Deadly Serious: During Extreme Weather Unreliable Wind & Solar Threaten Life & Limb

There’s nothing funny about being frozen to death in the dark. More than half of the 200 Texans who died during the mass blackouts that struck the midwest during February this year died of hypothermia, thanks to a lack of power. In all some 4.5 million households were left freezing in the dark when solar panels were carpeted in inches of snow and ice; wind turbines froze solid; and breathless, frigid weather all led to total collapses in wind and solar output across central USA.

Robert Bradley takes a look at the causes and consequences of the perfectly avoidable carnage.

The Great Texas Blackout of 2021: Classical Liberalism and Electricity
The Library of Economics and Liberty
Robert Bradley
6 May 2021

Part 1 of 2

Coordination is a central term in economics. And malcoordination is what happened in historic, tragic fashion in the Great Texas Electricity Blackout of 2021, with a death toll nearing 200, damages and uncollectible expenses in excess of one hundred billion dollars, dismissals and resignations of involved regulators and planners, and countless lawsuits.[1]

At fault was the “planned chaos” of central planning, not the (forgone) free-market order. The Great Blackout occurred in a heavily regulated, mother-may-I industry, involving various state and federal laws and different regulatory bodies. The malcoordination also resulted from “net zero” and “deep decarbonization” intervention favoring the least reliable energies at the expense of the most reliable in power generation.

A witches’ brew of intervention came together in a way that shocked everyone, particularly the experts and planners of the Electric Reliability Council of Texas (ERCOT) and the regulators at the Public Utility Commission of Texas (PUCT).

PUCT/ERCOT is the grid monopolist for 90 percent of Texas electricity, serving approximately 26 million Texans. The governmental entity oversees purchases and sales from 710 power generators (81,000 MW) involving 46,550 miles of transmission and 5,000 substations. Tax funded, PUCT/ERCOT implements price controls directly via discretionary price caps and indirectly via winning-bid rules.

Amid the wreckage, more and better regulation is being proposed, not fundamental deregulation.

The Conventional View
Government regulation and planning were not the problem, PUCT/ERCOT defenders insist. Texas’s grid “worked as designed,” system architect William Hogan of Harvard’s Kennedy School stated. Instead, an Act of God (a severe, prolonged freeze) and private-sector mismanagement (lack of weatherization) came together to de-power a tightly coordinated, properly incentivized grid.[2]

The fat-tail/business-failure interpretation, leaving 4.5 million Texas homes and businesses without power, focuses on the seen, the physical why of the debacle. It is based on recorded data of what-when-where-how much. And, in fact, the physical cause of the crisis centered on the unexpected falloff of gas-fired power generation owing to weather-related performance failures from the wellhead to the turbine. There was also weather-related underperformance in coal and nuclear plants.

Consider a recent paper by the research arm of the National Association of Regulatory Utility Commissions (NARUC), Regulatory Questions Engendered by the Texas Energy Crisis of 2021. The authors track ERCOT data show the growing imbalance of demand relative to supply that grew to the point of emergency blackout orders.[3] Renewable energies expectedly tailed off from low winds, little sun, and freeze issues; it was counted-on conventional sources that could not answer the bell.

As for the proverbial next time, weatherization and other reliability upgrades will become mandatory, and new incentives (including “smart meters”) will better regulate demand. New analyses are underway; with regulation as a process, the experts are “on it.”

The moral of the story? Worst-case events happen, problems are part of the improvement process. Do not fundamentally alter the PUCT/ERCOT regime. Fine-tune it.

A Deeper Look
The view presented above ignores the why behind the why, the economic why behind the physical why. Why the failure of the price system to prevent shortages? Why the mass entrepreneurial failure to perform? Reliability, after all, has been the holy grail of electricity service ever since industry pioneer Samuel Insull invested in batteries 125 years ago.

The major cause of the Blackout was government intervention writ large: highly subsidized renewable energies; centrally planned, one-sized design choices; and a forced disintegration of the natural gas and electricity industries. In more detail:

  • Government-mandated or enabled wind and solar generation, which has grown to 20–25 percent of annual Texas supply, virtually disappeared. While that is a feature of the summer peaks, the renewables drop-off happened during the February freeze.
  • Wind and solar, available when it is least needed and least available when most needed, has complicated and compromised the overall system.
  • PUCT/ERCOT price design allows low-marginal-cost (but unreliable) wind and solar generation to outcompete traditional baseload generation that has fuel costs (gas, coal, or uranium). Wind power, in particular, is sold at low-to-negative prices to receive the lucrative federal Production Tax Credit, which has been extended 13 times. Such underpricing has caused the premature loss of gas- and coal-fired plants and discouraged building new capacity in those areas.
  • Various state and federal laws have required/incentivized the disintegration of the natural gas and electricity industries. Without “natural gas majors” and “electricity majors,” vertically and horizontally integrated, within and across state lines (such as exists with petroleum), the coordination challenge has been exacerbated.
  • PUCT/ERCOT price caps, which are liberalized in emergencies to reward reliable generators, proved to be too little and too late. Price spikes at the peak, far beyond what can be paid back, is anathema for a political regime. Getting incentives right between spot bids and backup reserve incentives to achieve reliability is a central planning quandary.[4]
  • PUCT/ERCOT transmission-access socialism has depreciated the value of the grid for its owners and created a contrived profit center, retail marketing. (Prominent retailers went bankrupt because of the freeze, and others that passed along astronomical costs face lawsuits and collection issues.)
  • Warmer winters in general was the consensus from climate models as well as the official releases from the National Oceanic and Atmospheric Administration. Industry decision-makers no doubt discounted a prolonged freeze event, last experienced in the state in 2011.

