By The Editorial Board | The Wall Street Journal
Electric
Utility trucks are parked in front of the Oncor facility in preparation of
power outages due to weather, Fort Worth, Texas, Feb. 16. - PHOTO: RALPH
LAUER/EPA/SHUTTERSTOCK
How bad energy policy led to rolling blackouts in the freezing Lone
Star State.
Why are millions of Americans in the nation’s most
energy-rich state without power and heat for days amid extreme winter weather?
“The people who have fallen short with regard to the power are the private
power generation companies,” Texas Gov. Greg Abbott explained. Ah, yes, blame
private power companies . . . that are regulated by government.
The Republican sounds like California’s Democratic
Governor Gavin Newsom, who lambasted private utilities for rolling blackouts during
a heat wave last summer. Power grids should be able to withstand extreme
weather. But in both these bellwether states, state and federal energy policies
have created market distortions and reduced grid reliability.
Mr. Abbott blamed his state’s extensive power outages on
generators freezing early Monday morning, noting “this includes the natural gas
& coal generators.” But frigid temperatures and icy conditions have
descended on most of the country. Why couldn’t Texas handle them while other
states did?
The problem is Texas’s overreliance on wind power that
has left the grid more vulnerable to bad weather. Half of wind turbines froze
last week, causing wind’s share of electricity to plunge to 8% from 42%. Power
prices in the wholesale market spiked, and grid regulators on Friday warned of
rolling blackouts. Natural gas and coal generators ramped up to cover the
supply gap but couldn’t meet the surging demand for electricity—which half of
households rely on for heating—even as many families powered up their gas
furnaces. Then some gas wells and pipelines froze.
In short, there wasn’t sufficient baseload power from
coal and nuclear to support the grid. Baseload power is needed to stabilize
grid frequency amid changes in demand and supply. When there’s not enough
baseload power, the grid gets unbalanced and power sources can fail. The more
the grid relies on intermittent renewables like wind and solar, the more
baseload power is needed to back them up.
But politicians don’t care about grid reliability until the
power goes out. And for three decades politicians from both parties have pushed
subsidies for renewables that have made the grid less stable.
Start with the 1992 Energy Policy Act signed by George
H.W. Bush, which created a production tax credit to boost the infant wind
industry. Generators collect up to $25 per megawatt hour of power they produce
regardless of market demand. The credit was supposed to expire in 1999, but
nothing lasts longer than a temporary government program, as Ronald Reagan once
quipped.
The renewables lobby found GOP allies in windy states
like Texas, Oklahoma and Iowa. Former Enron CEO Ken Lay, who had made a big bet
on wind, begged then Texas Gov. George W. Bush in 1998 to lobby Congress to
extend the credit for five years. Congress has since extended it more than a
dozen times, most recently in December.
Wind producers persuaded former Gov. Rick Perry to back a
$5 billion network of transmission lines to connect turbines in western Texas
to cities. This enabled them to build more turbines—and collect more tax
credits. Because the Texas grid is often oversupplied, wind producers sometimes
pay to off-load their power, though they still turn a profit with the tax
credits.
Coal and nuclear are more strictly regulated and can’t
compete, and many coal plants have shut down in Texas and elsewhere. Over the
last decade about 100 gigawatts of coal power nationwide has been
retired—enough to power 60 million homes. Many nuclear plants are scheduled to
shut down, including large reactors in New York and Illinois this year.
Renewables and natural gas are expected to substitute,
but Texas is showing their limitations. In the Lone Star State, bad weather has
constrained the supply of gas, but government policies do the same in other
states. New York Gov. Andrew Cuomo and New Jersey’s Phil Murphy have blocked
pipelines to deliver shale gas from Pennsylvania to the Northeast.
Their pipeline blockade has driven up the cost of
electricity. The average retail price of power is about 50% higher in New Jersey
and New York than in Pennsylvania. They and other governors have also poured
subsidies into wind and solar, though neither can provide reliable power in
frosty weather.
Many states also have renewable mandates that will force
more fossil-fuel generators to shut down. New York has required that renewables
account for 70% of state power by 2030. Then layer on Democratic policies at
the federal level that limit fossil-fuel production and distribution.
The Federal Energy Regulatory Commission is supposed to
ensure grid reliability, but under Barack Obama it promoted renewables over
reliability. Democrats opposed efforts by Trump appointees to mitigate market
distortions caused by state renewable subsidies and mandates that jeopardized
the grid. On present trend, this week’s Texas fiasco is coming soon to a cold
winter or hot summer near you.
