Houston Republic

Taxpayer subsidies paid to wind and solar developers contributed to the grid nearing emergency conditions this week, according to an oil and gas expert.

“That's part of it,” Robert Bradley, CEO and founder of the Institute for Energy Research, said. “We get a lot of generation we don't need just because the tax breaks are so great, and when you keep adding the so-called unreliables, it’s at the expense of the reliables. They're the most expensive to build but the least expensive to dispatch.” 

Other than mild weather and normally scheduled or expected outages, April 13, was a normal day until Texas' grid operator, the Electric Reliability Council of Texas, sent an appeal for Texans to conserve electricity use because of allegedly near emergency conditions, according to media reports.

Robert Bradley, CEO and founder of the Institute for Energy Research | Provided

“Conventional generators are very thin right now because Texas has gone to so many renewables,” Bradley told the Houston Republic. “The way the pricing is set up, renewables are advantaged and baseload generation is not. So, we haven't had much new capacity with the baseload generators, which gets back to government policy, forced renewables and de-carbonization of the grid.”

According to ERCOT system conditions data, the wind hit its peak generation of almost 17,000 MW the next day on April 13 at 1 a.m. Wind generation subsequently dropped to about 5,000 MW during the daily periods of regular increased demand. Even the 5,000 MW, wind generation for April 13 was 3,000 MW less than what was forecasted.

“We need a lot less wind and a lot more natural gas and even coal,” Bradley said in an interview. “There have been coal retirements and some of those ought to probably come back for the summer. Texas has reached the limit of our renewable dependence. There certainly should not be any more wind or solar for the grid.” 

In addition to lagging wind generation, the Texas Tribune reports that solar generation was also unavailable as it also failed to reach projected output to the grid due to cloudy weather.

“During the day, there are a lot of clouds, which is another variable,” Bradley said. “It was a worst-case scenario for renewables and this can happen at any time, which puts Texas at the mercy of wind and clouds, not only just cold and heat.”

This is not a new phenomenon. As previously reported in the Houston Republic, recent winter storms exposed the danger of energy policies that make the state too dependent on wind and solar energy and the extreme cold and snow caused the wind turbines to freeze, leading to power outages across the state during a time of overwhelming demand for energy. 

“The big problem is that wind had an indirect effect and all the favoritism toward wind has ruined the economics of baseload generation,” Bradley said. “These independent generators can't just depend on emergencies where they get an astronomical price for generation because banks won't lend money on that. They need something more stable, and wind doesn't allow you to do that.”

Texas Railroad Commissioner Wayne Christian recently told the Austin News that the reliability issue isn't so much the existence of renewable energy, but that it has displaced reliable generation because they have been prioritized and subsidized by tax dollars. 

However, Bradley foresees that it’s not just tax dollars, but also ERCOT’s policy of accepting electricity with bids based on marginal costs.

“The marginal cost of wind and solar is so small that they'll always win because they don't have fuel costs,” he said. “You have these generation sources where on an average cost basis, they're more expensive, but on a marginal or incremental cost basis, they're the cheapest. They always get bid in but the rates are so low that the conventional generators don't make money.”

According to a report from America's Power, through 2018, renewable energy resources — primarily wind and solar — have received subsidies amounting to more than $100 billion.

Charles McConnell, the executive director of the Center for Carbon Management in Energy and Sustainability at the University of Houston, previously told the Houston Republic that Chapter 313 subsidies are one of several tools that Texas uses to "encourage the investments and the deployment of renewables – both wind and solar." He points out that the way renewables often operate means that they would not be profitable without government subsidies and other handouts. 

As a result, Texas' reserve margin has dramatically decreased due to the subsidizing of renewable energy projects.

“They're turning an energy-rich state into an energy-poor state is what all this government intervention is doing,” Bradley said. “At the state level, it’s just bad policy but it's also due to federal incentives, such as the production tax credit.”