In recent weeks, brutal winter storms knocked out nearly one-third of the electricity generating capacity in Texas. Massive blackouts left more than four million residents without power, which in turn destroyed properties and claimed the lives of dozens. As authorities begin to sift through the countless layers of this systemic failure, it becomes agonizingly clearer that not only was this tragedy avoidable but that it was enabled by numerous entities who prioritized profits over their constituents.
Blue Planet Energy solutions are used in disaster relief projects around the world, like in the aftermath of Hurricane Maria in Puerto Rico.
How Did the Grid Get This Broken, and Why Are Customers Paying the Price?
Let’s start from the top: Whereas the rest of the country draws its electricity from one of two massive electrical grids, Texas homes and businesses are powered by an independent third grid. This affords the state a considerable degree of freedom on how its electrical systems are built and maintained. Operations are managed by the Electric Reliability Council of Texas (ERCOT), which is undoubtedly a name you’ve heard a lot lately.
When Texas experienced its last extreme winter in 2011 (yes, a similar thing happened just 10 years ago), ERCOT recommended steps to upgrade and weatherize electrical systems that would help combat widespread outages during future events. But sadly, nearly every power company in the state opted out of these voluntary expenditures. Now, a decade later, its customers are paying the price of this decision – literally. Although the Texas grid was effectively rendered useless for days on end, leading to incredibly uncomfortable conditions and deaths, it also generated exorbitant bills whenever customers did get service. These customers can’t afford to (and shouldn’t be expected to) pay. How is this possible?
In most of the country, the electricity market is regulated and our rates are fixed. Although these rates may vary based on time of the year or day, they remain predictable. In Texas, however, deregulation opened the market to competition – today, customers have more than 200 electricity providers to choose from. Some of these providers offer a plan where the customer’s price is based on the wholesale rate for electricity, which can translate into savings much of the time. On the flip side, because any pricing fluctuations are passed directly to the consumer, this model can be financially devastating in times of crisis.
And that scenario is exactly what was unfolding before our eyes. As generation facilities shut down and demand for energy shot up, the wholesale price of energy skyrocketed. For reference, the average retail electricity price in the U.S. is about $0.13/kWh. Without much warning, Texas saw wholesale prices reach more than $9/kWh – nearly 70 times the national average. The result: scores of Texans watching helplessly as their bills reach several thousand dollars over the course of just a few days.
Courtesy of Tamir Kalifa – New York Times
As the New York Times reported in an interview with William W. Hogan, the Harvard Kennedy School professor who is touted as the architect of Texas’ energy system, the market is “performing as it was designed.” It’s not difficult to see who benefits from that design, and who pays the dire consequences. And while the burden put on customers is exaggerated in extreme weather events, a report by The Wall Street Journal found that Texans have been overpaying consistently for over a decade. The study found that Texans have paid $28 billion more for electricity under the deregulated retail providers than other Texans who pay a traditional utility.
While the final bill for the week of the blizzard is still unknown, this will lead to increased prices and a disproportionately large burden on poor Texans. ERCOT found itself over $1 billion short for payments from that week and the total value of energy sold that week alone could be greater than the entire year’s cost of energy in 2020. Rates will have to go up to cover these costs and the costs of rebuilding the grid. “Texas residential electricity ratepayers — and low- and middle-income Texans in particular — are going to pay a hefty price for that failure,” wrote Robert Bryce.
Setting the Record Straight on Renewables
Unfortunately, this disaster has lent itself to a barrage of misinformation, much of which places the lion’s share of the blame on renewable energy. The fact is that while Texas has the potential to generate enough renewable energy to power the entire country several times over, the state remains heavily reliant on fossil fuels. ERCOT forecasted just seven percent of its winter capacity would come from wind power; taking only those assets offline would not cause the scale of outages experienced across the state. The vast majority of the unavailable capacity was expected to come from gas, coal, and nuclear plants that were paralyzed in the extreme cold due to the previously mentioned lack of investment in weatherization. This point was hammered home in a statement to Reuters from Ed Crooks, vice-chair of the Americas division at Wood Mackenzie: “The crisis in Texas was not caused by the state’s renewable energy industry. The largest loss of generation came from gas-fired plants, with the drop-off from wind farms a long way behind.”
Similarly, while it is true that some of the state’s windmills were inoperable in the freezing conditions, this also could have been avoided with responsible planning. Consider a state like Iowa, where temperatures routinely plummet during the winter months. These systems are equipped with additional heating elements that keep turbines from freezing, allowing wind farms to remain a viable source of energy year-round. As Vijay Modi, a mechanical engineering professor at Columbia University, stated in an interview with Mashable, “Cold climate weatherized wind turbines are not rocket science.” He also pointed out that weatherization adds less than 10 percent to the price of a turbine – not insignificant, but certainly, a worthwhile investment when lives are potentially at stake.
Others are quick to point their fingers at ERCOT, but the organization has no legal authority to force actions upon power producers. ERCOT did what it could when it urged energy companies to winterize their systems 10 years ago. In my view, the blame here lies squarely on the legislators and state agencies that do have legal authority, but have done little to prevent such disasters. This was a failure of planning and policy on an unprecedented scale.
It’s Time to Mess with Energy Resilience in Texas
Texas should be dominating the renewable energy revolution, without question – no area of the country has a better combination of resource abundance, available land, and electricity demand. However, it’s important to note that adding renewable resources to the grid is only one piece of the equation to solve the climate crisis. To truly protect their constituents from catastrophic power outages and the price gouging that comes along with it, Texas authorities need to take a long, hard look at building resilience into their grid. Rather than leaning on fossil fuel-fired power plants and backup assets that are outdated, heavily polluting, and slow to react, it’s beyond time to invest in more reliable, more distributed energy resources that can quickly and safely respond to grid disruptions.
California homeowners go energy-independent after deadly wildfires cause historic outages from local utility PG&E.
We have long championed a grid-independent approach to clean energy by pairing renewables with battery technologies like our Blue Ion solutions. Our systems are engineered to act as a safe, low-maintenance energy resource that can play a critical role in enhancing grid resilience while at the same time delivering cleaner, higher-quality electricity than traditional power providers. We’ve demonstrated the exceptional performance and reliability Blue Ion systems offer in isolated grid environments like Puerto Rico and Hawaii, and during outages caused by disasters like Puerto Rico’s earthquakes and hurricanes as well as California’s wildfires. Now we’re ready to hit the ground running with renewable energy installers across the Lone Star State.
To really provide resilience at scale, we need policy and regulatory support for microgrids and distributed energy resources, but given the failure of leadership in Texas, let’s not wait for that. Years of market dynamics have made it hard for rooftop solar to compete with the grid electricity costs in Texas, but that is about to change. With it, Texans will realize that they want something the grid cannot provide them – reliable power. We can act now to develop resilience for homes, businesses, and critical infrastructure facilities independently. If you’re interested in helping Texans free themselves from the failures that purposeful inaction created across a decaying electrical grid, please consider joining our dealer network. Get in touch with the Blue Planet Energy team today and together, we can bring new meaning to the phrase “Don’t mess with Texas.”
~ Chris Johnson, CEO, Blue Planet Energy