Texans wonder if renewable energy subsidies are really a positive

Winter Storm Uri showed a weakness in the Texas energy grid that many Texans were unaware of beforehand — but not public policy expert Brent Bennett.

In the last two years, Texans have become increasingly concerned with the reliability and cost of electricity in Texas.

According to recent polling from The Texas Politics Project (TPP) at the University of Texas, nearly 90% of voters consider the state's electric grid an “important” issue in the 2022 election. This percentage was consistent no matter their political affiliation, religion, race, education or living location.

Furthermore, the TPP poll shows that voters are nearly evenly split on who will be able to effectively handle this issue as governor.

Gov. Greg Abbott is only leading his opponent, former Congressman Beto O’Rourke, by 1% on this question, the poll states.

Additionally, a Data for Progress poll reported that 69% of those surveyed (D: 66%, I: 74%, R: 69%) said their electricity bill is higher this year and 52% (D: 60%, I: 42%, R: 52%) said it has impacted them “a great deal.”

Texas voters consider the viability of the electrical grid to be one of the most important issues in the election, so much so that it has made the top four concerns. It comes in second place just behind immigration and is just above gun violence and the economy.

Bennett said he is somewhat surprised this has not been a bigger issue in the gubernatorial race.

“That’s something I think people are still really mad about,” he said “Depends on how much Beto wants to make it an issue. I mean, the governor doesn’t want to touch this. It put a black mark on his record. And he wants to bury this thing, especially if he’s thinking about running for president in a couple of years. Because this is going to be something everyone’s going to attack him on.”

Bennett said O’Rourke focused on grid unreliability early in the race, doing a campaign swing that some dubbed “The Pray the Lights Go Out Tour.”

“He went all over the state talking about the grid and they did more in the summer,” he said. “He’s been pretty quiet about, it seems like, recently, which I don’t know, maybe just wasn’t getting traction there."

Bennett, policy director for Life:Powered, an initiative of the Texas Public Policy Foundation which states its goal is “to raise America's energy IQ,” has devoted extensive time to researching the question.

In October 2021, TPPF published a paper Bennett wrote titled “Improving the ERCOT Grid Through a Reliability Requirement for Variable Generation.”

In it, he states that serving ratepayers should be the primary purpose of electricity policy and market design. But that is not the case now, Bennett argues.

“The Texas model of socializing transmission and reliability costs among ratepayers provides generators with an implicit subsidy and favors generators that impose more transmission and reliability costs on the system,” he wrote. “Failing to allocate reliability costs to variable generators will result in increasing costs for backup power or in more frequent reliability problems, as Texas is experiencing. Neither outcome is optimal for consumers.

“Allocating more of these system-level reliability costs to generators will bring more balance to the market and provide an incentive for generators to minimize those costs, thereby lowering the overall cost to ratepayers.”

Bennett said while the 2021 winter storm and the ensuing deadly chaos received an enormous amount of attention, but the Texas electric grid has experiencing more frequent reliability problems, including “tight summer conditions from 2018 to 2021” and the disasters during Winter Storm Uri.

He said the by increasing reliance on wind and solar generation, investment and revenue is being driven away from dispatchable generation and reliability measures. That, Bennett wrote, is the primary cause of these shortages.

“Placing reliability costs on ratepayers, as the Texas model has done to date, provides an implicit subsidy for less reliable generators. The necessary solution to improve reliability is to redirect investment away from variable generation and toward reliability measures,” he wrote. “A requirement for variable generators to provide a minimum amount of electricity during high-demand periods will improve reliability while minimizing overall costs and impact on the rest of the competitive market.”

It not only assures nearly five gigawatts of reliable backup resources, it would do so at a cost of less than $500 million annually, Bennett said, far lower than the billions of dollars that Texas ratepayers have paid over the past several years through increased scarcity prices.

He told Houston Daily that as developments unfold, Texas utility customers will not be happy.

“As of now, the Public Utility Commission is just kind of wrapping up their study of the load-serving entity obligations. So that’s kind of their main idea for market reform,” he said. “We think that once it becomes public it’s going to be widely decried as too expensive, especially now, and rightly so, because not only is it going to be expensive now, it’s going to get more expensive later because it’s not fixing the problems.

“What it’s doing is, it’s making customers pay for back-up power and not imposing the appropriate amount of cost allocation on wind and solar,” Bennett said. “So if we don’t check the growth of wind and solar, then what we’re doing is we’re building more of this stuff that is then creating more socialized costs for the rest of the grid. So you’re basically chasing wind and solar subsidies with subsidies for back-up power. And the more wind and solar you build, the more backup power you have to subsidize. And so it’s really just a dog chasing its tail.”

He said ERCOT is drawing the wrong conclusions on how to stabilize the grid.

“And I think particularly Chairman (Peter) Lake seems convinced that somehow this is going to work and solve that problem,” Bennett said. “We don’t think it will. We don’t know why he’s convinced of that. He sees the problem much the same way we do. It’s just that their solution just does not make any sense.”

Bennett said industrial consumers have a lot of influence, and they will be heard before this is settled.

“Almost half our electricity is large industrial and large commercial users,” he said. “So, they carry a lot of weight and they’re really against this idea. They’re probably going to have their own ideas. They’re pushing behind the scenes, I would guess.”

Bennett said he expects the debate will be “back to square one in terms of long-term market reform” by February.

“And then that will just open up a free-for-all in the Legislature. The problem is that anything the Legislature does is not likely to be very prescriptive,” he said. “We’re not going to get really any kind of cost allocation of wind and solar past the Legislature. I mean, we had our opportunity, we tried our best to do it.”

Bennett said industrial firms are unsure of what approach will work best, while there are renewable energy supporters who will oppose any effort to pass along costs to them. Some, he said, want to “virtue signal” by supporting wind and solar.

“They want to keep those costs hidden and pass them along to the ratepayers that are paying for it,” Bennett said.

Nearly 70% of Texas voters are reporting their current home energy bills are higher now than when they were at the same time a year ago. Once again, nearly 90% of these people reporting are saying these higher prices are impacting their lives in some way; with over 50% saying it is making a high degree of impact on their day-to-day lives.

To help improve the power grid, Texas voters are strongly in favor of making a variety of extensive improvements. These improvements include upgrading transmission lines and other electrical equipment, expanding overall energy efficiency, and increasing the use of emerging energy technology.

As part of the Life:Powered team, Dr. Bennett regularly speaks with policymakers, energy experts and industry associations across the country. He is responsible for researching, fact-checking, and spearheading many of the team’s policy and regulatory initiatives. He has written extensively on how America has improved its environment while growing its energy use and on future energy technologies.

Bennett has an M.S.E. and Ph.D. in materials science and engineering from the University of Texas at Austin and a B.S. in physics from the University of Tulsa. His graduate research focused on advanced chemistries for utility-scale energy storage systems. Prior to joining the foundation, Bennett worked for a startup company selling carbon nanotubes to battery manufacturers, and he continues to provide technology consulting to energy storage companies.

As a native of Midland, the heart of the oil patch, Bennett is a passionate student of energy and proponent of freedom and human flourishing. He currently lives in Austin, with his wife, Erin, and their son, Jack.