In a government-neutral market, costly intermittent wind or solar would not have been built for the grid, and the economics of gas, coal, and nuclear plants would have been that much stronger. Higher margins would have made weatherization more affordable and prudent. More baseload capacity would have been at the ready to avoid shortages.

In a free market, gas and electricity “majors,” integrated from the wellhead to the burner tip, would have simplified the coordination problem in contrast to the fragmented, high-transaction-cost industry that now exists.

Read Part 2 here.

[1] The blackout, lasting for 42 consecutive hours for many, caused 111 deaths from hypothermia, as well as deaths from carbon monoxide (CO) poisoning, medical equipment failure, and other related problems. Economic damages will surpass all previous power outages combined.

[2] Weatherization for sub-freezing infrastructure operation was “a voluntary guideline,” an ERCOT official stated. “There are financial incentives to stay online, but there is no regulation at this point.” Weather models developed after the 2011 freeze, he added, were falsified by the February 2021 storm.

[3] NARUC’s conclusions “elucidate a number of themes: 1) inherent design flaws, 2) insufficient regulatory oversight, 3) market manipulation, and 4) the distinction between reliability and resilience in designing and managing the electric market.” The central-planning framework of PUCT/ERCOT, well detailed by the study, goes unchallenged.

[4] Energy payments are the low-bid winners, always wind and solar with the lowest incremental costs (but high average cost). Capacity payments reward reliability, generation that can meet peak demand. PUCT/ERCOT is wed to energy payments, unlike other power planning regimes that better reward capacity.
The Library of Economics and Liberty

Not cool: never reliable & hopeless in icy winter weather.

About stopthesethings

We are a group of citizens concerned about the rapid spread of industrial wind power generation installations across Australia.

Comments

  1. Peter Pronczak says:

    Interesting topic, also read Part 2 & closed comments:

    A true free market can never exist as it is always ‘first in best dressed’. Entrepreneurs do not get rich without subsidy; tax deductions at least. In 2005 Adam Ginsberg (eBay PowerSeller) wrote the government wants you to be rich, now we have Pentecostalism saying God wants you to be rich and if you’re not, you’re doing something wrong: Biblically speaking ‘not a borrower nor lender be’ so Christianity has become decidedly non-Christian with money lenders entrench in the temple at the behest of government. Corporations have more human rights than humans as being incorporeal can’t be locked up (see Gerry Spence). Government always has a role to play, unfortunately with RE, it is not on the side of the people, it is imposing an ideology – a theory of right and wrong – something that is always incorrect to do; government should not act on theories, only on what is ‘known’ to support the greatest good. On that basis government bias toward RE is wrong and cannot be justified.

  2. In Texas as in South Australia such catastrophic power grid failures are an inevitable consequence of government mandated generous subsidies paid to renewables and the mandated preferential grid access granted to them. This is what happens when electricity grids are regulated by ideologically driven legislation which deliberately sets out to destroy the competitiveness of fossil fuel generation succeeds in that aim. It’s a case of be careful what you wish for – in most electric grids destroying fossil fuel generation means destroying the largest most reliable, contributors.

  3. I’m with Delmer! We need your pages! Thanks for them!

  4. John Shewchuk says:

    “Green energy” was never intended to improve the energy grid’s reliability — but only to cause fear and panic in the public under false pretenses … https://www.youtube.com/watch?v=QpVAHZCNTa8

  5. Thank you for all you do. Your continuing updates are great .

    • We do our best, thanks Delmer.

    • I Live in a small town and we are having developers coming into set up solar industrial sites. The commissioner’s are selling the taxes we will receive and the jobs that it will produce. Can you give me some insight on the facts that would let them know they are full of BS. And as I understand electricity rates will increase by quite a bit. Best Regards> Delmer

      • Delmer, search our site in the search bar to the top right of your screen, try terms like ‘community opposition’ or ‘developer lies’ and you will find numerous posts on how wind developers operate, much of which will apply to solar operators.

      • Peter Pronczak says:

        If you are in the Dubbo-New England solar growth areas where they also want to grow crops between the rows of panels, observe the erosion after the next heavy rains. Or ask what will be done to stop erosion in the first place. Most of the jobs are specialist flyin-flyout.
        Barnaby Joyce as the new National’s leader is pro nuclear.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: