Texas' Power Problems

Texas, Texas, of all places is having energy problems this week.

There is a lot of misinformation out there about what is going on. Here's my advice: do not trust the politicians for accurate information, and don't trust anyone who seems to favor one source of energy over another. Instead, go to the Energy Information Administration, part of the Department of Energy in D.C., which is the best source for data on these things.

My other advice is: think like an economist. Please.

So let's figure this out.

• You never heard of energy problems in Texas before. That makes this an acute rather than a chronic problem. Of course, it is weather related, but you probably knew that already.
  
• It's mostly a problem of electricity. Many households from Texas and through the southeast do not have furnaces. Instead they have heat pumps, which are kind of like a reverse air conditioner. So, no electricity means no heat.
  
• The U.S. infrastructure has 3 electrical grids for the transmission of power within the grid (transfer of power from one grid to another is not done on a large scale). The smallest of these covers most of Texas. It's just as cold in Oklahoma, and Arkansas, but there's no problems there because they are on a different grid. Hmmm ... there's a clue ... decisions were made within the Texas system that are turning out uniquely badly in this acute weather situation.
• Much colder parts of the world do not have trouble with heating. So the problem isn't really with the absolute level of coldness, but with the relative coldness in that particular region.
• Most people don't get a basic feature of energy: we deal with it in steps (or stages). Generation (and pollution) happen in one step. Storage (and accident risk) happen in another. Usage is in a third. For example, if your car uses gas, it does storage then generation then use, while if it is an electric car it does generation (remotely) then storage then use. Some forms of energy are preferable because of features of their generation, while others are preferable because of features of their storage.
• Batteries are a joke. This is how we store electrical power. They are an old technology (predating the internal combustion engine by about a century) that has never worked well. Yes, there have been big improvements in them in recent decades. But think about it: you do not have anything around your house that requires much power (like microwaves and hair dryers) that uses batteries. Cars are not really an exception: they spend much of their stored power to move the battery; moving the lightweight humans is a bonus. This is a longer point, mostly to get you to this: for electricity, storage is not much of an option. So the problem combines insufficient generation and lack of storage.
• This is a weird one. For all its oil wells, Texas doesn't use much oil for heating or power generation. Go figure.
• A lot of fingers are pointed at Texas' huge investment in windmills. It is true that the windmills are not running (and, it's a winter storm, there is no shortage of wind). The thing that most people do not realize is that the windmills rely on a energy from other sources: they're machines just like anything else and they run better when they're warm. If you can't store electricity, you can't keep a windmill warm with a windmill. You could do it with windmills in other warmer locations, but then you run into the problem that Texas is its own smaller grid. The Wall Street Journal pwned this one with data from the EIA: most of the windmills were shut down before the storm hit to keep from damaging them.
• Do note that other sources, particularly gas and coal, were ramped up when the windmills were shut down ... just apparently not enough. 
• Also, keep in mind two essential facts about scale. First, there isn't that much renewable energy production. No matter how much you favor renewables, it is inadvisable to view power generation as anything other than gas, coal, and nuclear. Be realistic about this one (but on the good side, it means that wind isn't really the source of problems). Second, the renewable energy industry is sneaky on this one: almost all renewable energy totals are dominated by hydro. Wind and solar sound cool, but it's really mostly big dams that we don't build much any more.
  
• It's not just wind that is having problems with the cold. There are issues with gas and nuclear too. This is where the economics comes in. There was a tradeoff here: winterization is expensive, and decision-makers in Texas did not put enough money into that. This is related to the relative cold mentioned above: places that are colder choose more winterization. Keep in mind that energy generation is a heavily regulated industry, and that the grid itself is a public entity that's merely kept at arms-length by bureaucrats who don't want you to know that everything comes back to them (sort of like Fannie Mae in 2007).
• It isn't huge, but it isn't nothing either: homes that have furnaces in Texas mostly have gas. So cranking up the furnaces puts strain on the amount of power from gas that can be used for other things.
• In general, there is no shortage of power in Texas, or inadequacy of the grid. Cooling in the summer in Texas requires a lot more energy than heating in the winter. But there's an acute shortage right now. Part of this is the winterization issue, and part of it that if you're busier in the summer, you do all your repairs in the winter, decreasing your flexibility. That again is sound economics. But if this is sound tradeoff, what's unsound?
• It's back to storage! It's not exactly like this, but essentially all the electricity everywhere was generated in a plant somewhere else about a second ago. Wind and solar can't be stored (solar is nice, but it provides power at the wrong time of the day). Natural gas is also largely unstorable. Hydro power can be stored, but Texas is pretty flat and dry and doesn't have much within its grid. Oil can be stored more readily than natural gas, but again there's the issue that all those potentially explosive tanks don't actually hold much relative to usage.

You can probably see where this is going. I think I've been pretty clear in arguing that the problem is not wind power. What it is, instead, is that the people who love wind also hate coal and nuclear power. And without advocating for them too much here, the economics is like this: wind (and other sources) might be preferable for generation because of their lower pollution, but that's only half the tradeoff. And if you have a tradeoff (in anything), and you're only focused on half of it ... you're probably going to come out the loser. Where coal and nuclear are better is with storage. In your life, if you have considered pollution problems but not storage problems, you may have been misled.

OK, so what about nuclear. This is the one that almost all the time is the safest and most reliable. But again, the problem is the tradeoff: when there's a problem it scares the sh*t out of people. And, if you look into the history of nuclear accidents, they're almost always about some human or mechanical part failing when they cranked up or cranked down the power. So this is not going to help anywhere, including Texas, with acute problems. Nuclear is what you ought to use for your baseline of some high percentage of peak usage. Who does this? France.

And that leaves coal power. You do not have to like coal power. You do not have to use it much. But you have to realize that it like having a woodpile and wood burning fireplace in your home. You only have to maintain it for when you need it. And if you're worried about pollution, the way to mitigate that is to run your coal plants at close to 100%. When you don't need them, you shut them down completely (and this is exactly what the power industry does, and has for decades). Coal is also the most storable energy source: no pipelines, no tanks, just big piles of rock that aren't as flammable as other stuff, and that don't flow away when you're not watching them. Coal also needs the least winterization: if you can warm up the conveyor belt you are good to go, and you can do that by dumping coal into the burner from a truck to get the heat going (you can even make the trucks electric if you like).

And in Texas this week, while coal power production ramped up, it didn't ramp up very much. Again, use your economics: it didn't ramp up much because it was already running at capacity. How would you test that? By looking at whether energy production from coal is fairly stable or not. Here's the EIA:

Coal power should. not. be. stable. It is the one that you can turn off if you don't like it, but you should also be able to turn it on when needed. And that's not what's happened at all.

BTW: the chart is a cool one to examine, because it shows both the low power from residuals, but also the ups and downs in demand that are mostly met by gas and hydro ... because solar actually makes the ups and downs worse (solar is procylical, gas and hydro can be countercyclical if they need to be, and so can coal if you let it).

N.B. TF brought up the very good point in class that the heat pumps common in Texas really don't work very well once the outside temperature gets below about 40. For the economics above, this means it is much more likely for residences to put a draw on the natural gas distribution system (to run the furnaces they do have), but this will pull gas out of the electrical power generation system which is the thing that's not performing well.

Update. I forgot to put in a link to the graph. You can't direct link to it. Instead, you go to the EIA's Data Tools, Apps, and Maps page, and then double-click on the tile entitled Hourly Electric Grid Monitor.