Unlike other states, Texas has a standalone power grid that’s purposely designed to cut it off from its neighbors. That allows the lone-star state to set its own rules over how power is produced and regulated, and the result is a regulatory body known as ERCOT. Because ERCOT, by design, practices a form of extreme hands-off, let-the-market-decide practices, the result is simply this: The Texas power grid is designed to break.
It’s designed to fail because in failure there is wealth. Power providers in Texas have discovered that if they produce enough electricity to satisfy Texas consumers, the profit levels are low. What’s more, as solar and wind have become more common, old gas and coal plants can’t compete. The price of power is so low that there’s no margin for those plants at all.
What to do? Make sure that Texas has just barely enough power. That way, there will be failures whenever plants have a problem. Which generates shortages. If there’s not a shortage, companies can always take enough plants offline for “routine maintenance” until they create a shortage.
Texas’ formula is exquisitely sensitive to supply and demand; any shortfall of power can lead to instant spikes that drive the cost of a kilowatt up three orders of magnitude. That’s why many Texas power companies make more from two days of disaster than they do in a whole year of normal service. And why some Texas consumers found themselves facing five-digit electric bills after the blackout that hit the state in Feb. 2021.
For Texas power companies, a shortfall is “hitting the jackpot.” For consumers, it’s a financial disaster on top of what can be a physical, or even health, disaster.
When that blackout came in 2021, Texas Gov. Greg Abbott and Mexican vacation king Ted Cruz were quick to blame wind and solar as the culprits. But the truth was that the state’s natural gas and coal-based power plants had taken no steps to protect their supplies against cold weather that can freeze coal in stockpiles or cause gas in pipes to become slush. The failures of the fossil-fuel plants caused a blackout that led directly to the deaths of at least 151 Texans.
While solar and wind were not to blame for the Texas blackout—both were producing more energy than had been predicted at the time of failure—they’re definitely responsible for what’s hitting Texas right now: a surplus of low-cost energy. The combination of good winds and relentless sunshine means that the heatwave is actually generating record levels of renewable power, more than offsetting any out-of-service fossil plants. In fact, solar and wind nearly tied natural gas as Texas’ biggest source of energy in 2021. In 2022, they’re likely to be the biggest source of Texas power.
There’s another factor also keeping costs down. Even as natural gas and coal prices have spiked, and fossil fuel companies have raked in record profits, the price of sunshine and wind is not subject to market manipulation. Not even in Texas.