Fossil fuel companies block clean energy in Texas, keeping prices high

0

The differential arises because Texas hasn’t installed enough transmission lines to carry clean energy east, and fossil fuel generators want it to stay that way.

The Gulf Coast Power Association illustrated the growing political battle by having a fossil fuel company lobbyist don an Abraham Lincoln costume at its annual conference last week and debate a clean energy lobbyist. disguised as Illinois Senator Stephen Douglas.

The Lincoln-Douglas debate question, when answered, will determine the future of electricity prices, how long Texas will depend on fossil fuels, and the profits of dozens of companies. Should we build more transmission lines or more natural gas power plants to meet our state’s growing energy needs?

Since the 2021 freeze that killed hundreds of Texans, most of the attention on the Electric Reliability Council of Texas’ grid has focused on generating enough power. But electricity market insiders have asked me to highlight the equally important and more complicated issue of transmission.

I’m not talking about the poles and wires on city streets, but the long-span power lines on massive towers that some people mistakenly associate with cancer. Transmission carries bulk electricity from wind projects, nuclear power plants, natural gas generators and solar installations to local transformers who distribute it.

Understanding why transmission is a big deal requires understanding how the ERCOT network is divided into three markets.

The wholesale electricity market is where generators compete to provide the cheapest electricity, and it’s where prices can range from negative numbers all the way up to $5,000 per megawatt hour. Retail providers, such as Reliant or the San Antonio municipal utility CPS, negotiate wholesale electricity contracts and sell electricity to consumers.

The Public Utilities Commission regulates companies that provide transmission lines between generators and consumers. Commissioners decide which transmission lines are built and determine how much transmission companies, such as CenterPoint and Oncor, can charge consumers for service.

The media focuses on the statewide average electricity price, but ERCOT charges different prices at 11,000 locations around the state called nodes based on the supply and demand of that location. Often, wind and solar generate more power than transmission lines can carry, making electricity cheap in the west while prices soar in cities east of I -35 when demand exceeds local supply.

Low prices in one part of the state are supposed to discourage new generation facilities in that area, while high prices are supposed to encourage new power plants nearby. Transmission lines are meant to ensure electricity can move around the state for reliability.

A new transmission line can therefore increase the profits of renewable energy generators in one part of the state and hurt fossil fuel generators by increasing supply where demand is high.

The Gulf Coast Power Association convinced Bill Barnes, a lobbyist for the NRG fossil fuel generator, to wear a beard and stove hat at the Austin conference. He argued that transmission lines hurt competition by discouraging companies from building natural gas power plants near cities.

Like many fossil fuel advocates, he wants to let high prices encourage new natural gas power plants.

Lincoln’s rival was Mark Stover, who represents Apex Clean Energy. He argued that wind and solar projects should go where they can access the cheapest land and generate the most electricity. Transmission lines give cities access to clean energy that’s cheaper than what new natural gas-fired power plants can produce.

Both sides recognize that no one knows what technologies might emerge in the five years it takes to build a new transmission line or in its 70-year lifespan.

The Public Utilities Commission and the Texas Legislature plan to overhaul the Texas electricity market, and how much transmission to build remains a dilemma. Will Texas make rural clean energy more reliable and fight climate change? Or are we going to encourage companies to burn fossil fuels closer to big cities?

The right answer is a compromise that also allows new technologies to be competitive.

Executives overseeing billions of dollars in capital assets, however, explained to the audience at the Gulf Coast Power Association why their method of production should prevail. Attendees heard PUC Commissioner Will McAdams voice his support for “distributable” electricity, a password to fossil fuels. ERCOT’s new CEO, Pablo Vegas, was listening intently.

One phrase I didn’t hear at the conference was climate change. Many powerful people remain willing to sacrifice long-term sustainability for short-term gain if the public doesn’t stop them, and that’s indisputable.

Chris Tomlinson, named 2021 Columnist of the Year by Texas Editors, writes commentary on money, politics and life in Texas. Sign up for his “Tomlinson’s Take” newsletter at HoustonChronicle.com/TomlinsonNewsletter.

twitter.com/cltomlinson

[email protected]

Share.

Comments are closed.