Meet the startup behind those massive Texas energy bills

Power lines are seen on February 19, 2021 in Texas City, Texas
Power lines in Texas City, Texas

Welcome to Insider Energy, a weekly energy newsletter brought to you by Business Insider.  

Here’s what you need to know:

Texas continued to dominate headlines this week, with lawmakers looking for where to hurl blame. They have plenty of options, including themselves. 

Let’s start there. 


Texas
A woman walks on an empty street on February 15, 2021 in East Austin, Texas

Blackouts and big bills: Who’s to blame for the Texas energy crisis?

That’s a question that lawmakers in the Lone Star State have been asking in state House and Senate hearings that began this week. 

  • “Who’s at fault?” state Rep. Todd Hunter, a Republican from Corpus Christi, said Thursday during the House hearing. “I want to hear who’s at fault. I want the public to know who screwed up.”

A true cluster: Texas Governor Greg Abbot blamed ERCOT, the nonprofit that manages the grid, while other lawmakers blamed the Public Utility Commission, which oversees ERCOT – and is led by a commissioner appointed by Abbot, The Texas Tribune reported

  • Legislation crafted by the very lawmakers questioning ERCOT and other entities also took heat for not mandating the kinds of safeguards that other deregulated states require. 
  • Lawmakers scrutinizing the energy industry “reap millions of dollars in unlimited political contributions from energy interests, more than any other sector,” ABC News reported
  • And then there were the energy producers themselves, which failed to provide enough power during the storm. 

Behind the big bills: Lawmakers also discussed how to provide relief for Texans facing enormous energy bills, most of which are due to a single energy company – Griddy

What’s next: The hearings continue today and could result in new legislation and mandates for energy companies. There have already been some consequences. 

  • Five ERCOT board members resigned this week including the chairwoman Sally Talberg. All of them live outside Texas.

Read more: A Texas startup had big plans to disrupt the state’s $21 billion power market. Now its customers face enormous electricity bills.


Deb Haaland DOI
Rep. Deb Haaland, Biden’s pick for Interior Secretary

Granholm is confirmed as Energy Secretary, Haaland is grilled by climate deniers 

Energy: Former Michigan governor Jennifer Granholm was confirmed Thursday to lead the Department of Energy. 

Interior: Meanwhile, Rep. Deb Haaland, Biden’s pick for Interior, faced hostile questions during her confirmation hearings this week from GOP Senators who deny climate science and are bankrolled by fossil-fuel interests.   

  • Sens. James Lankford of Oklahoma, Mike Lee of Utah, and John Marshall of Kansas – who sit on the Energy and Natural Resources Committee – reject the scientific consensus that human activity fuels global warming, according to statements they’ve made in recent years, Insider’s Eliza Relman reports.
  • “I’m not sure that there is even climate change,” Marshall said during an interview on a Kansas radio station in 2017. In a statement to Insider, Marshall claimed that the climate is “always changing.” 
  • Read Eliza’s full story here. For more on the Senators who are tied to fossil fuel interests, check out this piece from The Guardian.  

Oil rig in field
The worst for oil markets is likely over, Morgan Stanley said in a note Tuesday.

Oil erases pandemic losses, and now it’s headed for a historic surge: Bank of America

Bank of America came out with a big prediction for oil this week: demand for crude could, over the next three years, rise faster than at any point in the last half-century. 

  • The growth in demand could push prices up to $100 a barrel – well beyond where they were before the pandemic caused demand to crash.
  • Today, a barrel of Brent is trading for about $65. 

Behind the surge: Unprecedented government stimulus, which fuels economic activity, and rising demand in China, a major market. Voluntary production cuts, led by Saudi Arabia, have helped, too. 

Companies to benefit: “We’ve got buy ratings on pretty much all the oil names,” Doug Leggate, Bank of America’s head of oil and gas research told us earlier this year. “We think we are at the bottom of another significant cycle recovery in energy.”


