Buckle Up for Summer Blackouts: Wind Is Already Failing Texas in Spring

When the wind blows too much, natural gas plants are forced to shut down because they can’t underbid wind producers that can bid zero or negative. But when the wind doesn’t blow when it is needed, wind generators can afford the loss of revenue because they earn so much from tax subsidies.

It’s been all quiet on the electric grid front for a few months — but don’t get your hopes up. Over the last month, electricity prices came near the $5000/MWh regulatory cap three separate times because the wind wasn’t blowing enough when the sun went down.

If this sounds familiar, you’re not wrong.

You may hear from the drive-by media that the problem is unseasonably warm temperatures, or that there are a lot of power plants down for maintenance. But high 80s in April and low 90s in May are not unusual, and the Texas grid used to manage these weather changes with no problems. From 2014 to 2016, real-time prices only went over $1000/MWh twice, but it’s happened three times already this year.

If the grid is already on shaky ground, with many weeks to go before blistering triple-digit temperatures shoot electric demand through the roof, all signs are pointing to an unpleasant summer.

The problem with the Texas grid is so simple it’s infuriating: Relying too heavily on unpredictable wind and solar, without enough reliable reserve capacity, means higher volatility — leading to higher prices and increasing need for expensive interventions by ERCOT to avoid outages. This is why your electric bill is going up and up even though wind and solar are supposed to be cheap.

While Texas certainly has a lot of sun, peak solar output almost never aligns with peak electric usage. The Lone Star State also has plenty of wind, but wind generation is wildly unpredictable — by nature. It’s not unusual for a wind generator’s output to swing 60 percentage points or more in a single week.

Take last month, for example. On Tuesday, April 16, electricity prices reached their cap because ERCOT’s day-ahead wind forecast was off by 50%. Five gigawatts of wind we were counting on to power Texas as the sun went down didn’t show up. That was the equivalent of simultaneously shutting down 10 large natural gas units, or all of the state’s nuclear capacity. If the latter occurred, the news media would be up in arms (and rightfully so). But because the culprit was the political darling of both the left and the right, no one heard about it.

ERCOT hasn’t been the best at predicting wind output, and the problem isn’t entirely its fault. Wind veers so wildly between extremes it’s nearly impossible to plan a sustainable grid around its fickleness — yet wind makes up 26% of our generating capacity.

It’s all because lucrative tax breaks and subsidies at the state and federal level, combined with flaws in ERCOT’s market design, make it almost impossible for wind to lose money — and harder than ever for natural gas to compete, even though it’s far more reliable and affordable. When the wind blows too much, natural gas plants are forced to shut down because they can’t underbid wind producers that can bid zero or negative. But when the wind doesn’t blow when it is needed, wind generators can afford the loss of revenue because they earn so much from tax subsidies.

Imagine trying to open a restaurant when your competitor next door is paying its customers to eat there. It’s no wonder natural gas capacity in ERCOT has barely grown over the past decade, and not enough to make up for losses of coal plants, while demand has been steadily increasing.

All those subsidies are hurting our most reliable, affordable energy producers and putting our economy at risk — leaving you and me, the taxpayers on the hook.

While most political issues are far more complex and nuanced than brazen attack ads and headlines would lead you to believe, in this case, it really does boil down to one simple problem.

And it would be easy to solve — if lawmakers are willing to go against the grain of political correctness and set a clear reliability standard for the wind and solar generators that want to connect to our grid.

Unfortunately, that’s a gargantuan “if.”

As a former lawmaker, I understand the pressures our legislators are under to toe the line on alternative energy. Major utilities embracing World Economic Forum- and United Nations-aligned “energy transition” policies that seek to redefine what’s “clean” and what’s “pollution” are making matters worse. And the incessant misinformation from their well-funded lobby that promise rural “economic development” and “cheap energy” sound too good to be true, because they are.

Elected officials don’t serve the lobby. They serve Texans — or, at least, they should.

And Texans want a reliable, affordable grid. They want to not have to worry about losing power in the heat of the summer or the dead of winter. The Legislature must put a stop to these market-distorting subsidies and make reliability, not popularity, the priority for our electric grid.

