The Patriot Post® · In Brief: A Texas-Sized Energy Fiasco

We all remember the great Texas power outages a couple of years back, and Texans more than most. That doesn’t mean their elected representatives are learning the right lessons, as the editorial board of The Wall Street Journal notes.

What a mess. Renewable subsidies have distorted and destabilized the Texas electric grid, which resulted in a week-long power outage during the February 2021 freeze. To prevent more blackouts, Republicans in the Lone Star State now plan to subsidize gas power plants.

The Texas Senate last week passed putative energy reforms to “level the playing field,” as Lt. Gov. Dan Patrick put it. Texans will now spend tens of billions of dollars to bolster natural-gas plants that provide reliable power but can’t make money because of competition from subsidized renewable energy.

In short, subsidies of wind and solar create an over-reliance on those forms of energy. That makes power generation from more stable sources less profitable, but more needed.

Baseload plants were developed on the financial assumption that they’d run 85% to 90% of the time, but many aren’t because they are being squeezed by renewables. Coal plants are closing, and gas generators are at risk. Too few new gas plants are being built to support a growing population and industry. As a result, power is becoming unreliable, especially during extreme weather.

As usual, politicians only know how to throw (your) money at problems.

The Senate Finance Committee set aside $10 billion in its budget proposal to fund part of the cost for these emergency plants, but the legislation also proposes charging consumers. An insurance program would finance zero-interest rate loans to existing gas generators to maintain their equipment, which they are struggling to do owing to negative power prices.

Another Senate bill would create financial incentives for “peaker” gas plants that could ramp up on demand. Yet building peaker gas plants that run only 10% of the time costs about three times more than a baseload gas plant that operates 85% to 90% of the time.

To sum up: Texas Republicans are trying to fix the enormous inefficiencies caused by federal and state renewable subsidies with state subsidies that cause more inefficiencies.

The Journal’s editors conclude:

Texas’s grid mess offers a portent for the rest of the U.S. and another illustration of how the Inflation Reduction Act will cost Americans much more than the $391 billion that Democrats claimed. States may have to subsidize backup power generation to keep the lights on. Subsidies that create market distortions invariably lead to more subsidies and more distortions. California couldn’t have done it better.

Wall Street Journal subscribers can read the whole thing here.