By Ed Ireland — April 17, 2023
The near failure of the Texas power grid, coming just 4 minutes and 37 seconds from a complete collapse on February 14, 2021, was the first alarm bell that something was dreadfully wrong with US power grids. Meredith Angwin, a physical chemist and power grid specialist, described the February 2021 failure of the Texas power grid failure as a seminal event that was not a surprise:
Those of us who were watching the grid had noticed for years that Texas ran with a very low reserve margin…and there were predictions that Texas was going to be in trouble, [1],”
Since then, more power-grid operators have been speaking out about the increasing instability of their grids due to an over-weighting of non-dispatchable wind and solar power. A report on February 24, 2023, from the largest power grid in the US, PJM, warned of “increasing reliability risks” affecting 13 states and the District of Columbia and 65 million people who get their power from PJM. This report is a wake-up call for all US power grids because most face the same grid instability problems highlighted in the report:
- The growth rate of electricity is likely to continue to increase from electrification coupled with the proliferation of high-demand data centers in the region.
- The projections in this study indicate that it is possible that the current pace of new entry (of electricity generation capacity) would be insufficient to keep up with expected retirements and demand growth by 2030.
- Thermal generators are retiring rapidly due to government and private sector policies as well as economics.
- PJM’s interconnection queue is composed primarily of intermittent and limited-duration resources.
More grids have been warning that the addition of new wind and solar needs to be restrained and that retirements of dispatchable thermal generation—such as coal, nuclear and natural gas—need to slow.
This was emphasized by Manu Asthana, CEO of PJM, in a speech at the Electric Supply Association, on March 27, 2023, when he noted that new supply resources had not kept pace with retirements because of clogged interconnection queues, siting obstacles, and supply chain constraints:
I think the math is pretty straightforward. I think we need to add [supply resources] faster … but I also think we need to subtract slower and subtract generation only when the replacement generation is here at scale. I really think that’s critical.
Asthana also emphasized that these retirements are not the result of old facilities being voluntarily shuttered but instead are being forcibly closed by government intervention:
Most of the retirements are expected because of state and federal environmental and climate policies.
He added that PJM faces the additional problem of increasing loads from the EVs and the push to “electrify everything,” plus data center growth since their grid includes the greater Washington DC area.
The problem of rapidly retiring dispatchable power generation such as coal and natural gas is indeed entirely policy-driven. One of Joe Biden’s campaign promises was to eliminate fossil fuels, with policies focused on eliminating coal mines and coal-fired power plants. He said recently that all of the country’s coal plants should be closed because they’re “too costly to operate and can’t be relied upon as a dependable energy source for future generations” and replaced by wind and solar.
The significant impact of these energy policies was emphasized in a recent article in the Houston Chronicle:
Hundreds of power plants, representing more than 87,000 megawatts of coal-, nuclear- and natural gas-fired generation, have retired in the United States over the past five years as power grids age and adjust to investor pressure and tougher state regulations around climate change, according to data from the Energy Information Administration.
New solar and wind farms are coming online to replace them at a fast clip — of the 46,000 megawatts of new capacity added to the grid last year, more than 60 percent were solar and wind projects, according to the energy administration.
These warnings are not new. ERCOT, the operator of the Texas grid, warned two years ago after the near collapse of the Texas grid during Winter Storm Uri that they were launching a study of potential changes to improve the performance and long-term stability of the Texas grid.
The results of that study provided the basis for the Texas legislature to hold hearings that culminated in two bills approved by the Texas Senate last week on May 5. Senate Bill 6 passed by a vote of 22 to 9 to build up to 10 gigawatts of backup power generation that is weatherized and has on-site fuel equivalent to 10 nuclear reactors. It would create an energy insurance fund using taxpayer money, and builders of the facilities would be assured returns of up to 10%. Senate Bill 7, passed 31-0, creates a financial incentive to encourage the private development of energy generation resources that can come on within two hours and run for at least four hours, such as natural gas plants or batteries.
Opponents immediately created the false narrative that the Texas bills are proof that Texas politicians “no longer have faith that competitive markets can adequately and economically satisfy the electricity need of Texas citizens,” said Beth Garza, a consultant for the think tank “R Street Institute.”
