Why Does the Texas Spend So Much Money on Intermittent Wind and Solar Energy?

Electricity that can’t be delivered as and when it’s needed has no commercial value; in the absence of massive subsidies, there’d be no market at all for intermittent wind and solar.

As soon as the subsidies to wind and solar get cut, the ‘investment’ in new capacity evaporates, entirely.

But it’s those subsidies that distort the power market, destroying the normal market incentives which would otherwise see investment in reliable and affordable generation capacity.

It’s a point well made by Mike Nasi – an electricity market expert and regulatory attorney – in his testimony to Indiana’s 21st Century Energy Task Force.

Testifying before Indiana’s 21st Century Energy Task Force, electricity markets expert and regulatory attorney, Mike Nasi, warns Indiana policymakers of the significant indirect costs and risks renewables have placed on the Texas grid.

Mike Nasi: “I have solar on my house. I’ve supported wind generation. But, we cannot underestimate the escalating costs as we more deeply penetrate the market with [renewables]. So, where Indiana is now is where Texas was a decade and a half ago, making decisions about really big, weighty, costly things; and, I’d simply ask, look to Texas and learn the lessons from it. […] Very high performance from the thermal fleet is keeping this story from being a horror story. […]

Even though natural gas prices were down this year by 15%, power prices in the Texas market went up 40%. How does that happen? When you underestimate what the cost of renewable penetration is going to be in your grid. […]

The biggest miss, other than transmission, the impact of subsidization. I think you all know this but when you get $23 a megawatt hour for putting wind on the grid, in the form of a subsidy, and the price of electricity drops low, and you only get that subsidy if you generate, you bid the price of electricity negative.

You literally, in the Texas market, see one out of every three bids negative. In other words, paying to stay on the grid. So, that has two effects. One, it destroys and distorts the market place and, two, it erodes the capital of existing thermal: nuclear, coal, and I will tell you new gas. We could spend another hour talking about the myth that new gas is getting built. Take a look at the Texas market. See how much new gas is getting built. Close to nothing, because people and banks are not going to invest in a marketplace where a subsidy is driving the price of electricity to below zero.”

21st Century Energy Policy Development Task Force Hearing

Indiana House Chamber

October 31, 2019

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