If fossil fuel is being out-competed by renewables, maybe the problem isn’t renewables
Texas is known for many things, and not least among them is great barbecue. Among the most famous of Texas’ barbecue joints is Franklin Barbecue in Austin. The food at Franklin is so popular that people line up for hours before it opens just to make sure they don’t miss out.
But there’s a problem. Unlike many other barbecue restaurants that are open all day, Franklin is only open for lunch. During the dinner hours, which is the period of peak barbecue demand, Franklin isn’t producing barbecue at all, meaning other venues have to pick up the slack.
What’s worse, because these other barbecue restaurants need to be kept as “back up” to meet demand when Franklin closes, the existence of Franklin raises costs for all barbecue customers. As such, some are calling for the state to levy special taxes or restrictions on Franklin to keep people from buying so much of their brisket.
OK, just kidding, that last paragraph isn’t true about barbecue. Aside from the fact that no self-respecting Texan would countenance attacks on a national treasure like Franklin, the argument that one business harms another by not competing with it enough — and that the state should restrict the first business to offset that harm — is a bit strange. Yet versions of this argument are increasingly being made against another growing Texas industry: renewable energy.
Opponents of renewable energy have long decried the fact that the industry is subsidized. Fair enough. Yet in their fervor to criticize renewable subsidies, some have gone on to embrace arguments that, if correct, would apply to renewable energy even if the industry never received a penny in subsidies. As a result, even some conservatives have found themselves in the strange position of arguing that a free market in electricity doesn’t work.
Consider this video by a group calling itself the Clear Energy Alliance as indicative of the broader trend. As the video notes, peak electricity demand doesn’t always match up with the time of day when the most solar energy is being produced. As such, most of that demand is met by traditional fuel sources.
According to the video, this makes solar electricity like “a privileged part-timer who arrives late, does work others could easily do, and then leaves while everyone else is working full tilt.” Not only that, but “because all full-time workers are needed at peak workload, they all have to be kept on staff, and there is an expensive duplication of labor.” In the barbecue example, this would equate to competitor barbecue restaurants having to hire cashiers to stand around with nothing to do while people are eating at Franklin instead.
Yet if you find yourself being out-competed by a part-timer, maybe he’s not the problem. Maybe the problem is you.
Throughout the 20th century, advocates of government control complained that competition was wasteful and led to duplication of labor, thereby increasing costs for consumers. This is the same argument that some are making today against renewables. But experience has shown that rather than increasing costs and waste, competition actually tends to lower costs and improve service.
According to the video, we should care about traditional fuel sources losing sales to renewables because if traditional plants can’t make a profit, there will be no one to provide power during peak demand times. Yet this has things backward. The fact that renewable generators only produce power during part of the day does impose a cost, but not on consumers; these costs fall on renewable generators themselves. For power companies that produce during peak periods, this lapse in production on the part of renewable generators represents a profit opportunity. Indeed, despite a rapid growth in renewable generation in Texas, electricity prices have fallen further than those in any other state and reliability remains high.
Whether it’s barbecue or electricity, the market is able to cook up something far better than what will come from second-guessing it.
Image credit: r.classen
