HEADLINE: “The Texas Lesson: Growing Your Green Energy Means Electric Bills, Higher Taxes to Cover Subsidies and Less Energy Security” THOMAS J SHEPSTONE

“As renewables penetration grows, stabilizing the Texas grid is getting more expensive, further clouding the true cost of wind and solar.”

The Texas Lesson: Growing Your Green Energy Means Electric Bills, Higher Taxes to Cover Subsidies and Less Energy Security

THOMAS J SHEPSTONE

APR 10

READ IN APP

One of Doug Sheridan’s latest posts succinctly addresses the problem with green energy, namely that it's unaffordable despite all the free lunch claims by green energy evangelists. Texans are in for some shocking electric bills!

As renewables penetration grows, stabilizing the Texas grid is getting more expensive, further clouding the true cost of wind and solar.

ERCOT purchases ancillary services in the day-ahead market for the purposes of balancing next-day supply and demand of power on the grid and mitigating real-time operational issues. These services can be provided by generators or consumers to either increase or decrease the supply or demand of power in relatively swift fashion.

Subscribed

Ancillary services fall into four buckets:

1) Regulation—Fast-responding reserve capacity deployed immediately (ie, every 4 seconds) to balance supply and demand. These services can be either generation “up” or “down.”

2) Responsive Reserves—Reserve capacity to balance supply and demand if a generator trips offline or a large load unexpectedly comes or stays online.

3) Non-Spin Reserves—Capacity that can be available within 30 minutes to cover errors in supply or demand forecasts or to replace deployed reserves.

4) ERCOT Contingency Reserves (ECRS)—Capacity that can respond within 10 mins to address forecasting errors or replace deployed reserves.

The tools ERCOT uses to provide these services are varied, including” a) generating assets; b) large single loads or smaller aggregated loads that can be interrupted automatically in response to low frequency or per ERCOT instruction, as well as offer into the real-time market as requested by ERCOT, and; large energy storage assets (eg, batteries) that can discharge or consume power on the system.

Resources are selected in day-ahead market auctions to provide the services for each hour. All are paid the market-clearing price for that service and hour by parties representing load-serving entities—ie, retail electric providers and municipal and co-op utilities. The cost are ultimately passed to end users.

With more renewables on ERCOT, the cost of ancillary services is growing. In 2024, the trailing 3-year avg of total ancillary costs was $1.24B, or $2.96 per MWhr... up 98% and 80%, respectively, since 2020. Ancillary services costs now amount to 5.2% of the cost of wholesale power, up from 3.5% ten years ago.

In our opinion, the rise in these ancillary costs reflect mounting long-term problems on ERCOT. This includes, but is not limited to, a lopsided energy market that struggles to attract much-needed dispatchable new-build generation.

We note the effective tripling of costs for non-spin (backup) reserves since 2020 as wind and solar capacity proliferates. Add the costs for ERCS—which includes both spinning reserves and demand-response programs—and growth in costs has been even steeper.

Of course, state leaders may in the end bail out ERCOT using taxpayer funds rather than face voters over higher rates. In fact, the Texas Energy Fund is a first step in that direction. If so, our analyses will need to expand to reflect this and other tactics from Austin's bag of tricks and distortions.

The evidence that renewables invariably drive up electricity costs is everywhere: Australia, Germany, California, and the list goes on, blowing up green energy claims of falling prices and competitiveness. Intermittent sources of energy will always destroy the efficiency of the market and undermine energy security.

And, there's no true solution to the intermittency. Battery storage is a very short-term solution, not to mention the costs. Only coal, gas and nuclear energy can ensure energy security. Gas is the best combination of clean and low cost, but we need all three.

#Texas #Renewables #GreenEnergy #ERCOT #Subsidies #Electric

BOTTOMLINE: “The evidence that renewables invariably drive up electricity costs is everywhere: Australia, Germany, California, and the list goes on, blowing up green energy claims of falling prices and competitiveness.”