost of paying for electricity produced from wind and solar farms reduces the attractiveness of renewables to most Texans. Although they look pretty good to the owners and operators of the wind farms.

The Texas Legislature is pretty much ignoring all these facts. Which is pretty amazing, given the primary role renewables played in the Texas blackouts. The Legislature is able to do so mainly because of a concerted effort by most Texas policymakers, the renewable energy lobby, and the Texas and U.S. mainstream media to blame the blackouts on markets. For, after all, if renewables were to blame, all those folks would have some explaining to do for the years of passing laws, pushing policies, and writing articles promoting the benefits of renewable energy.