Gov. Greg Abbott sent a letter on July 6, 2021 to members of the Public Utility Commission of Texas (PUC) directing them to “take immediate action to improve electric reliability across the state.” The second directive was to “Allocate reliability costs to generation resources that cannot guarantee their own availability, such as wind or solar power.” Unfortunately, the PUC hasn’t acted on this directive or even studied it. The costs of scarcity on the grid are estimated to have exceeded $12B in 2023, which is equal to two-thirds of the property tax relief passed in the 88^th Legislature, all paid for by ratepayers.

“Unfortunately for Texans, the ERCOT grid is moving from a single grid with gas and coal power plants running efficiently all day to two grids: one for wind and solar and one for expensive backup power that fills in the gaps when there is not enough wind and sun,” says Dr. Brent Bennett, policy director for Life:Powered at the Texas Public Policy Foundation. “Every time these scarcity events occur, whether due to real scarcity or artificial scarcity created by ERCOT’s operating policies, ratepayers are shelling out tens to hundreds of millions of dollars for backup power. It is the most expensive way to operate a grid, and Texans will feel the bite as these costs are absorbed over time.”

The Californication of our grid is unfolding before our eyes. If the Legislature and the PUC don’t act fast, the Texas miracle won’t last.

The Honorable Jason Isaac is CEO of the American Energy Institute and a senior fellow at the Texas Public Policy Foundation. He previously served four terms in the Texas House of Representatives

Related Topics:#HeartlandDailyNews #JasonIsaac #SummerBlackouts #TexasPowerGrid #WindFailingTexas #WindSubsidies

Up Next

Trans Mountain completion shows victory of good faith Indigenous consultation

Don't Miss

America Is Really Bad At Foreign Interventions. Why Does Biden Think Ukraine Will Be Any Different?

Todayville

Todayville is a digital media and technology company. We profile unique stories and events in our community. Register and promote your community event for free.

Follow Author

Liberal reporter reveals Democrats secretly wonder who’s running America after seeing Biden

National / 6 hours ago

Saskatchewan files injunction against Trudeau gov’t over carbon tax dispute

COVID-19 / 6 hours ago

Heroic Nurses in Horrible Hospitals

Automotive

It’s Time To Abandon Reckless EV Mandates

Published on July 4, 2024

Todayville

From Canadians for Affordable Energy

Dan McTeague

Written By Dan McTeague

Already, billions of tax dollars have been handed out in subsidies to companies that have no accountability to the Canadian taxpayer. This experiment in societal re-engineering will disproportionately harm Canadian workers and families, especially those who live in rural communities.

And it will surely fail

Canada is not nearly ready for the wholesale adoption of electric vehicles (EVs).

That was the message of the letter I sent to every member of Parliament recently, urging them to drop the “Electric Vehicle Availability Standard” introduced by the Trudeau government late last year. That’s the policy that mandates that all new vehicles sold in Canada must be electric by 2035. There is no way, considering the economic, technological and infrastructural realities of our country — and our world — where this is possible.

Stubbornly attempting to achieve this goal would do serious damage to our economy, leaving Canadian taxpayers on the hook for generations to come. Already, billions of tax dollars have been handed out in subsidies to companies that have no accountability to the Canadian taxpayer. This experiment in societal re-engineering will disproportionately harm Canadian workers and families, especially those who live in rural communities.

And it will surely fail. In my letter I highlight a few of the central reasons why staying the course on EV mandates by 2035 is extremely reckless. Right off the bat, the technology is simply not there for electric vehicles to be a reliable source of transportation in Canada’s climate. The batteries cannot hold their charge in frigid temperatures. Forcing Canadians to rely on vehicles that can’t handle our winters is irresponsible and dangerous.

Electric vehicles’ cost is another issue. Right now, the EV market relies heavily on government subsidies. These subsidies can’t last forever. But without them EVs are prohibitively expensive. Even with them, the costs of maintaining an EV are high. Replacing a damaged battery, for example, can cost upwards of $20,000. Mandating that people buy vehicles they can’t afford to either purchase in the first place or maintain if they do buy them is political malpractice.

