Texas power grid set for now, but future less certain
Last month was the second-warmest May on record in Texas, and forecasts for this summer indicate we’ll be hitting aboveaverage temperatures. At the same time, Texas’ population is growing twice as fast as the nation’s, driven in part by the more than 1,000 people per day who are moving here from other states and countries.
All this means the demand for electricity is growing steadily to meet the needs of Texas’ growing number of households as well as the state’s robust commercial and industrial development. Which begs the question: Will the Texas power grid hold up this summer against potentially record demand?
Since the beginning of the year, three large coal-fired power plants have been shuttered, removing 4.2 gigawatts of base load power from the Texas grid. Accounting for 22 percent of the state’s coal-generating capacity, these plants produced enough electricity to supply 2.1 million homes.
While coal capacity has declined, wind generation has grown exponentially. With 22 gigawatts of wind, almost a fifth of total installed capacity, Texas leads the nation by far in renewable energy. Unfortunately, in the middle of the day in the middle of the summer, the wind in west Texas is usually not blowing, thereby posing serious challenges to grid reliability. What’s more, because Texas’ power grid is free-standing with limited interconnects to other states, the outlook for this summer is even more tenuous.
Last week, the Trump administration floated a plan to help ensure grid resilience and reliability in Texas and elsewhere by ordering grid operators to buy electricity from coal and nuclear plants, currently struggling to compete against cheap natural gas and renewables. Since 2010, 628 coal-burning units at power plants in 43 states have closed with the loss of 115 gigawatts of electricity. Investor-owned utilities are expected to retire, or announce the closings, of another 16 gigawatts of coal and 550 megawatts of nuclear capacity by the end of this year, while two dozen nuclear plants, currently generating 33 gigawatts of power, are scheduled to shut down by 2021.
The U.S. Department of Energy would also establish a “Strategic Electric Generation Reserve” with the aim of promoting the national defense and maximizing domestic energy supplies. The DOE’s intervention would buy time for a two-year study of vulnerabilities in America’s energy system.
The Trump proposals are generating blowback from oil, natural gas, solar and wind industry groups that claim these initiatives would raise energy prices and distort markets. But the power markets are already distorted because of the government subsidies to wind and solar as well as the renewable portfolio standards mandated in most states. But beyond the grid reliability and national security arguments for sustaining commercially viable coal and nuclear plants is the case for maintaining energy diversity. America is richly endowed with oil, natural gas, coal and nuclear, much of which is used for electric power generation. In turn, relatively inexpensive and reliable electric power provides the basis for our economic prosperity and global competitiveness. This is especially the case in Texas, where we rank No. 1 in the nation for oil, natural gas and electric power production. But we also rank first in energy use, with natural gas currently accounting for about 50 percent of our total energy consumption. Cheap and plentiful natural gas is a boon to Texas’ consumers and industries, but will this always be the case?
Texas and the nation need to be conservative with energy resources, especially in markets fraught with uncertainty as evidenced by oil prices that have jumped from $30 per barrel a year ago to $70 today. Will growing liquefied natural gas exports push up prices? Will wind and solar continue to draw investment when taxpayers are not longer forced to subsidize producers? Can investment in critical energy infrastructure survive growing opposition by the anti-fossil fuel crowd? We just don’t know.