Wind and solar power generated close to 40 percent of the power that Texas needs during its recent heat wave. And, unlike the February 2021 collapse of wind generating about 42 percent of the power needed in Texas and then falling to less than 10 percent, wind and solar seemed to hold their own—at least this time. A recent CNN article touted that “renewables — powered by the wind and sun — have no fuel cost.” While that is true, they do need back-up power for when the sun isn’t shining and the wind isn’t blowing. Some states, including Texas, are adding expensive storage batteries to store excess wind and solar power, which can be released when wind and solar are not available to generate power. As of June 2021, Texas had 343 megawatts of battery storage—the second-highest in the country after California.
The Energy Information Administration (EIA) models a solar hybrid system, which is a single-axis solar PV system coupled with a four-hour battery storage system. The levelized cost of the solar hybrid system, taking into account that solar has no fuel cost as CNN stated, is about 60 percent higher than a stand-alone solar system or a combined-cycle natural gas plant. EIA’s levelized cost for a solar hybrid system is $58.62 per megawatt-hour, compared to $36.09 for a stand-alone solar system (without backup to cover its inherent intermittency) and $37.05 for a combined-cycle natural gas plant in the agency’s most recent Annual Energy Outlook, released on March 3, 2022.
The CNN article goes on to say that “Texas needs more transmission lines to carry energy generated by renewables to customers.” Apparently, the state has more solar capacity that could generate additional power, but there is insufficient transmission lines to carry that power to consumers. Adding more transmission capacity, of course, incurs additional cost, which would increase the price of electricity to consumers, as has the $7 billion already spent on transmission to bring wind from West Texas to markets. So while CNN touts no fuel cost, battery back-up and additional transmission lines are costs that add to a utility’s rate base and increase prices for consumers.
Australia Suspended Its National Electricity Market
While Texas enjoyed wind and solar power during its heat wave, other places are having problems with low levels of renewable generation. In Australia, the Energy Market Operator had to suspend the national electricity market for the first time ever due to lack of sunshine and wind, forcing electricity prices to skyrocket and threatening mass blackouts during freezing winter weather in the southern hemisphere. (Sound familiar, Texas?) Consumers were asked to conserve power to avoid blackouts. On the night of June 13, parts of Sydney’s northern beaches underwent a blackout while Queenslanders narrowly avoided one. Power problems occur more often in the evenings when output from solar and wind farms falls and people head home from work and switch on their appliances.
About 60 percent of Australia’s electricity comes from coal while 32 percent comes from renewable sources, and that number has been growing rapidly. Of the renewables, solar makes up about 37 percent and wind 36 percent, so when the sun doesn’t shine and the wind doesn’t blow as much as expected, Australia can be short of power. Along with the bad performance of solar and wind units, about 25 percent of coal power was offline due to scheduled maintenance and unexpected faults. Australia’s top power producer AGL Energy had one of three units at its Bayswater coal-fired plant in New South Wales back online on June 16 and another was due to come back online a few days after.
EnergyAustralia, which lost output from two units at its Yallourn coal-fired plant in Victoria, brought one unit back online on June 16 and the other was expected to return to service late the following week. The company’s gas-fired plants have helped with power supply: the company’s Tallawarra plant in New South Wales had been operating at close to 75 percent of its capacity since the beginning of May compared to its typical operating rate of around 20 percent.
Under the market suspension, the energy market operator took control of directing supplies to the east coast power grid from the energy generators, which received a set price for their power. (Western Australia and the Northern Territory are not part of the national electricity market.) On June 14, the energy market operator directed five gigawatts of generation through direct intervention to prevent blackouts after generators stopped supplying power because they would have lost revenue due to the price cap. (Australia’s national electricity market’s total generating capacity is 65,252 megawatts.)
When the price cap was put into the wholesale market, a number of generators who had said they were available suddenly withdrew their capacity. If it is costing a generator $400 per megawatt-hour, but they are only getting paid $300 per megawatt-hour, it would be a major revenue loss to the company to run its capacity. At the $300 per megawatt-hour price, many generators did not operate, resulting in a big reduction in the amount of generation capacity online. The national electricity market suspended trading, but became a market without a market.
The suspension of the national electricity market was temporary and it was the first time the whole electricity market was suspended since its creation in 1998. The market in South Australia was suspended in 2016 after a state-wide blackout, which an investigation determined was due to “overly sensitive protection systems” in wind farms affected by severe weather impacts on transmission.
Both Texas and Australia’s electricity grids were affected by freezing winter weather when wind and solar power dropped precipitously. In Australia’s case, the energy market operator set a price cap so that consumers would not be hit with large price spikes as they did in Texas in February 2021. Australia’s price cap, however, had companies withdrawing their power because of losing revenue. While Texas’ solar and wind units performed during the state’s recent heat wave, the state has taken action to bring on expensive battery storage units to back up their intermittent power, which will increase electricity prices. Reliability issues are clearly evident when wind and solar power make up a major part of a country’s or state’s electricity grid, which was not the case before politicians forced them into their country’s generating systems through mandates and financial incentives.