On the contrary, the Texas Senate plan is designed to address the anticompetitive policies embodied in the comically-misnamed Inflation Reduction Act and other policies coming out of the Biden Administration. As PJM CEO Asthana (cited above) noted, such measures are needed because “the U.S. no longer has competitive energy markets now that the heavy hand of government has superseded markets with massive taxes and subsidies for wind and solar.”
In a recent article in Forbes and Substack, David Blackmon summed up the pending legislation in Texas:
Advocates for renewables and the climate change lobby also oppose the program on the grounds that it could crowd out the building of more renewables and increase emissions. But the bill does nothing to impact the array of incentives and subsidies for renewables that already exist. ERCOT has clearly demonstrated it already has a hard time properly managing the high volume of wind capacity that has been loaded up on the grid in recent years, and a major weakness of renewables is their failure to perform during severe weather events, which is the whole point of having an adequate reserve of dispatchable thermal capacity.
We will know soon if these bills can be passed into law by both houses of the Texas legislature. With the federal government ramping up subsidies for more and more unreliable energy, states may need to follow some form of the Texas approach by subsidizing or otherwise facilitating the addition of dispatchable power, such as natural gas-fired generation, to preserve power grid stability.
[1] Robert Bryce’s Power Hungry Podcast, starting at the 2-minute mark).
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Ed Ireland is an Adjunct Professor at TCU’s Neeley School of Business. He received his B.S. from Midwestern State University and Ph.D. from Texas Tech University. This analysis was originally posted at Thoughts About Energy and Economics (free subscription).
“Hardwiring the Grid” – Huh? Rewrite using synonyms to see the silliness
“87,000 megawatts … retired in … five years” and “46,000 megawatts … added … last year” Pick 5 or 1 and do it apples to apples. Is the additional 46MW an outlier? If not, then megawatts are growing. Does “a recent article” mean Houston Chronicle’s referencing 2022?
Those solar and wind projects are nameplate capacity not deliverable capacity.
Wind and solar, with more than 50% of a project’s cost offset by subsidies from Biden’s US-destruction cabal, produce near-zero electricity when the wind is not blowing and the sun is not shining, which is the case right now in New England, not only on this day, but on many other days throughout the year
When the wind IS blowing and the sun IS shining, a large capacity, MW, of oil/gas-fired CCGT power plants have to staffed, fueled, kept in good working order, to be immediately ready to counteract the up and down outputs of wind and solar, on a minute-by-minute basis, 24/7/365, “for as long as it takes”.
DO YOU THINK THAT IS FOR FREE?
And what about the grid augmentation/expansion to connect all those occasional, weather-dependent “producers”?
DO YOU THINK THAT IS FOR FREE?
Perhaps “nameplate capacity” should not even be a term- the only term used should be “deliverable capacity”. Why does the fake term exist? I say this as an ordinary citizen who is not involved in the energy business so I have no clue- just curious.
Texas should claw back the subsidies for wind and solar to finance the required conventional or nuclear backup, as that backup is made necessary by the weather dependent nature of wind and solar.
Most of the subsidies are Federal, not state, so Texas has zero ability to claw back
Texas runs its own grid, so taxing subsidized producers would be possible.
Excellent idea. Tax them at the same rate that the feds subsidize them.
Is that Trump economics. the consumers would have to pay the ‘tax’ otherwise the generators wouldnt build a thing if they had to give and subsidies to Texas
“Is that Trump economics.”
As if that’s a bad thing. I’ll take Trump economics any day of the week.
This is misleading. The “economics” are degraded soley by government and private sector policies. There is no such thing as “economics” in a vacuum. Don’t get me wrong. Things like restricting strip mining is a legitimate exercise of government. Thing is what we have now is an anti-science agenda that seeks to shift the energy sector regarless of facts or cost.
There are no problems with strip mines and therefore no reason to ban them.
The only thing is that they need to require the miners to remediate the land when they are done.
And that has been a requirement for many decades.
