As California Exports Blackouts To Nearby States, Will Texas Avoid The Same Fate?

As California Exports Blackouts To Nearby States, Will Texas Avoid The Same Fate?

California’s wild hourly swings in mandated renewable power generation have wrecked the economics of generating reliable electricity in other Western states.
Chuck DeVore
By

California’s electric grid operator declared a “Flex Alert” Friday morning, showing all that mandated solar and wind power can’t reliably keep the lights on in California. California’s politically driven renewable energy mandates are likely to cause more blackouts this summer outside of California after a remarkable ruling by the Federal Energy Regulatory Commission (FERC) that allows California to hijack electricity that Arizona already contracted to receive.

California is America’s largest importer of electricity. The Golden State also mandates an increasingly large share of renewable energy on its electric grid with a goal of 60 percent by 2030 and 100 percent by 2045, while banning the renewal of coal-fired power contracts to provide electricity to California from out of state.

This would be fine if the consequences of these mandates were limited to those who voted for them. But they’re not. Because California’s grid is part of the Western Interconnection, its laws and regulations on electricity affect eight Western states and parts of four more, including El Paso, Texas.

How California’s Mess Is Affecting Other States

Fearful of blackouts this summer that might affect the Sept. 14 recall election targeting Gov. Gavin Newsom, California’s grid operators are buying up power around the West. This prompted Arizona officials to warn that California’s actions may lead to blackouts in Arizona, with Arizona Corporation Commission Chairwoman Lea Márquez Peterson blasting the late June FERC decision to prioritize electric utilities in California over those of other Western states.

“Our electric utilities did the right thing and planned ahead, securing pre-negotiated contracts with utilities in the Pacific Northwest to ensure that critical hydropower would be available to Arizonans when it would be needed the most, which would be delivered across transmission line through the state of California,” Márquez Peterson noted in a statement.

Tucson Electric Power and Arizona Public Service, two Arizona utilities, specifically warned that California was “exporting its reliability issues which are the result of dynamics within (California) to the rest of the West.” I raised this issue in 2017 and 2019, but regulatory agencies and elected officials too often wait until after a crisis to act. As a result, California’s aggressive environmental goals have become a crisis in the Western U.S.

A compelling political battle may arise in the West this summer. The question will be whether Western governors will passively stand by and allow their electric generators to save California from afternoon and early evening blackouts at the cost of their own constituents losing power. Given the antipathy towards California in neighboring states, it’s not hard to understand how California paying a premium for power and driving up prices while threatening blackouts won’t go over well for governors seen as doing little to stop it.

How California Energy Began to Break Down

So, how did California and its neighbors arrive at this point? Because California’s electricity goals measure net use of electricity by source, it allows California politicians to virtuously claim they are “greener” than they really are.

They do this by generating a surplus of subsidized solar power during mild days. This surplus electricity is priced to sell, as there is often more supply than demand in California. As a result, California frequently exports cheap electricity to other states in the middle of the day. This has depressed the value of baseload power generation, discouraging needed new investment and causing the premature retirement of gas and coal powerplants.

Even so, California’s grid is increasingly unstable, resulting in a frequent need to import electricity in the late afternoon. This happens almost daily when solar power ramps down with the sun and people return home from work and school, causing a shortfall in electricity for two to three-and-one-half-hours—something called the “duck curve” for the shape of the electric demand graph. During hot evenings, California relies on natural gas, coal, and nuclear power from surrounding states when their own renewables fall short.

Will Texas Turn Itself Into California?

California’s wild hourly swings in mandated renewable power generation have wrecked the economics of generating reliable electricity in other Western states.

This phenomenon parallels the struggles Texas is increasingly contending with in its own grid (known by the acronym ERCOT for Energy Reliability Council of Texas). In Texas’s case, it wasn’t due to ambitious renewable mandates set by politicians and regulators but generous federal subsidies for wind and solar that allow them to make money even when they pay Texas’s largely free-market grid to take their power, as happens with one-third of Texas power contracts during the year.

The huge financial advantage federal subsidies provide to wind and solar has distorted Texas’s largely deregulated electricity market, discouraging investment in new gas-fired power plants and resulting in the early retirement of thermal plants. Since 2016, Texas added a net capacity of 13,000 megawatts of wind and solar—although it usually produces a fraction of that at largely random times—while losing a net of 4,000 megawatts of more reliable coal and gas-powered generators.

This erosion of reliability was at the heart of Texas’s deep-winter blackouts. Fortunately, for Texans, the legislature passed a bill during its recently concluded 2021 session that, if used correctly by the Texas Public Utilities Commission, would begin to address the weaknesses in Texas’s grid caused by the growing share of unreliable wind and solar. On July 6, Gov. Greg Abbott directed the commission to take four significant steps:

  1. Incentivize investment in “reliable sources of power, like natural gas, coal, and nuclear power.”
  2. Allocate reliability costs to generation resources that cannot guarantee their own availability, such as wind or solar power.
  3. Better schedule generator maintenance (significant amounts of power were down for maintenance during the winter storm).
  4. And accelerate the construction of new powerlines connecting reliable power to customers.

While Abbott’s new policies will help Texans avoid future blackouts, there is little chance concrete action will happen before summer’s end, leaving Texas vulnerable to at least one more summer of tight electricity supplies during hot days when the wind isn’t blowing over West Texas’s wind turbines.

Don’t Subject Right States to Left Governance

Given the havoc California is visiting on its neighbors in the West, it’s interesting that there were multiple calls for Texas to join one of the national grids after the winter storm, with The New York Times headline mocking,

As Arizona, Nevada, and other Western states are finding out, interconnectivity with California generates numerous problems. In addition, the roughly 85 percent of Texas served by its own grid—El Paso connects to the west and parts of the Panhandle and East Texas connect to the Eastern Interconnection—remains largely free from federal electricity oversight because Texas electricity doesn’t engage in interstate commerce. Most Texans see that as a powerful benefit.

It’s instructive to examine the electric prices to consumers that result from each state’s energy policies and mix of generation. Through April of this year, California’s average electricity prices clocked in at 18.52 cents per Kilowatt-hour (kWh), the highest in the contiguous U.S. outside of New England, increasing by almost 12 percent year over year.

This is about double the average of the other states in the Western grid, meaning California can pay top dollar to drain other states’ power supplies, leaving them to bake on hot summer days while Californians remain cool. In Texas, the average price of electricity through April was 10.34 cents per kWh, 56 percent of the average in California—and that’s including a massive spike in prices due to Winter Storm Uri in February.

In the wake of Texas moving to limit the danger of blackouts from an overreliance on unreliable renewables versus California pressing ahead with its 100 percent renewable mandates, it will be fascinating to see which model delivers the affordable, reliable power that’s a prerequisite to modern civilization.

Chuck DeVore is vice president of national initiatives at the Texas Public Policy Foundation and served in the California State Assembly from 2004 to 2010.

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