Assigning Blame for the Blackouts in Texas

There are two facets to the Texas energy catastrophe that I’ve seen on this site: the delivery problem and the capacity problem.

The “Planning Engineer” dismisses delivery problems in Texas thusly:

“Considering the extreme cold, nothing particularly surprising is happening within any resource class in Texas. The technologies and their performance were well within the expected bounds of what could have been foreseen for such weather conditions.”

With that issue resolved, he proceeds to ask, “Who is responsible for providing adequate capacity in Texas during extreme conditions? The short answer is no one.” He turns the rest of his discussion solely to questions of capacity and market forces. 

From all that we’ve seen of the Texas emergency, it appears that they had more problems with delivery than capacity. It doesn’t matter how much fuel you have in reserve if your turbines or water cooling systems freeze up, or your power lines go down. Systems set up to shed heat in a Texas summer need a whole different approach to handle cold. Generators failed because of the way they were housed and winterized.

The problems in Texas began with infrastructure weaknesses and cascaded outward from there.

I’m not sure what a “planning engineer” does, but I wonder if he ever goes out in the field and actually fixes things.

Texas power grid was ‘seconds or minutes’ from a total blackout that could have lasted months, ERCOT says
Texas’ electrical system was “seconds or minutes” from collapsing and plunging the state into the dark for months, the power grid’s operators said Thursday while defending their decision to initiate controlled outages.
“Our frequency went to a level that, if operators had not acted very rapidly … it could have very quickly changed,” said Bill Magness, CEO of the Electric Reliability Council of Texas, the agency that oversees the grid.

I don’t believe we can trust government utilities to deliver the promised energy. The failure in Texas should be a wake up call for all of us. We have an 8K generator that will power much of our household. I recommend now that people visit harbor tools, northern tool, Home Depot and Menards and look at the Portable generators that can be used to keep your family safe when government utilities fail.

Reading the article, and then reading the comments depressed me enough to put pen to paper – or arthritic fingers to keyboard, anyway.

We would all like it to be a problem caused by one simple thing – renewable energy – and with one simple answer – e.g. coal. Or nuclear power. But the reality is more complicated than that, and it behoves us to look closely at our political philosophy to understand how such a thing could happen and what are the options to prevent its re-occurrence.

Firstly what is becoming apparent to the ordinary person, as opposed to electrical and other engineers, is that the sort of reliability that accrued from conventional thermal power stations running off local stores of e.g. coal and uranium with nice large spinning masses giving a decent measure of short term frequency stability on a grid, costs extra when applied to a renewable grid.

This is the dilemma between energy markets and capacity markets: Capacity markets are a way of pricing and selling reliability. More on that later.

Now it is a general axiom of engineering that is so basic no one ever bothered to quote it or give it a name but it goes like this. As an engineering service the income derives from the average usage case, but the cost derives from the worst case.

For example, most income from running an airline comes from boring uneventful three quarters full aircraft flights, or thereabouts. But nearly all the cost in the aircraft business comes from ensuring that it can take 2g positive and 1 g negative loading – the sort of turbulence that can kill passengers – the duplication of flight controls and instruments in case one set goes wrong, the excessively conservative maintenance schedules that are supposed to guarantee nothing breaks in flight and indeed the extra fuel carried to allow contingency routing. Add in the pilot hours on simulators to ensure that the pilots are trained on that one in a thousand freak event….What your airplane ticket buys you is not just a flight, it is a safe flight.

In the context of the current crop of near failures on the grid, irrespective of causes, ultimately any solution is going to cost money, and add to the cost of electricity.

So that is the first fundamental point that cannot be gotten around – how much (more) is the US consumer willing to pay for a more resilient electricity supply?

Again, having had that political debate, the question arises of how – should the answer be ‘enough to do the job’ – are the changes to be implemented? Irrespective of blame or causes.

Now there are a range of solutions on offer, and no doubt I will get downvoted for advocating them when in fact I am not.

Firstly the way the Texas grid seems to operate is a very free market in energy. Free markets work very well when there is potential diversity of supply, and no natural monopoly, and the customer is free to pick any supplier in an emergency who can meet his demands – albeit at a higher price.

The United States loves its free markets. So do I, but I am a pragmatist and a realist, and with certain sorts of product a free market doesn’t work as it should.

First of all the electricity grid itself – the distribution mechanism for the product, electricity, is a natural monopoly. Free market ideology cannot get around that simple fact. Secondly, the way electricity is sold people do not have a trading platform attached to their electricity meters so they can switch suppliers when the one they are contracted to cannot deliver.. the way they could with e.g. domestic coal for heating.

Those facts stop a free market process from operating effectively.

In the UK, during WWII, we nationalised everything as a matter of wartime expediency. Roads, railways, coal mining, power generation and distribution, telephone services, the post office. That meant that central planning and control could deliver what were considered to be essential services for the nation, reliably.

The inevitable downside to that was that investment became politicised, and so too did the work forces. To the point where the coal miners union – essentially run by hard left agitators – became more powerful than government. It was into that context that Margaret Thatcher was elected, to essentially restore the reliability of power generation and the authority of government from the political instability with which it had become burdened.

Her solution – hated then and now, by the Left – was to privatise what were, in effect, in many cases natural monopolies.