LIVE EVENT: Join us March 8 to hear from leaders across the energy industry on building a new low-carbon economy

We’re hosting a panel with executives from Shell, Facebook, Oliver Wyman, and Form Energy on March 8. You can sign up here

What we’ll discuss: My plan is to go beyond a fluffy conversation about the energy transition and break into some of the challenges companies face as they try to meet demands from investors, climate activists, and their employees. I also want to delve into the specific hurdles that remain on the technology front. 

Got questions for them? Reach out at bjones@insider.com


That’s it! Have a great weekend. 

– Benji 

Ps. This week in Should I Return My Dog, Jumi found a mini Torah displayed on a shelf in my apartment and proceeded to shred it. Happy Purim.

Jumi Benji Jones
Read the original article on Business Insider

Texas blackouts explained: Arctic weather shut down power plants as demand for heat surged, and the state’s grid is on its own

winter storm 8
Pike Electric service trucks line up after a snow storm on February 16, 2021 in Fort Worth, Texas. Winter storm Uri has brought historic cold weather and power outages to Texas as storms have swept across 26 states with a mix of freezing temperatures and precipitation.

  • Millions of Texans are without heat and power Wednesday as Arctic weather pummels the state. 
  • The cold weather caused energy sources including natural gas plants to go offline, just as demand for electricity went up. 
  • Climate change could make events like these more frequent, experts say. 
  • Visit the Business section of Insider for more stories.

Millions of Texans are without heat and power as Arctic weather continues to barrel through the state.

The blackout, which affected 2.8 million people across Texas as of Wednesday morning, is among the largest in US history.

“We know millions of people are suffering,” said Bill Magness, the president of Texas’ electric-grid manager ERCOT, in a statement Wednesday morning. “We have no other priority than getting them electricity.”

While some power was restored Tuesday night, outages are expected to continue through the week. At least 30 people across eight states have died from the winter weather sweeping the country.

Misinformation spread online Tuesday, with some conservative groups and lawmakers falsely blaming the blackouts on frozen wind turbines that quit generating power. In reality, thermal energy sources that went offline, such as coal and natural gas plants, contributed more to the problem.

But the drop in energy supply is just part of the reason why so many people in Texas lost power this week. Here’s what you need to know. 

winter storm snow texas
A man walks to his friend’s home in a neighbourhood without electricity as snow covers the BlackHawk neighborhood in Pflugerville, Texas, U.S. February 15, 2021. Picture taken February 15, 2021.

The simple reason why millions lost power: A gap between supply and demand

A major winter storm that hit Texas over the long weekend caused two important things to happen: Sources of electricity, like natural gas plants, went offline, while at the same time demand for the energy they produce went up, as people across the state turned on heaters to stay warm. 

That caused a massive shortfall in energy.

The organization that manages most of Texas’ grid, known as ERCOT, responded by cutting power to millions of homes, in rotating chunks (to limit the time any one household was dark). These so-called rolling blackouts are similar to what happened in California last year, which was also due to extreme weather. 

On Wednesday morning, 46 gigawatts of electricity were offline in ERCOT’s territory and 2.8 million customers were without power, ERCOT said. This is one of the largest shortfalls in energy supply in modern US history, Patrick Milligan, a manager and power expert at the consulting firm ICF, told Insider. 

Most of the supply that went offline was coal and natural gas, not wind

About 61% of the energy sources offline in Texas on Wednesday were thermal – that is, power plants that run on coal, natural gas, or nuclear energy. The rest was from solar and wind farms, ERCOT said.

Cold weather is the obvious culprit: All different kinds of power plants in Texas have trouble operating in Arctic weather as their instruments freeze, not just wind turbines. In fact, earlier this week, wind farms were overperforming compared to forecasts, said Rebecca Miller, a research manager at Wood Mackenzie who tracks output across the state. 

It can be more difficult to pump natural gas out of the ground or transport it to power plants in freezing conditions. What’s more, utilities have prioritized sending natural gas to homes for heating, instead of to power plants, Miller said.

