Sometimes power
It has been approximately two years since a surprise winter-weather outbreak in Texas during the winter (of all times) caused its electric grid to fail, leaving many residents freezing in the dark during a severe cold snap. How did it happen? Responsible parties have been saying, “¯\_(ツ)_/¯”. Others disagree.
As it happens, the electric grid is a wonder of the modern world. It’s scale and complexity are second in impressiveness only to the task it is meant to handle: providing everyone all the electricity they want or need at any given moment without advance warning. To make sure this happens, power plants have to generate enough electricity—and be at the ready to generate it or stop generating it—according to the total electric demand on the grid. The electricity generated constantly has to match the electricity consumed at every moment. Any mismatch between supply and demand that lasts for more than mere seconds will cause the grid to fail, as the internal safeguards against the destruction of equipment shut it down, causing areal blackouts. Powering it back up after an emergency shutdown is a work of coordination between massive bits of industrial equipment spread out across large geographic areas.
When electricity was still spreading as a utility across the country, industry insiders recognized that the most efficient management structure would be one of local monopoly. It seemed logical and unavoidable. The alternative to having a single electricity provider at one location providing electricity to households via its own wires would have been to have multiple providers with multiple alternative copper wires running parallel to each other to each end consumer. Consolidation would cut down on all that extra copper. But the resulting monopolies would be able set prices for their electricity as high as they wanted, theoretically, since they had no local competitors. In other words, they would act like monopolists.
Early regulation of electricity monopolies (which became a model of regulation for other utilities) set the prices and profit margins electric companies could charge customers. The monopolies would otherwise be permitted to continue existing, earning money for the owners at a predictable rate of return. In response, the monopolies would have to ensure an uninterrupted supply of electricity. The monopolies were allowed to charge a fixed percentage of their capital investments as a reliable rate of return on their investments. If a power plant was to be built for a million dollars, for instance, by regulation the power plant’s owners would be allowed to earn ten percent profit on the plant—just to name a number as an example.
This created a different problem, in that it became an incentive for electricity monopolies to overbuild—to build more and more electric plants, substations, and overland power lines as investments, because each of these investments produced predictable, steady profits at no risk. The monopolies still behaved like monopolies, and they were permitted by the regulator to earn economic rents from their customers.
Economic theorists were never quite satisfied that monopolies were acceptable or even necessary, and they came up with mechanisms to introduce competition into electricity markets. To begin with, they would require the wires between the power plants and consumers—homes and businesses—to be operated separately from the electric generation facilities. This would be the grid network, and it would be operated essentially as a monopoly under public ownership. The power plants would be operated by private companies, and they would compete with each other to furnish electricity to end users according to the most fundamental principle: the lowest price. This would force power plant operators to cut their costs, thereby improving efficiency while giving consumers a choice. Or so the theory went.
As a practical matter, the grid operators (of which there are several multi-state organizations across America, plus one for most of Texas) would do the buying for end users on an hour-by-hour, day-to-day market. Generators, after all, needed some way to plan ahead, and end customer had better things to do that watch the spot prices for kilowatts on their computers all day.
Many parts of this system were first implemented in California in the 1990s, and while they proved much of it as workable, they also resulted in the Enron fiasco of gambling on electricity spot-market prices. The incentives also led politicians to promise energy so green that it couldn’t be produced in California at all and would have to be purchased from the grids in neighboring states. The system could lead to wild market-price spikes in times of high electricity demand.
The grid as it is now is meant to provide electricity at reasonable prices, but the goal of reliability has been moved into third place after environmental cleanliness, meant to come from renewable sources, including the popular darlings of wind and solar, and from the unhappy green stepchildren of hydroelectric power from massive river dams and smokestack power from burning wood and other plant matter.
The unreliable nature of wind and solar put them at a disadvantage when it came to reliability. They couldn’t promise to deliver wind power in an hour at any price since they couldn’t guarantee the wind would blow, for instance, and in daytime hours, they couldn’t guarantee the sun would shine. The regulators thus gave them advantages in the competition for price, mainly by providing them with grants and subsidies. In many cases these subsidies are so large that wind and solar plants can offer their electricity on the marketplace for free or at negative prices. Operators of conventional power plants (using coal, oil, gas, and nuclear fuels) could not compete. Lacking a profitable return, investors have been scheduling many of these conventional plants to be shut down.
Wind and solar also have to have extra power plants on stand-by for when the weather is less windy or sunny than anticipated. Due to their unique ability to respond quickly, these back-up plants have to run on natural gas, which has to be available on demand. So if you have a lot of wind and solar on your grid, you also have to have access to natural gas at the ready, and that gas has to be in the pipelines, since it doesn’t store well in the volumes needed to power the grid. Which is a problem when the weather turns cold.
Weather may not be predictable enough for industrial planning, but it does have predictable patterns in the depths of winter: there isn’t much sunlight to power solar panels reliably, and the winds are either too violent or too calm to be of much use. So the grid has to run on natural gas—just when the colder parts of the country experience spikes in natural gas demand for home heating. The result is that either the grid fails, or else homeowners can’t heat their homes during a cold snap. In both cases, the spot-market prices for natural gas will go stratospheric, signaling to end users either to freeze or go dark—maybe both.
Some have hopefully suggested that the problem can be solved by finding ways to store wind and sun energy in batteries, or in physical systems that work like batteries, so that their energy can be tapped as it is needed rather than when it is produced. Which will be a consideration for another day.
Most of the description above was informed by the book Shorting the Grid by retired chemist Meredith Angwin. In it, she describes the complexity of the modern electric grid along with its byzantine management structure. She also spells out its weaknesses and apparent lack of long-term planning, as well as its poor transparency. The book is an easy read despite the subject matter’s complexity. The book is not a work of an activist, although her initial inspiration for getting involved was in trying to save Vermont Yankee nuclear power plant from being shut down.
I highly recommend this discussion between Angwin and Robert Bryce, recorded just after Bryce’s power was restored at his home in Texas in February of 2021. It provides a good overview of how the grid works, both ideally and in reality. The podcast version is here; the YouTube version is below:
I've been praying my power didn't go out today. I think we have somewhere in the range of 2-4" of graupel (think of a snow cone) on the ground. I did one round of shoveling and whoa, pellets in the face is painful. The hubs is out doing round two.
Oh boy, it's Truitt vs. OMG in the Mothership comments. Love it when they tangle with each other and leave everybody else alone.