Is The Energy Market Working For Texas?
This week, the Houston Chronicle looked into a curious effect of having a diverse stream of cost-effective power sources in an unregulated market: namely, that it’s harder for electric companies to make money when electricity is cheap, and the grid is powered in part by renewables like wind and solar that—as long as the wind is blowing and the sun is shining—help shift the focus away from traditional power generation. With fewer financial incentives to maintain plants, the reliability of the grid suddenly becomes a question mark, because Texas doesn’t get anywhere near enough reliable energy strictly from renewables. As the Chronicle explains it:
The state needs coal, natural gas and nuclear plants to meet electricity demand, but the problem for power companies is they only make money when their plants are running, not while waiting for the wind to stop blowing and the sun to stop shining. In the past, earnings from summer price spikes more than covered the costs of maintaining plants that operated at less than full capacity and kept companies profitable.
The problem now is that spikes happen less often, and as a result, Texas’s Public Utility Commission held a workshop on Thursday to consider if the state’s unregulated electricity market—the only such system in the U.S.—needs to be updated to better reflect a grid with multiple energy sources, some of which are cheap enough that power companies worry.
Perry’s DOE Funds Battery Research
Batteries are a big part of the future of energy (ask Elon Musk about that), and while much of the research into that future is happening in the private and academic sectors, the Department of Energy has long had an agenda of fueling investment into research that might not yield immediate financial returns, but which could have a significant impact on the foundation of knowledge we use to develop new technologies. (As Michael Lewis pointed out in Vanity Fair this month, funding research that may not be profitable is part of why the DOE exists.) Critics of Perry’s leadership have questioned whether this tradition would continue, but the Battery500 consortium, launched last year by the Obama administration, got another $5.7 million in funding to seed fifteen “new, potentially risky battery technologies that could pay off big and grow into significant energy storage solutions,” according to the energy blog Red, Green, and Blue.
This week’s news that NRG reported second quarter losses of $642 million—up from $276 million over the same span in 2016—means that there are big changes happening in Houston. The company announced plans to divest itself of $4 billion in assets, and in addition to slashing its renewables program, it expects to replace as many as 100 of its 2,400-person Houston workforce with temp and contract workers. At least 80 workers received layoff notices this week, according to the Houston Chronicle, and the paper noted that there are 100 listings for contract workers to do maintenance at five Texas plants. NRG itself hasn’t commented on the number of layoffs, or their potential replacements (it did say that the employees who’ve bad laid off have received severance packages), and it’s unclear if the bleeding stops here, or if there are more layoffs on the horizon.
Fun With Maps
If the layoffs and reliability concerns for the Texas grid have you worried, maybe you’d like to relax by playing with an interactive map? Here’s one, from the American Wind Energy Association, that shows every wind farm in the United States. There are a lot of them, and a whole bunch of those are in Texas—specifically West and South Texas. That’s not exactly news to observers of Texas energy trends, but it is something to see the dozens of blue dots between Abilene and Snyder, or in the stretches of citrus groves (and little else) north of the cities of the Rio Grande Valley. The map marks the wind farms with blue dots, and the wind power manufacturing facilities with red ones (those tend toward urban areas—but not exclusively), and offer a visual representation of the importance of Texas in the seat of America’s wind belt.