A fact long ignored by decision-makers in Ottawa is that our electrical grid isn’t ready for the excess demand that would come with widespread EV adoption. These mandates, paired with the government’s goal of fully decarbonizing the grid by 2035, put us on a collision course with the reality of unreliable power. A grid powered, not by reliable fossil fuels, but by spotty wind and solar energy would be further burdened with millions of cars relying exclusively on electricity.

Beyond the electricity itself, the EV mandates will require additional transmission and distribution capacity. But there are no signs any plan is in place to expand our transmission capacity to meet the 2035 target.

The sheer number of new charging stations required by wholesale adoption of EVs will strain our distribution networks. Natural Resources Canada projections show that Canada will need between 442,000 and 469,000 public charging ports by 2035. At the moment, we have roughly 28,000. And that doesn’t include the private charging stations people will need to install at home. Closing that gap in such a tight time frame is almost certainly impossible.

All of those considerations aside, at a fundamental level the government’s push for electric vehicles encroaches on the operation of the free market, all in the name of emissions reductions. The Canadian economy is founded on the market principle that the consumer drives the economy (no pun intended). Thousands of times over, it has been shown that if there is enough demand for a product, supply soon follows. In the case of EVs, however, the federal government is operating under the assumption that if you somehow create a supply, that will inspire a demand.

This hasn’t worked in any of the countries where it’s been attempted, which is why nations around the world have started to tap the brakes on EV mandates. Decision-makers in Ottawa need to follow suit and abandon these reckless and costly mandates. Let the market decide when EVs are ready for prime time. In other words, let Canadians decide.

Dan McTeague is President of Canadians for Affordable Energy

Economy

Ottawa’s Regulatory Assault on the Extraction Sector and Its Impact on Investment

Published on July 4, 2024

Todayville

From the Fraser Institute

By Kenneth P. Green

Business investment is a foundational requirement for a prosperous economy. It provides the resources to establish new companies, expand existing ones, and invest in new factories, machinery, and technologies. Business investment in Canada has declined markedly for over a decade. It is a major reason why Canadian living standards are stagnating in absolute terms and declining relative to many peer countries, particularly the United States.1

One factor behind declining business investment is the heavy regulatory burden imposed by the current federal government on the extraction sector, which includes: mining, quarrying, and oil and gas. Since 1990, this sector averaged 17.3 percent of total non-residential business investment, and reached as high as 28.7 percent of the total in 2013.2

The federal government has been particularly critical of the oil and gas sector. As an example of such sentiment, in a 2017 speech Prime Minister Trudeau said it would take time to “phase out” the oil sands, indicating the long-term goal of the federal government to eliminate the fossil fuel industry (Muzyka, 2017). The prime minister’s comments were followed by a number of new regulations that directly or indirectly targeted the oil and gas sector:

• In 2019, Bill C-69 amended and introduced federal acts to overhaul the governmental review process for approving major infrastructure projects (Parliament of Canada, 2018). The changes were heavily criticized for prolonging the already lengthy approval process, increasing uncertainty, and further politicizing the process (Green, 2019).

• In 2019, Bill C-48 changed regulations for vessels transporting oil to and from ports on British Columbia’s northern coast, effectively banning such shipments and thus limiting the ability of Canadian firms to export (Parliament of Canada, 2019).

• Indications from the federal government that a mandatory hard cap on GHG emissions would eventually be introduced for the oil and gas sector. In 2023, such a cap was introduced (Kane and Orland, 2023), excluding other GHG emitting sectors of the economy (Watson, 2022).

• In early 2023, the government announced new fuel regulations, which will further increase the cost of fuels beyond the carbon tax (ECCC, 2023).

• In late 2023, with limited consultation with industry or the provinces, the Trudeau government announced major new regulations for methane emissions in the oil and gas sector, which will almost inevitably raise costs and curtail production (Tasker, 2016).