They are too clever for that This is the new robber barons age .
https://www.sierraclub.org/planet/2015/04/coal-mines-are-going-bankrupt-who-will-clean-them
in Appalachia they just abandon the site and nothing is done
‘Law to Halt Strip-Mining Abuses Is Widely Ignored‘- LA Times
The only thing that will make the people listen is blackouts. Just like AGW has become the de facto truth through propaganda the same can be said for solar and wind power being the savior.
But they’d have to be prepared to correctly identify the problem. That would require more capability than I am willing to believe in.
If we had black-outs the Woke crowd would undoubtable claim that it is all Donald Trump’s fault.
absurdly high electricity bills every month will also make people listen- time to blame Biden for high energy costs- and keep repeating it over and over
Texas will likely get sued by the Bidenistas.
Laws need to be passed stating that “All renewable Energy Contracts SHALL deliver a guaranteed amount of power per year on a monthly basis and pay a penalty equal to ten times the amount of undelivered electricity each month. Sufficient Batteries AND [not or] FF power sources SHALL be provided to provide average annual output for a period of two weeks or as determined by a risk analysis study of typical weather caused outages – whichever is GREATER.
It amazes me how many people will reply to a comment I have made on other web sites when I claim that a 100 MW wind turbine site only delivers 1/3 to 1/4th the Name Plate rating. No one seems to be aware of the fact that a Wind Turbine is consuming about 10-15% of its name plate power even when it is sitting there, frozen in place, delivering nothing. Worse are those that claim that As the EIA claim the U.S. electricity consumption is about 4 trillion kWh that only need to build about 2 Million 2-MW Wind Turbines. When you call them on it they then claim that Solar Panles and/or batteries can provide for the daytime peaks – That it averages out over the grid. LOL Duck Curve does not agree with that.
The “name plate” ratings (a very poor term BTW) for wind turbines and PV modules have very little connection to energy/power they might provide in actual use. They instead should be viewed as maximum ratings that are needed for system design calculations, including safety margins.
And name plate ratings are quite useful when selling the people on really cool, really clean energy generation. Most don’t question the “experts”.
Yes. The name plate number for wind farm misleadingly says ‘power 250,000 homes’ – who use only 1/3 + of the power generated
Actual delivery is much less on average and all consumers need power not just homeowners
Meanwhile in the UK they are dreaming up new ways to subsidise renewables now that they have painted themselves into a corner in CFDs.
https://www.current-news.co.uk/uk-government-considers-reforms-to-contracts-for-difference-scheme/
They have missed the plot entirely. They need to be worrying about retirement of dispatchable generation, and the refusal of Norway to allow another interconnector. The consumer gets to pay, with heightened blackout risk to boot.
The distorted (perverted) electricity market due to renewables has meant that, apart from the great mistake of the West of replacing thermal sources by renewables instead of expanding-together-with, for each renewable MW, 1 MW must be paid to thermal sources by backup (capacity payment); and for each MWh of renewable electricity not dispatched, 1MWh must be paid to renewable facilities for ‘cancel orders’ because there is a maximum limit above which all renewable generation is lost, that citizens must also pay for that non-existent energy and that they cannot consume.
As long as governments continue to turn a blind eye to these facts that make the price of electricity to inevitably and sharply rise, apart from making power grids increasingly unstable, the West will continue to “enjoy” clean, green and sustainable energy… but from inside our caves in the Stone Age.
The simplest and most direct way (elementary high school algebra) to end with the renewable scam, but at the same time the most difficult (signs of intelligence on planet Politicians) is to assign the essential cost of thermal backup to the levelized cost of renewables (R -LCOE), making thermal sources shake off that cost-by-fault-of-others. That would be the immediate death sentence to the dead weight of red renewables or “redewables”.
‘The simplest and most direct way…is to assign the essential cost of thermal backup to the levelized cost of renewables….’
Way too complicated for most consumers and politicians. It would be much simpler and direct to level the playing field for energy dispatch:
1- All supply must be bid-in and scheduled into the grid to be eligible for dispatch, and
2- Any supply selected for dispatch that fails to perform must compensate the grid for any increase in the cost of securing additional energy.