__________________
RELATED
ARTICLE
A
Deep Green Freeze
By The Editorial Board | The Wall Street Journal
Oil
rigs are seen in a icy landscape near Interstate 20 in Odessa,Texas, Feb. 12. -
PHOTO: JACOB FORD/ASSOCIATED PRESS
Power shortages show the folly of eliminating natural gas—and coal.
Gas and power prices have spiked across the central U.S.
while Texas regulators ordered rolling blackouts Monday as an Arctic blast has
frozen wind turbines. Herein is the paradox of the left’s climate agenda: The
less we use fossil fuels, the more we need them.
A mix of ice and snow swept across the country this
weekend as temperatures plunged below zero in the upper Midwest and into the teens
in Houston. Cold snaps happen—the U.S. also experienced a Polar Vortex in
2019—as do heat waves. Yet the power grid is becoming less reliable due to
growing reliance on wind and solar, which can’t provide power 24 hours a day,
seven days a week.
While Texas is normally awash in gas and oil, the
Electric Reliability Council of Texas, which oversees the state’s wholesale
power market, urged residents this weekend to conserve power to avoid power
outages. Regulators rationed gas for commercial and industrial uses to ensure
fuel for power plants and household heating.
Texas’s energy emergency could last all week as the
weather is forecast to remain frigid. “My understanding is, the wind turbines
are all frozen,” Public Utility Commission Chairman DeAnn Walker said Friday.
“We are working already to try and ensure we have enough power but it’s taken a
lot of coordination.”
Blame a perfect storm of bad government policies, timing
and weather. Coal and nuclear are the most reliable sources of power. But
competition from heavily subsidized wind power and inexpensive natural gas,
combined with stricter emissions regulation, has caused coal’s share of Texas’s
electricity to plunge by more than half in a decade to 18%.
Wind’s share has tripled to about 25% since 2010 and
accounted for 42% of power last week before the freeze set in. About half of
Texans rely on electric pumps for heating, which liberals want to mandate
everywhere. But the pumps use a lot of power in frigid weather. So while wind
turbines were freezing, demand for power was surging.
Gas-fired power plants ramped up, but the Arctic freeze
increased demand for gas across the country. Producers couldn’t easily increase
supply since a third of rigs across the country were taken out of production
during the pandemic amid lower energy demand. Some gas wells and pipelines in
Texas and Oklahoma also shut down in frosty conditions.
Enormous new demand coupled with constrained supply
caused natural gas spot prices to spike to nearly $600 per million British thermal
units in the central U.S. from about $3 a couple weeks ago. Future wholesale
power prices in Texas for early this week soared to $9,000 per megawatt hour
from a seasonal average of $25.
Prices jumped in the Midwest too, though less
dramatically because there are more coal and nuclear plants. Illinois and
Michigan have more gas storage than Texas, which exports much of its shale gas
to other states and, increasingly, around the world in liquefied form.
Europe and Asia are also importing more fossil fuels for
heat and power this winter. U.S. LNG exports increased 25% year-over-year in
December while prices tripled in northern Asian spot markets and doubled in
Europe. Germany’s public broadcasting recently reported that “Germany’s green
energies strained by winter.” The report noted that power is “currently coming
mainly from coal, and the power plants in Lausitz” are now “running at full
capacity.”
Coal still accounts for 60% of China’s energy, and
imports tripled in December. China has some 250 gigawatts of coal-fired plants
under development, enough to power all of Germany. Unlike Democrats in the
U.S., Chinese leaders understand that fossil fuels are needed to support
intermittent renewables. “Power shortages and incredibly high spot gas prices
this winter are reminding governments, businesses and consumers of the
importance of coal,” a Wood Mackenzie consultant told Reuters recently.
California progressives long ago banished coal. But a
heat wave last summer strained the state’s power grid as wind flagged and solar
ebbed in the evenings. After imposing rolling blackouts, grid regulators
resorted to importing coal power from Utah and running diesel emergency
generators.
Liberals claim that prices of renewables and fossil fuels
are now comparable, which may be true due to subsidies, but they are no free
lunch, as this week’s energy emergency shows. The Biden Administration’s plan to banish
fossil fuels is a greater existential threat to Americans than climate change.
https://www.wsj.com/articles/a-deep-green-freeze-11613411002?mod=trending_now_opn_2
