Texas is facing another hot summer with record-breaking projections for electricity demand with a supply that is having a hard time keeping up. As the Houston Chronicle reports, “If Texas runs short of electricity, ERCOT expects to import additional power from neighboring states if it’s available and issue emergency alerts to ask consumers to reduce their electricity use.”
Texas’ electricity market is the most competitive in the world and a global leader in providing power without the centralized planning found in many other states. So why is there a fear of a shortfall? It is not because markets don’t work. Instead, federal and state renewable energy subsidies are destabilizing the market.
The two largest renewable energy generation sources, wind and solar, are receiving massive subsidies but failing to perform when needed most and gobbling up huge swaths of land in the process. While politicians tout the massive buildout of wind and solar in the state, Texans are rightly wary of the promises of these unreliable energy sources.
The most recent data shows that wind generation operates at 37.4 percent of capacity—a slight increase from previous years. Solar power performs even more abysmally at 26.1 percent. In practice, we can expect 0.374 megawatts to come online for every megawatt of wind capacity built, and likewise for other sources. That means a lot more land for a lot less generation in a renewable-heavy energy portfolio.
According to the Energy Information Administration, renewables collectively generated 15.2 percent of our energy supply in 2016, and they accounted for 45 percent of all federal energy subsidies. In the same year, natural gas provided 35.1 percent of our supply (the highest of any generation type), but its net benefit from federal energy subsidies was less than zero, dipping to -5 percent.
Given the current subsidy scheme, reliable generation sources are having to compete at a disadvantage, creating an artificial shortage that threatens our energy supply. In the end, taxpayers are footing the bill for power that doesn’t provide when we need it most. If we run out of electricity this summer, it will be the fault of renewable subsidies, not the market.
Rather than force renewable generators to pay for the harm they are causing, the Public Utility Commission of Texas has simply thrown Texans’ money at the problem, ordering increases to electricity prices by as much as $3 billion per year—without a public vote.
The Texas Legislature attempted to address this issue this year, but a simple bill this past session that would have required the PUC “to identify and study the ongoing effects that federal renewable energy subsidies have on the pricing, reliability, and efficiency of the electric power market” died in the Texas House State Affairs committee.
The Legislature can still take charge of this by having the lieutenant governor and speaker issue interim charges to examine the problem and recommend legislation. At the top of the list should be addressing the reliability challenges caused by the federal Production Tax Credit and Investment Tax Credit. When Texas decides to take charge of its electricity market, the best days of reliable, affordable power will lie ahead of us.
This is a commentary submitted and published with the author’s permission. If you wish to submit a commentary to Texas Scorecard, please submit your article to submission@texasscorecard.com.