The growing regulatory burden has a number of implications that impede or even prohibit oil and gas investment, by increasing costs and uncertainty, making it less attractive to invest in Canada. Both a 2022 survey of mining companies and a 2023 survey of petroleum companies identified the same three risks as inhibiting investment in Canadian provinces—uncertainty over disputed land claims, protected areas, and environmental regulations.3

It is also important to recognize that the Trudeau government introduced a carbon tax in 2016, which conceptually should replace regulations related to greenhouse gas (GHG) emissions such as those listed previously rather than be an additional policy lever used to manage GHG emissions.4

The regulations discussed above, as well as direct decisions by the federal government had tangible effects on the oil and gas sector:

• In late 2016, the Northern Gateway pipeline running from northern Alberta to Kitimat, British Columbia was cancelled by the Trudeau government, further limiting the ability of firms in Alberta to get their products to export markets (Tasker, 2016).

• In 2017, TransCanada Corp. cancelled its $15.7 billion Energy East pipeline, which would have transported oil from Alberta to Saint John, New Brunswick. The project was cancelled in large measure due to changes in national policy regarding the approval of large infrastructure projects (Canadian Press, 2017).

• While the Trans Mountain pipeline from Edmonton to Burnaby, BC was approved, Kinder Morgan exited the project in 2018 due to uncertainties and questions about the economics of the project, forcing the Trudeau government to take the ownership. The cost of the project has since increased by more than four times the original estimate to $30.9 billion (Globe and Mail Editorial Board, 2023).

• In 2019, US-based Devon Energy announced plans to exit Canada’s oilsands to pursue more profitable opportunities in the United States (Healing, 2019).

• In 2020, Teck Resources abandoned its $20 billion Frontier oilsands mine in Alberta because of increasing regulatory uncertainty (Connolly, 2020).

• In 2020, Warren Buffett’s Berkshire Hathaway decided not to invest $4 billion in Saguenay LNG, a liquified natural gas plant and pipeline, due to political and regulatory risks (CBC News, 2020).

The divestitures above are not an exhaustive list. Other companies including Norwegian Equinor (formerly Statoil), France’s TotalEnergies SE (formerly Total SA), US-based Murphy Oil, and ConocoPhillips have all reduced their investments in Canada’s oil and gas sector.

The government’s mounting regulations and hostilities towards the oil and gas sector did not go unnoticed outside of Canada. A 2018 article in The Economist listed the many failures to develop pipeline infrastructure in Canada to bring much-demanded oil and gas to market. Indeed, the piece called it a “three-ring circus” that risked “alienating foreign investors who are already pulling back from Canada” (Economist, 2018).

It is first important to acknowledge the overall decline in business investment in Canada since 2014. Overall, total non-residential business investment (inflation-adjusted) declined by 7.3 percent between 2014 and 2022.5, 6

The decline in business investment in the extractive sector (mining, quarrying, and oil and gas) is even more pronounced. Since 2014, business investment excluding residential structures and adjusted for inflation has declined from $101.9 billion to $49.7 billion in 2022, a reduction of 51.2 percent (figure 1).7

A similar decline in business investment of 52.1 percent is observed for conventional oil and gas, falling from $46.6 billion in 2014 to $22.3 billion in 2022 (inflation-adjusted) (figure 1). In percentage terms the decline in non-conventional oil extraction was even larger at 71.2 percent, falling from $37.3 billion in 2014 to $10.7 billion in 2022.8

Simply put, the declines in the extraction sector are larger than the total decline in overall non-residential business
investment between 2014 and 2022, indicating the magnitude of the overall effect of the decline in business investment in this sector.

The importance of business investment to the health of an economy and the rising living standards of citizens cannot be overstated. One of the major challenges facing Canadian prosperity are regulatory barriers, particularly in the oil and gas sector.

In that light, much of the regulatory burden added over the last eight years to the oil and gas sector should simply be eliminated. In some ways this is already being forced on the federal government through court decisions. For instance, in October of 2023, the Supreme Court of Canada ruled that parts of Bill C-69 were unconstitutional as they infringed on areas of exclusive provincial jurisdiction, requiring revisions to the Act (Dryden, 2023).

A careful and clear analysis is needed of the costs and benefits of the regulatory measures imposed on the oil and gas sector, including Bill C-48, the recent methane regulations, and the emissions cap. Based on this analysis, the regulatory measures should be adjusted to help improve the ability of Canada’s energy sector to attract and retain investment.