The near failure of the Texas power grid, coming just 4 minutes and 37 seconds from a complete collapse on February 14, 2021, was the first alarm bell that something was dreadfully wrong with US power grids. Meredith Angwin, a physical chemist and power grid specialist, described the February 2021 failure of the Texas power grid failure as a seminal event that was not a surprise:
Those of us who were watching the grid had noticed for years that Texas ran with a very low reserve margin…and there were predictions that Texas was going to be in trouble, ,”
Since then, more power-grid operators have been speaking out about the increasing instability of their grids due to an over-weighting of non-dispatchable wind and solar power. A report on February 24, 2023, from the largest power grid in the US, PJM, warned of “increasing reliability risks” affecting 13 states and the District of Columbia and 65 million people who get their power from PJM. This report is a wake-up call for all US power grids because most face the same grid instability problems highlighted in the report:
More grids have been warning that the addition of new wind and solar needs to be restrained and that retirements of dispatchable thermal generation—such as coal, nuclear and natural gas—need to slow.
This was emphasized by Manu Asthana, CEO of PJM, in a speech at the Electric Supply Association, on March 27, 2023, when he noted that new supply resources had not kept pace with retirements because of clogged interconnection queues, siting obstacles, and supply chain constraints:
I think the math is pretty straightforward. I think we need to add [supply resources] faster … but I also think we need to subtract slower and subtract generation only when the replacement generation is here at scale. I really think that’s critical.
Asthana also emphasized that these retirements are not the result of old facilities being voluntarily shuttered but instead are being forcibly closed by government intervention:
Most of the retirements are expected because of state and federal environmental and climate policies.
He added that PJM faces the additional problem of increasing loads from the EVs and the push to “electrify everything,” plus data center growth since their grid includes the greater Washington DC area.
The problem of rapidly retiring dispatchable power generation such as coal and natural gas is indeed entirely policy-driven. One of Joe Biden’s campaign promises was to eliminate fossil fuels, with policies focused on eliminating coal mines and coal-fired power plants. He said recently that all of the country’s coal plants should be closed because they’re “too costly to operate and can’t be relied upon as a dependable energy source for future generations” and replaced by wind and solar.
The significant impact of these energy policies was emphasized in a recent article in the Houston Chronicle:
Hundreds of power plants, representing more than 87,000 megawatts of coal-, nuclear- and natural gas-fired generation, have retired in the United States over the past five years as power grids age and adjust to investor pressure and tougher state regulations around climate change, according to data from the Energy Information Administration.
New solar and wind farms are coming online to replace them at a fast clip — of the 46,000 megawatts of new capacity added to the grid last year, more than 60 percent were solar and wind projects, according to the energy administration.
These warnings are not new. ERCOT, the operator of the Texas grid, warned two years ago after the near collapse of the Texas grid during Winter Storm Uri that they were launching a study of potential changes to improve the performance and long-term stability of the Texas grid.
The results of that study provided the basis for the Texas legislature to hold hearings that culminated in two bills approved by the Texas Senate last week on May 5. Senate Bill 6 passed by a vote of 22 to 9 to build up to 10 gigawatts of backup power generation that is weatherized and has on-site fuel equivalent to 10 nuclear reactors. It would create an energy insurance fund using taxpayer money, and builders of the facilities would be assured returns of up to 10%. Senate Bill 7, passed 31-0, creates a financial incentive to encourage the private development of energy generation resources that can come on within two hours and run for at least four hours, such as natural gas plants or batteries.
Opponents immediately created the false narrative that the Texas bills are proof that Texas politicians “no longer have faith that competitive markets can adequately and economically satisfy the electricity need of Texas citizens,” said Beth Garza, a consultant for the think tank “R Street Institute.”
On the contrary, the Texas Senate plan is designed to address the anticompetitive policies embodied in the comically-misnamed Inflation Reduction Act and other policies coming out of the Biden Administration. As PJM CEO Asthana (cited above) noted, such measures are needed because “the U.S. no longer has competitive energy markets now that the heavy hand of government has superseded markets with massive taxes and subsidies for wind and solar.”
Advocates for renewables and the climate change lobby also oppose the program on the grounds that it could crowd out the building of more renewables and increase emissions. But the bill does nothing to impact the array of incentives and subsidies for renewables that already exist. ERCOT has clearly demonstrated it already has a hard time properly managing the high volume of wind capacity that has been loaded up on the grid in recent years, and a major weakness of renewables is their failure to perform during severe weather events, which is the whole point of having an adequate reserve of dispatchable thermal capacity.
We will know soon if these bills can be passed into law by both houses of the Texas legislature. With the federal government ramping up subsidies for more and more unreliable energy, states may need to follow some form of the Texas approach by subsidizing or otherwise facilitating the addition of dispatchable power, such as natural gas-fired generation, to preserve power grid stability.
 Robert Bryce’s Power Hungry Podcast, starting at the 2-minute mark).
Ed Ireland is an Adjunct Professor at TCU’s Neeley School of Business. He received his B.S. from Midwestern State University and Ph.D. from Texas Tech University. This analysis was originally posted at Thoughts About Energy and Economics (free subscription).