Samsung challenges state grid and water
President Joe Biden, U.S. Sen. John Cornyn and U.S. Rep. Michael McCaul are taking bipartisan credit for bringing a $40 billion computer chip plant to Central Texas. Now, Texans must deliver the copious electricity and water to bring Silicon Gulch to life.
The cutting-edge fabrication facility is undoubtedly good for the economy and national security. But the project spotlights the future compromises necessary in a state where electric grid operators struggle to keep the lights on in April and droughts frequently require water restrictions.
When the electricity supply is tight, should the power go to the Samsung plant in Taylor or Riot’s bitcoin mine in Rockdale? What’s more critical, grassy lawns or artificial intelligence chips to break encoded Chinese communications?
Should we build more natural gas power plants to meet demand, as Lt. Gov. Dan Patrick insists, or should we respect Samsung’s desire for 100% clean energy?
The Electric Reliability Council of Texas says its job is to meet the needs of any company that requests power. The nonprofit parastatal shouldn’t make those decisions; the Legislature and the Public Utility Commission, though, should.
Riot says its maximum power consumption in Rockdale is 700 megawatts, enough power for 140,000 homes. ERCOT has a contract with Riot, where the grid operator pays the company to shut down when conditions are tight. In the summer months, Riot can make more money from those demand response payments than cryptocurrencies.
However, bitcoin prices are reaching record highs, making it less profitable to shut down. The company has also fought federal and state requirements to report basic data about its operations and demand response strategy.
A microchip foundry is not nearly as flexible and typically requires 200-megawatt service. Samsung has not released information about anticipated power and water demands at the new facilities, so far only promises to use clean energy and increase water recycling and wastewater cleanup.
Samsung, however, has not invested enough new clean energy to offset its current electricity use or future demand, according to Stand.Earth, a climate activist group that factchecks such promises. The company relies on renewable energy credits for 90% of its claim to be 100% clean energy and has executed only one power purchase agreement to add one wind project to the grid.
Failing to add new generation is bad news, considering ERCOT forecasts demand will rise by 62,000 megawatts on a grid barely capable of supplying 90,000 megawatts.
The South Korea-based company’s current facility requires 2 million to 4 million gallons of water daily, a little less than half of which is recycled. The water Samsung uses in Taylor will come from the sinking CarrizoWilcox Aquifer in Milam County. Residents there are not amused.
Newton’s third law of motion applies here: No economic development, no form of energy and no generator of wealth is without undesirable consequences.
The United States and Texas need a 2-nanometer microchip manufacturing facility, and Central Texas is a good place for it. Operating the factory will require inputs of limited resources shared by all Texans.
Though they are loathe to share bad news, we elect politicians to hammer out whether public money is best spent paying crypto bros to shut down their bitcoin scams. We expect our representatives to prioritize jobs and security over growing exotic grasses for ornamental front lawns. Don’t trust anyone who offers a free lunch.
UPDATE: Oklahoma Attorney General Gentner Drummond has filed against Texas energy companies Enable Transfer and Symmetry Energy Solutions for allegedly artificially inflating natural gas prices during Winter Storm Uri in 2021.
“I believe the level of fraud perpetrated on Oklahomans during Winter Storm Uri is both staggering and unconscionable,” Drummond said in a prepared statement. “Our analysis indicates that some bad actors reaped billions of dollars in ill-gotten gains.”
Additional cases against other companies are likely, he added.
I wrote about these allegations in an award-winning series of columns in August. Drummond was not alone in pursuing lawsuits against natural gas companies for manipulating wholesale prices. The Kansas attorney general and a company called CirclesX are also pursing civil cases demanding restitution.
The dozens of companies named as defendants have all denied any wrongdoing.
Texas Attorney General Ken Paxton has failed to investigate pipeline companies in Texas for market manipulation despite evidence they may have inadvertently triggered four days of blackouts that left hundreds of Texans dead. The Railroad Commission of Texas, responsible for regulating pipelines, has refused to investigate.
Pipeline executives, meanwhile, keep giving handsomely to Texas politicians.