“Classical liberalism does not have a long resume in the history of energy thought. Prior to the 1970s energy crises, it was a backwater for free-market intellectuals, although the opportunity was there for both scholarship and political advocacy.”
I recently constructed a new home with a two-story library, ladders and all. On one side are my energy-related books; on the other, economics. Several thousand volumes are, for the first time, organized in one place. Better late than never as I am in my 66th year.
The energy books, many unearthed from storage, bring back a lot of memories. Some observations follow.
Classical liberalism (or the political term, libertarianism) does not have a long resume in the history of energy thought. Prior to the 1970s energy crises, it was a backwater for the free market intellectuals, although the opportunity was there for both scholarship and political advocacy.…
“You may be right. I have stated earlier that the ERCOT market’s reliance on scarcity pricing did not foresee an environment with high penetration of zero-marginal cost resources. Back in 2005 I generically simulated an energy-only market to demonstrate how scarcity pricing would work. I never anticipated the mass introduction of renewables at that time.”
— Robert Borlick, electricity expert (below)
The once-proud, sturdy Texas electric grid is under severe stress–yet again.
Growing demand (electricity is life!), hot (almost) summer weather, and disappearing renewables (wind in the day, solar at night) have exposed a wounded grid.
The wounds are evident in prematurely retired natural gas and coal generation capacity, as well as a lack of new capacity. Why? Renewable energy severely diminished incentives for baseload generation that would have prevailed without (government-enabled) wind and solar capacity.…
“In 2011, even though the market was caught by surprise by one of the hottest summers in Texas history, Texans did not experience any blackouts because of reliable generation. Today, however, the reckless rush toward renewables has changed the situation completely. ”
– Bill Peacock, Energy Alliance (below)
Bradley: How did the just-completed Texas legislative session deal with the February Blackout that caused so much damage to life and property?
Peacock: The session had two issues to address here. One was dealing with the aftermath costs; the other was reform to prevent it from happening again. The lawmakers did poorly with both.
Q: What did the Legislature do wrong in dealing with the aftermath?
…A: The Legislature failed to appropriately address the massive financial costs of the blackout, most of which came from the Public Utility Commission of Texas’s (PUCT) panicked decision to raise electricity prices to $9,000 per MWh and leave them there for three days.