Hurricane Ida took down New Orleans’ electrical grid, at least for a while. Not only did it affect the grid, but it also hit oil and gas pipelines in the area, causing some of them to suspend contracts.
Just a few days after the storm, Enbridge energy said its pipelines weren’t operating because they had been forced to halt service on its offshore platforms. Onshore assets were still in operation, but many refineries along the Gulf Coast had cut or limited operations.
Texas is only too familiar with power supply problems resulting from heavy weather. In February of this year, a host of events that were each relatively unlikely occurred simultaneously, according to the Dallas Federal Reserve. The unprecedented freeze brought a surge in demand for heat and electricity. Meanwhile, many power plants and natural gas facilities were down due to lack of winterization. Energy generation from renewables was extremely low.
The Dallas Fed is currently watching energy generation in Texas to evaluate its potential effect on economic stability in our region. It has determined that Texas is quickly approaching the limits of our current mix of energy sources, if it hasn’t already reached those limits. Demand for power is increasing due to the more potent storms we have been experiencing. And, migration to the area will drive up the demand for energy, as well.
Wind and solar power do require some kind of backup
It’s not as simple as saying that wind farms don’t work when there’s no wind, or that solar arrays are powerless on a cloudy day. However, the energy they can generate is indeed affected by the weather conditions. We can overcome this limitation in part by increasing the use of utility-scale battery storage so that all of the energy generated can be used over time.
However, the Dallas Fed notes that we currently rely on thermal energy (coal, oil and gas) to make up the difference when renewables can’t provide all of the energy needed. These thermal plants are aging, however, and require greater-than-average downtime for maintenance and repairs.
Thermal energy plants aren’t being replaced at a rate that could prevent future blackouts. The Dallas Fed points out that Texas operates on an “energy only” principle, where companies are paid only for the energy they actually produce. This is opposed to a “capacity market,” where companies are paid for their capacity to produce energy.
Unfortunately, the presence of wind and solar energy has the effect of decreasing wholesale energy prices when they are working. This creates a disincentive to build and maintain thermal power plants.
Will Texas be able to maintain enough capacity?
Many policymakers are pressing to move Texas and the United States off of thermal energy altogether and switch to wind, solar, hydroelectric, geothermal or hydrogen power in the future. However, while we make this transition, we need to maintain incentives for thermal energy companies to provide backup power when renewables aren’t available – at least until we develop sufficient battery storage.