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Terence Corcoran: When the ice storm cometh

Terence Corcoran, Financial Post

Texas crisis will reshape energy policy-making everywhere as wind-power collapse puts renewables under scrutiny.

The Texas case joins others around the world that suggest the great stampede to build wind and solar, fuelled by massive government subsidies and price-fixing regimes, comes with risks. PHOTO BY SPENCER PLATT/GETTY IMAGES FILES

The North American energy policy community, a space already filled with plenty of hot air streaming in from the global warming conflict, now faces a new jet stream of cold winds blowing down via the polar vortex. There’s no point getting bogged down in the climatic origins of the polar vortex; suffice to say that its recent acceleration has had a devastating impact on North American weather patterns.

What’s most interesting and important is the energy politics triggered by the polar vortex and its impact on the Texas power grid. Indeed, the Texas power wipeout instantly generated an explosion of hype, conflict and debate that will shape energy policy-making for some time. The key question: What are the risks in renewable power, especially wind?

Over the past week, shares of key renewable corporations have dropped, presumably brought on by reports that a collapse in the Texas wind-power sector was one of the main factors behind the failure of the Texas electricity grid. Among the until-now high-flying wind power firms to take a hit are NextEra Energy Partners, down 10 per cent over the past week. Other renewables in different sectors (Brookfield Renewable Partners down six per cent, Renewable Energy Group down 20 per cent) seemed to be part of a sudden ice storm downdraft that struck just as the sector was hitting a likely over-bought peak.

Another indicator of a potential energy policy-making turnaround was the renewable clash generated by Texas Gov. Greg Abbott. On Feb. 9, before the polar vortex descended on his state, Abbott received an award recognizing his commitment to wind development. “Clean and renewable energy are a valuable part of America’s future and are closely tied with Texas’ prosperity and success,” said Abbot. “While Texas continues its leadership in production in our oil and gas sector, the Lone Star State also is a national and international leader in wind energy.”

A few days later after the blackouts spread across Texas, Abbott blamed the grid meltdown and blackouts on the failure of the state’s renewable wind power to operate through the storm. Fierce attacks followed. That brought on a round of counter attacks from the media and green activists who, with some accuracy, noted that the Texas power failure was not solely a product of the collapse of wind power.

In reality, the fierce storms and cold locked down other power sources, although it is clear that wind-generated power all but collapsed, with much of the burden taken up by natural gas. In the end, according to the U.S. Energy Information Administration, much power kept flowing thanks to fossil fuels, nuclear and coal production.

What seems to be clear is that the Texas grid system was not prepared for a wave of equipment-freezing cold and soaring demand from people wanting to keep warm and operate their household equipment.

The failure of renewable wind supply was not the sole cause of the Texas blackouts. What were the other causes? Clearly a full review of the state’s energy policies is needed to get to the overall political, economic and technological background that created the conditions for massive failure. This is where the real lessons from the Texas ice storm will emerge and where the future of energy policy will be shaped, and not just in the United States.

Renewable advocates are scrambling to the defence of wind and solar, but the Texas case joins others around the world that suggest the great stampede to build wind and solar, fuelled by massive government subsidies and price-fixing regimes, comes with risks.

In Germany, a 2019 McKinsey report on the state of the nation’s power grid warned that “Germany has enjoyed a highly secure electricity supply for decades, but the tide is beginning to turn. The German power grid repeatedly faced critical situations in June of this year: significant shortfalls in available power were detected on three separate days. At its peak, the gap between supply and demand reached six gigawatts — equivalent to the output of six major power plants.”

The German problems continue. A Foreign Policy magazine commentary last week asked whether Germany is making too much subsidized renewable energy, risking more blackouts and price distortions. The McKinsey report warned of blackouts, continued high prices and of the need to increase electricity imports to offset the inconsistency in renewable power.

The German problem is in part the same one confronting Texas, which includes the same risks that are building in Britain, Australia and Canada, where the push for renewables keeps growing.

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