The summer is in full swing in Texas. With temperatures soaring into triple-digits across the state’s most populous areas, more energy is required to keep the lights on and the indoors cool. With these higher-than-usual temperatures, demand for energy is breaking records, giving rise to concern about the adequacy of the state’s energy supply.
People are right to be concerned. But not because Texas’ world-class energy market doesn’t work. Instead, the tight margins are due mostly to government intervention, particularly renewable energy subsidies.
As wind generation continues to penetrate the energy market—nearing 20% of capacity in 2017, Texans will increasingly be subject to the unreliability of an energy source that isn’t around when we need it most and surges when we need it least. Day after day, data published by the Electric Reliability Council of Texas (ERCOT) show the inverse relationship of wind-produced energy and demand.
Production of wind energy peaks in the early hours of the morning (or the late hours of the night) and plummets from there. It sinks to its lowest in the afternoon as the temperature heads toward its peak. This creates an inverse relationship with the electricity needed by Texans to run our businesses and air condition our homes, which is low in the early morning hours and peaks in the late afternoon. These trend lines don’t bode well for the record-setting days ahead.
In fact, as Texas’s energy load reached a record 73,259 MW in the late afternoon of the July 19, wind production sank to just 4,229 MW. That’s not even 18 percent of its installed capacity! That day, wind peaked at around 2:00 a.m., when the load was only 48,408 MW. As is always the case, wind energy isn’t there when we need it most.
When wind generation does surge, it distorts the pricing scheme that keeps reliable energy available. Subsidized electricity sweeps the grid, forcing prices down below the levels traditional generation sources need to continue to operate and invest in new generation. Wind energy production thus fails to supply us with the power we need in the present while reducing available power for the future.
As reserve margins dip to around 10 percent this year, policymakers should reconsider the incentives that corrupt the market to make renewable energy economical. The government shouldn’t be in the business of picking winners and losers—especially when Texans are forced to pay for the contest. Texas should eliminate all state and local government subsidies for renewable energy.