Privatisation removed the politics from investment and allowed modernisation to occur without argument over funding it. But it also raised a serious problem. These were in many cases natural monopolies – not coal mining, but railways, the national power grid, the telephone system, the post office and so on. These were still regarded as critical national infrastructure and couldn’t be allowed to exploit their natural monopolies to gouge consumers.

What happened in effect was the the boards of these nationalised industries morphed into politically controlled regulatory authorities. OFCOM for telecoms, OFWAT for water, OFGEN for electrical power and so on. These were given serious teeth. And their job was to act as a sort of proxy shareholder and customer in the monopolistic areas. So that they could set standards of delivery and fine the agencies responsible if they failed to deliver.

Having thus set a level playing field for any or all participants – there are for example many water companies, regionally split – in effect the government both set a standard for delivery and additionally set a cap on profits. That is an ongoing process – at regular intervals commercial companies sit down with official regulators and argue the case for price rises while the regulators negotiate expected standards for public utility delivery.

Now that is, for better or for worse, how it’s done here. It looks like ERCOT is an attempt to do the same thing in Texas, that has singularly failed.

So a partial resumé: Resilience costs money, and it is a political decision ultimately whether or not people are prepared to pay for it. In the case of natural monopolies or arm’s length commercial contracts between suppliers and customers, the free market mechanism is inefficient in delivering the desired result, and nationalisation places far too much power with both unions and central government. The awkward compromise that has worked reasonably well – I will say no more than that – in the UK is to bring these natural monopolies under state oversight, but not state ownership. To make this work, the regulatory authorities need teeth, and they need competence. They acquire both by statute. Staff can be fired politically, and laws can be passed giving them powers of retribution against commercial companies.

Now it has to be said that in the case of electrical power, in the UK, the mechanism is close to failing because the political goalposts have been changed from the supply of the lowest cost most reliable electricity, to meeting spurious ‘renewable obligations’ designed to favour renewables over conventional generation, even though no carbon dioxide emissions are reduced as a result.

This ultimately cannot be blamed on the regulatory authorities – they are only doing what their political masters have instructed them to. In fact my long road to being an ardent Brexit supporter started with trying to establish who in fact was responsible for what was clearly a policy leading to disaster … well I suppose here we would call it the green blob. A cadre of profit making crony capitalists who have marketed a myth so powerful that governments and in particular the EU, cower in its face. But I am preaching to the converted. Accept my apologies.

To return to Texas, as the case in point. Clearly ERCOT has failed to deliver what people have suddenly discovered they need. Reliable electricity in a winter freeze.

What ‘planning engineer’ is saying, and I can’t offer an opinion on the veracity of that, is that they were not tasked with that, ultimately. Well if not, then it is a political decision as to whether they should be.

What he is also saying is that by implementing an energy market and not a capacity market, there is no financial incentive to invest in plant that would cover extreme situations, or more gas storage, or the ‘winterisation’ of conventional power stations. The UK has increasingly had to run a capacity market for precisely these reasons. Because OFGEN is tasked with maintaining sufficient capacity as well as planting windmills. In fact what has happened is that strictly adhering to ‘renewable obligations’ and resilience constraints has led to huge numbers of fossil powered inefficient backup plants being deployed to the extent that – as in Germany – emissions have not really reduced at all!

And this brings me to the causes. Not cause, but causes. Looking at the graphs it is clear that although the frozen wind power was a joke, it was not the biggest problem. And indeed ERCOT was merely being a tad economical with the truth when they pointed out that gas, coal and nuclear had taken hits as well.

The dominant failure was gas. And let’s not twat on about fracked gas having high moisture content and freezing. That’s just spin. The serious issue is that gas is what people use to heat their homes with as well as generate electricity with, and there wasn’t enough put by.

Why not?

Because there is no money to be made in supplying over capacity in an energy, as opposed to a capacity, market. Power comaines lose less by failing to supply than they would have lost by building excess capacity for a once in a decade event.

Why is there an energy, as opposed to a capacity, market?

Because windmills and solar panels have no capacity to sell. That is a point being made here. capacity means you get paid for reliable ability to supply.

And that seems to me to be the salient point. In order to incentivise renewables, ERCOT and whoever else is involved, have disincentivised maintaining adequate capacity. Even of gas.

In short it wasn’t the windmills per se that were the problem, it was the whole political and commercial framework designed to put the windmills there, that disrupted the market enough to cause the problem.

That’s how it seems to me. The UK has had to patch a capacity market on the side of the renewable energy market to guarantee continuity of supply, and its not working that great, but so far it is working. And the regulator has the teeth to do it. It isn’t the solution, but it is a solution.

Ultimately, irrespective of carbon dioxide affecting the climate, (even if it were true), we have somehow been suckered into ‘renewable energy‘ when we ought to be focussing (if the warmunistas are right) on emission reductions. The bland assumption that renewable energy reduces emissions overall must be challenged, and we must start to recognise that there is cash value in reliability as well as megawatt hours.

But please, dont get sidetracked into making simplistic claims that are clearly false. Windmills per se were not really the problem, it was the whole policy framework and the mind set that put them there that was the problem.

And there I will stop. I am not competent to pronounce on the intricacies of US or Texas regularity law. Or its politics.