Since Texas weathered its second-hottest summer on record and faced unprecedented demands on its power grid, the future of energy supply and use in the state—and across the country—has become the subject of national discussion. Air conditioners were in constant use in Texas over the summer as average temperatures reached 85.3 degrees between June and August and didn’t dip below 100 degrees for weeks on end in some cities.
The strain that the soaring temperatures put on the Electric Reliability Council of Texas (ERCOT), the state’s energy distribution network, is severe, no matter the circumstances.
Making that situation all the more dire is the rapid growth of the state’s population and the rising number of tech companies that are installing or expanding facilities in Texas that require massive amounts of power to operate.
More and more people live and work in a state that’s woefully unprepared to cope with soaring demand.
“Peak demand in ERCOT has grown 14 percent since 2019, while our supply of thermal generation—gas, coal, nuclear—has remained essentially flat,” Brent Bennett, policy director of Life:Powered, an initiative of the Texas Public Policy Foundation, told The Epoch Times.
The investment of $99 billion in wind and solar infrastructure in Texas and about $10 billion more in green energy transmission lines has not only failed to improve energy supply but has exacerbated the problem, he said.
Texas Swelters
The summer of 2023 was so hot that officials in some areas came close to adopting daily “load shedding,” or power outages, at least as a temporary expedient—protocols similar to those that have made life miserable for many people living in South Africa, whose state-run energy distributor, Eskom, is notoriously ill-managed.
Texas cities sweltered at 105 degrees or hotter for the most days in a row on record.
On Aug. 20, ERCOT hit a milestone: an all-time weekend peak demand record of 84,805 megawatts (MW), according to Alexander Stevens, manager of policy and communications at the Institute for Energy Research, a Washington-based nonprofit agency. Mr. Stevens compared that figure to the August 2022 peak demand of 78,485 MW.
Even that Aug. 20 weekend peak demand wasn’t as high as the demand on individual days this past summer. On Aug. 10, ERCOT grappled with 85,435 MW of demand and hit 81,674 MW on Sept. 5.
Mr. Stevens attributes the records partly to population growth, noting that from 2000 to 2022, Texas received an influx of 9,085,073 new residents, a record among states and 3 million more than the runner-up, Florida.
The retreat of excruciatingly hot weather over the autumn doesn’t mean that the Lone Star State is out of trouble. With winter approaching and posing its own set of challenges, ERCOT last month began soliciting bids from power providers in the hope of ramping up its reserves by at least 3,000 MW.
Given that 2023 was far from the first hot summer in Texas and that the demographic trends have been underway for many years, some may wonder why the state is scrambling now to try to expand its reserves and avoid more emergencies.
Mr. Stevens and other experts who spoke to The Epoch Times agree that while renewable energy isn’t sufficient to meet demand, politicians who want to appear forward-looking and in line with environmental, social, and governance (ESG) imperatives aren’t listening.
A Green Energy Panacea?
Even with policies specifically tailored to meet Texas’s acute needs, the market would be a challenging one. But, in the face of all these trends, Texas doesn’t receive anything close to the level of investment in energy production and distribution systems and facilities that it requires to meet demand.In fact, policies that encourage wind, solar, and other so-called green and renewable energy sources not only fail to meet the demand but actively undermine any efforts to sustain and broaden supply networks that aren’t cyclical in nature and vulnerable to changes in the amount of wind or solar energy available at a given time, specialists in energy use have told The Epoch Times.
Part of the issue here is cultural and political. Some people assume that only political and social regressives living in flyover states, with a callous attitude about the environment, would harbor doubts about or oppose generous subsidies for ESG policies.
Many view ESG as essentially well-intentioned and lack any understanding of how such policies actually divert resources from and wreck the competitiveness of the utilities on which millions of people depend for their day-to-day existence, according to energy sector experts.
The escalating crisis in Texas has implications for the availability and reliability of energy throughout the nation, given the tendency in other states to favor ESG-based solutions and the demographic trends that expand energy use without regard for available resources, the experts say.
Misdirected Allocations
The problem comes down to flawed energy policy, William Keffer, director of the Energy Law Programs at Texas Tech University, told The Epoch Times.“As a general observation, we have allowed our sources for electricity in the state to become lopsided, so that we have too much dependence on the renewables sector—wind and solar—and not as much capacity as we should have when it comes to the dispatchable sources like natural gas, coal, and nuclear,” he said.
Investors looking at opportunities in Texas and elsewhere obviously seek out assets that they expect to generate high returns, and the federal tax credits lavished on wind and solar facilities have helped bring about this lopsided market, he said.
The original idea of providing subsidies to foster renewable energy sources back in the 1990s was understandable, even laudable, but legislators have gone on renewing tax credits for such projects without regard for market dynamics, Mr. Keffer said.
A clause of President Joe Biden’s Inflation Reduction Act extends the Investment Tax Credit, offering a 30 percent credit for wind, solar, storage, and other renewable initiatives, he pointed out.
The Biden administration is a huge backer of tax credits for investments in wind and solar projects. On May 31, the Treasury Department, the Energy Department, and the IRS released new guidance regarding an allocated credit program, offering a 20 percent tax credit on top of the existing 30 percent credit for wind and solar facilities in low-income communities.
“We just keep on extending these tax credits, which is going to continue to disrupt the market, with people spending their money in ways they would not otherwise,” Mr. Keffer said.
Undercutting the Dispatchables
With such lavish tax credits, wind and solar facilities can essentially sell their energy for close to zero dollars and still turn a profit, according to Mr. Keffer. The producers of dispatchable and badly needed energy sources aren’t in this position, hence they aren’t attractive investment targets, and no one wants to finance the building or expansion of coal, natural gas, or nuclear facilities.“Wind and solar are always going to beat them to the punch with an artificially low price, such that they can’t sell their electricity at a price that gives them a return on their investment,” he said.