A wind farm in TExas
Wind turbines in Loraine, Texas

There are other, less obvious drivers behind the Texas blackouts

The US is made up of three major electric grids, and one of them overlaps, almost entirely, with the state of Texas alone. In other words, Texas essentially has its own grid.

That can exacerbate a situation like this, by making it harder for Texas to draw power from other regions that aren’t under the same weather-related stress, said Emily Grubert, an assistant professor of environmental engineering at Georgia Tech, who studies large infrastructure.

“The entire grid of Texas is subjected to this emergency condition at once,” Grubert said. “That’s a lot of pressure to be putting on a grid that doesn’t have access to other areas that aren’t under those conditions.”

But there were other issues at play, as well, such as a lack of preparedness – both on the side of supply and demand.

Homeowners weren’t told to do much to conserve energy, Miller said. Meanwhile, power plants weren’t properly weatherized. 

Take the examples of wind turbines. While obvious, it bears mention that wind turbines have no problem operating in much colder states than Texas. Minnesota and Iowa, for example, have large wind farms yet don’t suffer from blackouts when temperatures plunge to single digits. 

“Wind can operate perfectly in cold weather,” Milligan said. 

Like natural-gas and coal-fired power plants, wind turbines can be weatherized to withstand tough winter conditions. But weatherization costs money turbines in Texas generally aren’t equipped for cold weather.

“Why would you have a snowplow in Austin? That kind of same thinking applies to the power plants,” Grubert said. 

It didn’t have to get this bad

This isn’t the first time that Texas has been hit by an Arctic burst. In 2011, around the time of the Superbowl, cold weather swept through the state, causing a familiar result: 3 million people were plunged into darkness.  

That’s left many wondering: Why didn’t energy producers and regulators do more to prepare for this cold spell? 

They did do something: That summer, a federal report recommended things like weatherization to prevent supply from going offline in the future, the Houston Chronicle reports. 

But a lot of that advice wasn’t followed, Milligan said, partly because it wasn’t enforceable and there was no mechanism put in place to pay for it. Weatherization is expensive, he said. 

Plus, Texas’ energy market is deregulated, and suppliers there try to produce energy as cheaply as possible, Milligan added. 

“The generators are not really incentivized to undertake these kinds of [weatherization] investments,” Milligan said. 

It would have been hard to have completely prevented these blackouts, experts told Insider; this kind of weather really is unusual for Texas. But the impacts would not have been so devastating if companies had done more to prepare, they said. 

texas weather
A vehicles drives on snow and sleet covered roads February 15, 2021, in Spring, Texas.

More blackouts are coming if we don’t do more to prepare 

The irony of blaming wind turbines for the power outages in Texas is that extreme weather events are known to be made worse by climate change – which is, in turn, fueled by burning coal and natural gas. In theory, wind and solar farms offset emissions spewed into the atmosphere, lessening the impact of climate change. 

“Can you expect more extremes? Yes,” Grubert said. “In terms of what that means for the grid, that’s a question that we as a society will have to grapple with.” 

It’s not only important to prevent outages outright but to ensure that we have ways to keep people safe when the grid goes down, she said. 

“Even if the energy system had stayed up, there would have been a lot of people in trouble during this event,” she said, such as those who may not have access to heat. 

The importance of managing demand, such as through measures that make buildings more energy-efficient, also can’t be understated, she said. 

Winter storm texas
Power lines in Fort Worth, Texas

When power will be restored, and what happens next

The outages are likely to continue through the week as a second winter storm brings freezing rain and sleet to the state.

“We are anticipating another cold front this evening which could increase the demand,” Dan Woodfin, ERCOT senior director of system operations, said in a statement Wednesday morning. “The ability to restore more power is contingent on more generation coming back online.”

Texas Governor Greg Abbott has called the blackout event “unacceptable” and said he will add the reform of ERCOT as an emergency item for the 2021 legislative session. 

“The Electric Reliability Council of Texas has been anything but reliable over the past 48 hours,” Abbott said.

The Federal Energy Regulatory Commission has also launched a task force to investigate the outages in Texas and across the US.

Read the original article on Business Insider