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Texas – More Subsidies for Wind, More Regulations for Oil

February 17, 2021 By Debbie Young

Oil pumps and wind turbines in West Texas. By Roschetzky Photography @ Shutterstock.com

Frigid temps and icy conditions have blanketed most of the country. Tuesday evening, two to three million Texans remained without power as temperatures, along with the sun, began to go down. Parts of Texas entered the 2nd straight day of widespread power outages amid Arctic temperatures.

Why has Texas been especially vulnerable to this winter’s onslaught from Mother Nature?

The problem, according to the WSJ, is a Texas-sized reliance on wind power, leaving 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.

Coal in recent years, has been declining on the Texas grid, and renewable sources such as wind and solar have been increasing, according to the WSJ.

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.

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.

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Debbie Young
Debbie, editor-in-chief of Richardcyoung.com, has been associate editor of Dick Young’s investment strategy reports for over three decades. When not in Key West, Debbie spends her free time researching and writing in and about Paris and Burgundy, France, cooking on her AGA Cooker, driving her Porsche Boxter S through Vermont and Maine, and practicing yoga.
Latest posts by Debbie Young (see all)
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