“Coal plants continue to be shut down, and natural gas plants don’t add to their lineup, because nobody wants to invest in a new one.”
Mr. Bennett also sees the issue explicitly in terms of a mismatch of supply and demand—an overreliance on renewables at the expense of ones that actually work.
Heavy subsidies for renewables haven’t made people’s daily lives easier. The expansion of resources in the areas of wind and solar doesn’t mitigate demand on the traditional dispatchable resource providers, he pointed out. In fact, as the experience of the past summer illustrates, the dependence can be especially pressing at precisely a time when wind and solar are, in theory, poised to step into the breach and alleviate the strain.
The addition of 10 gigawatts (GW) of wind and 16 GW of solar capacity over the past four years didn’t ease demand placed on the state’s thermal fleet, defined as peak demand minus wind and solar output, over the summer, Mr. Bennett said.
In fact, the demand during the hottest months reached 70 GW, higher than the 69 GW recorded during the summer of 2019, he noted. The coming winter may shatter even the more recent record, Mr. Bennett predicted.
“The bottom line is that we are adding capacity, but it is all wind and solar, and even prodigious amounts of wind and solar cannot be entirely relied upon to produce enough at the right times,” he said.
Texas and the federal government can’t continue to act as though moving further toward a so-called green future will solve everything and that this is the only way to define or measure progress, Mr. Bennett said.
“Unless we build more gas power plants, we’re going to need a similarly prodigious amount of energy storage to keep up,” he said.
The problem, as Mr. Bennett and others who have studied this issue for years see it, is a belief in renewable sources as the way of the future and the primary, if not the only, legitimate candidates for investment.
“The reason we are short of reliable power is because the federal subsidies for wind and solar are causing us to overinvest in those resources and thereby underinvest in everything else. We have to mitigate the overinvestment problem caused by the subsidies in order to solve that problem,” he said.
Politics Over Science
Mr. Stevens agrees that policymakers have placed undue faith in methods and systems that don’t address the daily needs of ordinary people and that decisions come down to politics rather than practicality.“The main reason for the near blackouts in the summer in Texas has a lot to do with political intervention in electricity markets that has led to intermittent renewable energy being forced onto the grid and the development of dispatchable sources—coal, nuclear, natural gas—being curtailed,” he said.
While some may like to imagine a reality where people can rely on wind and solar to power homes, offices, malls, movie theaters, restaurants, and the data centers on which tech platforms run, the reality is that wind and solar are fickle sources of supply, depending heavily on fortuitous and all-too-rare combinations of circumstances.
On hot afternoons—at precisely the time when more people depend on air conditioners—winds are often fleeting or nonexistent. For their part, solar panels have lower capacity during higher temperatures, Mr. Stevens noted. Hence, it’s at precisely those times when demand for energy runs highest that wind and solar sources are least likely to work, especially in a state as populous as Texas.
With their dependence on highly variable climactic and solar factors, green energy systems don’t constitute a reliable grid, he said. This is true not only for Texas but also for other states that are susceptible to extreme weather and where supply and demand exist in a precarious balance at the best of times.
“Consequently, dispatchable power sources like coal, nuclear, and natural gas-powered generation are essential to stabilize the grid,“ Mr. Stevens said. ”Until cost-effective utility-scale battery storage becomes widely available, which is not anticipated in the near future, significant natural gas generation capacity will remain crucial for maintaining grid stability, not only for the ERCOT power grid, but for others as well.”
The issue is controversial, and many theories abound as to how Texas got to the current impasse. Blaming the rise of Bitcoin mining is a mistake, tempting though it may be to find a scapegoat, he said.
Vickaash Agarwal, a partner at the Dubai-based investment firm Illuminati Capital, contrasted the decentralized nature of cryptocurrency transactions with the operations of banks, which require vast amounts of energy to power the data centers in which they store unencrypted customer information.
“Nowadays, Bitcoin mining operations can be housed in containers and placed near power stations, further reducing the strain on the power grid. When compared to global bank data centers and gold mining, Bitcoin mining tends to exert less stress on the energy grid, primarily because of its decentralized and immutable data storage approach,” Mr. Agarwal said.
Ross Baldick, a professor of electrical and computer engineering at the University of Texas at Austin, agrees that it would be a mistake to blame Bitcoin miners for the strains on the state’s energy supply.
A Market-Based Solution?
If providers could operate freely in Texas without political interference, Mr. Stevens believes that consumers would select retail electricity providers in a manner conducive to robust competition. The retail operators would provide energy at competitive rates while attracting significant investment to allow them to bolster their operations.Mr. Bennett believes that Texas and other states will flourish as energy markets only if controls are imposed on the number and role of wind and solar projects that operate.
Looking at Texas’s woes this past summer, and the uncertainties of the coming winter, and considering the problem on a national level, there’s some irony to the situation, according to Mr. Bennett. It isn’t as though the funds to develop and maintain energy production and distribution networks sufficient to keep people comfortable and productive are lacking.
Here, again, he alluded to the more than $100 billion spent on wind and solar projects in Texas alone.
“If Texas were to take just $25 billion of that and invest it in weather readiness, new natural gas plants, and other resiliency measures, even with a 25 percent reduction in wind and solar output, its grid would be secure,” Mr. Bennett said.
“Requiring wind and solar to provide greater reliability before they can connect to the grid, and fixing the market’s pricing signals to better value dispatchable generation, are essential first steps to solving this problem.”
ERCOT officials didn’t respond by press time to a request by The Epoch Times for comment. Department of Energy officials also didn’t respond by press time to a request for comment.
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