That rather depends on the timescale of bids. Wind and solar can be reasonably certain of their output say an hour ahead, which is when gate closure occurs in the UK system. What they have contracted to supply at that point is subject to imbalance pricing if they fail to provide it, and they may get compensation if they are asked to curtail. BETTA already does what you say. However, it is very different from being required to bid for meeting demand on a long ahead scheduled basis, including during a period of winter Dunkelflaute. Then the wind farms simply don’t bid to supply, and there is no penalty on them for not doing so.
You are correct, of course. Mean load is forecastable, but actual load is highly variable short-term and has to be continually balanced. Re. timescale of bids, I don’t think you can run a grid without scheduling at least one day ahead of dispatch. Conventional energy sources easily operate under this requirement, so W&S should be required to do so as well.
My sense is that they can’t unless they ‘partner up’ with conventional sources that can come on line immediately from standby. This probably means single cycle gas turbines that normally wouldn’t be selected for dispatch outside of high peak load conditions. What this boils down to is that W&S will have to incorporate the cost of this back-up into their bids, which will then reflect their true cost to consumers and probably drastically reduce their participation in day-ahead scheduling.
This is not to say that W&S won’t have a presence in energy supply. If they’re highly confident in the next day’s weather forecast or are otherwise willing to pay a compensating penalty rate for non-performance, they can just ‘wing it’. Alternatively, as you noted, there is very high certainty of their availability in real-time. In that time frame, it would make sense for conventional sources scheduled in the day-ahead market to save on fuel by throttling back and procuring W&S energy in the real-time market. This would allow W&S to participate in the market, albeit at prices at or below the cost of conventional sources.
All-in, consumers are assured of reliable, on-demand energy at true, market-based rates.
If a person looks at the aspirational Integrated Resource Plans what one noticed a few years ago was that inter-regional transfers were being counted on to make up for lack of dispatchable reserves. PacifiCorp’s most recent plan calls for running coal-fired plants longer than the previous plan called for, and also rather than shutting down so many coal-fired units, converting more to natural gas. There is a growing realization of problems ahead. However, from what I can see, because there is also a powerful remaining belief that a miracle will get us soon to 100% “renewables”, the gas conversions are cheap simple cycle plants — why build an advanced, high-efficiency plant that has such a limited life?
There is also still a belief that a large enough grid can eventually eliminate these problems. What will happen as we integrate various regional markets and balancing authorities further?
Think about integrating California with its massive solar resources into all western inter-connected grids. Subsidized solar in an extended day ahead market (EDAM) can bid lower at times than any dispatchable asset — maybe even outcompete non-dispatchable wind. It is going to act as pressure to either eliminate fossil fuel fired assets and make an increasingly unreliable grid, maybe even a grid depending on demand management, or cause subsidizing of dispatchable assets also.
Four hours worth of batteries will not aid solar’s intrinsic capacity factor problem much, but will cost quite a lot of money.
No matter where a person looks, this cult-like belief in a climate crisis promotes poor, short-sighted thinking.
Every Leftist knows, with utmost certitude, that electricity originates from the wall socket. To question their central planning plans is racist patriarchy.
Electricity really is ‘from central planning’.
Without the power politburo or market operator – yes they really are called that- deciding how much and when the grid would collapse as it runs in very tightly defined limits
“The problem of rapidly retiring dispatchable power generation such as coal and natural gas is indeed entirely policy-driven.”
So why is Texas leading the way? Are they all a bunch of Leftists down there? Or are there hard-headed entrepreneurs who recognize the economics of wind and solar?
Texas is leading the way because there is wind there, and there are federal (and maybe state) subsidies for wind. That allows wind to be the low-cost provider in a system that lets wind to go to the front of the line to be paid when it can produce, and imposes no downside when it can’t. That leaves base power, like coal, gas and nuclear, fighting over the scraps, leading to closures.
Take away the wind subsidies, Nick, and see what happens. Stop imposing the ridiculous environmental regulations that are designed to make coal and gas unaffordable power sources, and see what happens. Start rewarding those power producers who will guarantee capacity years in advance, and see what happens.
“ Stop imposing the ridiculous environmental regulations that are designed to make coal and gas unaffordable power sources, and see what happens.”
None of this explains why Texas is leading the way. Are they so anti coal and gas?
Stop being obtuse. It makes you seem like you know nothing about investment. People get involved in all sorts of endeavors that turn out long-term to be poor ideas — witness investment bubbles, manias and panics. More specifically think about mortgage backed securities.
As long as renewables are/were not held to account for their lack of dispatch the tax credits and other advantages afforded them become/became too good to pass up. In sufficiently small quantities they are relatively harmless.
Excellent explanation of the situation.
Actually, it does explain why Texas in investing in wind and solar. Even if you refuse to acknowledge it.
Warren Buffett, Nick, Warren Buffett. Or, drag a $100 bill through a trailer park.
‘That allows wind to be the low-cost provider in a system that lets wind to go to the front of the line to be paid when it can produce, and imposes no downside when it can’t.’
The lack of downside is the key. If W&S have to pay for non-performance, they either 1) go away entirely or 2) raise their bids to reflect their now higher cost of ensuring reliability.
“Take away the wind subsidies, Nick, and see what happens.”
That’s right. Nick didn’t have anything to say about this very significant point.
Windmill farms are not economically viable on their own. Without government subsidies, there would be very few windmill farms.
My particular State, Oklahoma, stopped paying subsidies for new windmill farms about a year ago. The State Legislature said to continue, would bankrupt the State.
Regional personality type? Worry about vs do something about.
Plenty people say diversity adds value, but not enough people say why diversity would add value.
A member state with “lets try it” personality helps a republic if the state does not require frequent resuscitation.
Iconic billionaire investor and advisor Warren Buffet (Berkshire Hathaway) certainly recognizes the TAXPAYER SUBSIDIES and TAX BREAKS that can be harvested from wind & solar projects.
As he said –
“without the tax breaks and subsidies, wind and solar make no sense”
In NIck’s world, massive subsidies prove that the thing being subsidized is economic.
So why is Texas the USA leader in subsidies?
Texas has a lot of wind, that’s why those who farm subsidies go there.
Nothing at all unusual, except to those who are expert at ignoring the obvious answers.
SB7 is nonsense. There should be no applause for requiring a pittance 4-hour dispatchable backup, when the actual need will periodically run 4 days, as was with the case of Uri. 4 hours is a standard to accommodate very expensive battery farms. Furthermore, neither of these Texas senate bills place the cost of grid unreliability on the source of this instability, i.e., on wind (and in the future for Texas) and solar farms.
Very nice report Ed Ireland. The only point I question is the subsidies. Subsidies are the problem not the answer. If we eliminated subsidies today our problem would be solved tomorrow.
Concerning PJM I wish I were the energy god, I would declare an energy holiday for all fossil fuel and nuclear generators serving PJM. Biden would get his wish and Washington would be shut down. It’s a win win. When these knuckleheads realize what a huge mistake it is to get rid of fossil fuels and nuclear, which will take about an hour, we can fire up good dependable power generators and start dismantling the wind and solar monstrosities.
The grid is pretty complicated. The primary issue is dealing with rare events. Their impacts and causes are diverse.
Most modeling results that are published publicly are low grade BS designed to justify a rate increase or to appease a regulator.
Plenty of professional engineers at utilities across the country could tell you what lies they’ve been told to model. Most won’t because they’d lose their jobs.
That said, the grid has built-in automatic protection. It will almost always drop some loads instead of dropping all loads and collapsing. There are lots of ways to fail without collapsing.
vboring, you ignorant slut. Just wait for the next big one on the U.S./Canadian Atlantic coast.
LOL
No disputing that wind was the major cause of the grid failure in Texas. However load shedding compressor booster stations on bone-dry spec gas pipelines and load shedding the cooling water pumps to a nuke plant were major contributing factors. From their report:
Make of these suggestions as you will:
Assign a senior staff member to staff the State Operations Center as needed. This
Ensure the Technical Advisory Committee is comprised of senior-level members
from each member organization to promote timely decision-making.
Looks like “senior” members are ticked off about something and looking to get out.