Do-nothing plan for Texas grid could leave us in the dark

Do-nothing plan for Texas grid could leave us in the dark

We can have reasonable debates about how Texas should fix its power grid to supply enough energy for the future.

But the proposal by ERCOT’s independent market monitor that we should simply trust in the powerful invisible hand of the deregulated energy market is not a place to start.

As economic theories go, we’ll give it some credit. Telling people who froze in the dark in February 2021 not to worry because these things take care of themselves is brave. It is also bad policy.

ERCOT, or the Electric Reliability Council of Texas, is a nonprofit organization that operates most of the state’s electricity market. It hires a firm called Potomac Economics to act as a monitor to ensure the market is competitive and efficient.

Late last year, the Public Utilities Commission, the state agency to which ERCOT answers, issued a detailed report calling for significant energy market reforms to promote capital investment in dispatchable energy that can be stored and switched on and off. as needed.

Texas’ renewable energy supply is growing at a rapid rate, and this cheap, clean energy is something we desperately need. But the advent of so much wind power has discouraged investment in dispatchable power, which we need when the wind doesn’t blow and the sun doesn’t shine. The PUC has proposed requiring power producers to meet a reliability standard. Those that meet the standard can sell government-issued credits, which can create capital for investments in reliable, dispatchable energy.

Related: PUC Has Plan to Fix Texas Grid Lawmakers need to listen

Potomac Economics is discouraging this approach and instead calling on the legislature to simply leave the market alone with the promise that it will take care of itself.

PUC Chairman Peter Lake rightly called it “purely economic theory” divorced from the reality of actually running a grid.

“We know we have a problem. We know we’re going to run out of track sooner rather than later,” Lake said, referring to the fact that Texas doesn’t have the power generation capacity we need to meet our growth.

While Potomac has recommended doing nothing, Governor Dan Patrick is leading an effort to simply rig the energy market in favor of oil and gas producers. The PUC’s plan is somewhat stuck in the middle between Potomac’s laissez-faire dream and Patrick’s market manipulation.

What is at stake is a functioning and fair energy market for the state. We simply cannot afford to get this wrong.

Patrick would cripple the renewable energy industry that provides abundant clean energy. Potomac would only ask us to wait and hope. We can do neither of these things. Instead, lawmakers should think about it with an eye toward gently encouraging decentralized investment while nurturing the wind and solar industry.

As Lake said, “We cannot risk one of the world’s largest economies by hoping that business as usual will get the job done.”

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