Op-Eds

Texas grid reform should make every megawatt count

Aug 23, 2021

issues: Electricity Policy, Energy and Environment, State Policy, Texas

originally published in mrt

“Is the Texas grid fixed?” It’s a question I’ve gotten a lot from friends and family over the past few months. Texans strongly want to avoid a repeat of the February blackouts that cost billions, led to over a hundred deaths and gave the state a political black eye. But electricity policy can be a complicated subject, and when different elected officials—even within the same party—send conflicting messages about where we stand, it’s understandable that people would be nervous.

The truth is that it’s still too early to tell whether Texas will fix the problems with its electric grid. Yes, in May the Texas legislature passed SB 3, a major electricity reform bill, to deal with the problem. Many of the details of that bill, however, have yet to be filled in by the state’s Public Utility Commission (PUC), which oversees regulation of Texas’ electricity system, and is currently taking input on how to write those rules.

A major issue of controversy is whether Texas should favor some types of energy over others in its electricity market. In a July press conference, PUC chairman, Peter Lake, said, “We’re not in the business of picking winners and losers.” That’s certainly been the case historically. One of the strengths of the Texas market is that generators themselves decide what type of power plants to build, and then compete to deliver electricity at the lowest cost. However, since the February blackouts, there has been a growing drumbeat that this system has led to too much renewable energy on the system, and that measures need to be taken to promote more “dispatchable” generation.

This would be a mistake. Contrary to what some have claimed, renewable energy failures were not a significant cause of the February blackouts. All generation types experienced outages due to the extreme cold and icy weather, and in the case of natural gas these outages were exacerbated by the inability of plants to get fuel. Time spent attacking the wind rather than securing natural gas infrastructure is worse than simply wasted.

In addition, state efforts to shift Texas’ energy mix away from renewables would increase costs to consumers without delivering any added reliability benefit. During this spring’s legislative session, there were efforts to add additional costs to renewable energy as an indirect means of encouraging future investment in other fuel sources. While these measures probably would not have done much to change the fuel mix on the Texas grid, they definitely would have made electricity more expensive. Indeed, that was the very purpose: to make non-renewables more competitive by making renewables cost more. Texans, who are already paying for the costs of the February event, don’t need to have their bills raised even more, especially when renewables weren’t the problem in the first place.

Finally, there is always the danger that attempts to discourage renewable generators in Texas from making electricity could work. Texas needs every megawatt it can get on hot summer days when demand is at its peak. Penalizing renewable energy now in the hopes that it will encourage investment in other supposedly more reliable energy sources later risks driving those megawatts off the grid when they are needed most.

Keeping the government out of picking winners and losers lets the free market prevail. We don’t need to play the blame game or punish certain forms of energy like solar and wind. As state regulators work through this, they need to ensure reliability, affordability, and stability for Texas families and businesses. The answer is not to impose penalties on specific energy sources. We need them all to prevent another blackout or even a catastrophic grid failure.