It got hot in Texas last week. It tends to do that in June.
But for many Texans, something was different during the first heatwave of the year. They woke up sweating because their thermostats had been turned up by their power companies.
What these Texas electrical consumers did, but in many cases didn’t recall or understand, is sign up for a program that offers rebates or lower electrical rates in exchange for the electric provider having the right to control a so-called “smart thermostat” that can be adjusted over the internet to save electricity when the grid is under strain.
This process is part of an array of tools used by power companies and grid operators called “demand response.” Electric grids must generate power the instant it is used. This is becoming increasingly difficult as unreliable renewable energy—wind and solar—are making up larger amounts of the power grid.
Demand response asks consumers, not generators, to manage variability in electric supply and demand. Reducing demand during peak times reduces the need for peaker plants—generators that only run for a few hours a year—and produces a net societal benefit in terms of lower costs for electricity and, for environmentalists concerned about greenhouse gases, lower carbon dioxide emissions.
Demand response can work in a competitive market when scarcity during peak times causes higher prices for electricity, allowing consumers—particularly large industrial operations—to save money by reducing consumption.
Back to the Texas heatwave. As often happens when Texas gets hot, the wind doesn’t blow much. Texas has thousands of wind turbines. If the wind blows just right and when it is needed, those wind turbines could generate about 30% Texas’s requirements. During peak demand in the middle of the heatwave, Texas’s massive wind turbine fleet produced about 10% of their capacity, or about 2% of the grid’s needs. At one point during the heatwave, wind produced less than 1% of its installed capacity.
Texans got a rude awakening as to how vulnerable their electric grid has become due to overreliance on wind and solar during the 100-year event winter storm in February. With many power plants offline due to weather issues, gas supply shortages, or maintenance to prepare for the hot summer, Texas’ grid was slammed, and people suffered. Many died in the cold. Even so, gas, coal, and nuclear—known as thermal plants—produced 91% of the power Texans needed during the duration of the deep freeze—wind and solar, an anemic 9 percent.
How did Texas get to this point? When the state largely deregulated its electric market 20 years ago, federal tax credits for wind power—known as the Production Tax Credit—were due to expire. Congress instead revived the program and then extended it. This allows wind producers, with a comparable program for solar, to make money even if they pay the grid to take their power.
In Texas, about one-third of the wind power transactions are negative. This negative pricing causes havoc in the markets and discourages investment into new reliable thermal power plants while accelerating the decommissioning of old power plants.
In the last few years, even while electric demand has grown, Texas has added a net of 21,000 megawatts of subsidized and unreliable wind and solar while seeing a net loss of 4,000 megawatts of reliable gas and coal.
Texas’s elected officials took the first steps to fix their renewable reliability problem during their just-concluded legislative session, though it may be a couple of years before any results are seen.
California has arrived at roughly the same place as Texas but by a different route, using regulatory mandates and laws to force more renewables onto the grid. The main difference is that in the Golden State, solar power dominates rather than wind as in Texas.
California is also seeing more demand response being pushed onto consumers. The problem in California is that voluntary demand response programs will be seen by powerful, environmentally minded regulators and politicians as an insufficient sacrifice. This will inevitably lead to mandatory use of smart thermostats and, eventually, mandatory smart meters that charge variable rates for electricity—cheap at low demand times and sky-high during hot afternoons when solar power starts to ramp down with the sun.
Rather than force working Americans to pay for the environmental dreams of the coastal elites, producers of unreliable renewable power should be required to guarantee reliability and price that into their costs.
Electric grid reliability and affordability matters. Wind and solar are not capable of being both reliable and affordable—as consumers in California and Texas are starting to learn the hard way.