California v. Texas let’s gooooo
Welcome back to Bright Ideas, a weekly newsletter about the surprising rise of clean energy.
My name is Julian Spector. I live in Los Angeles and report on clean energy for Greentech Media, and I write this for fun since I can’t steam my body at Korean spas any more.
Currently I’m digging into the ambiguities of carbon free energy by waging weekly debates with myself. Last week I argued whether wind and solar power were good for gas plants. This time, I’m staging a policy grudge match between two states that achieved booming clean energy economies in very different ways. Here’s the agenda:
Readers decide who won, gas plants or not gas plants
California vs Texas, arguments, rebuttals
It’s back: Let’s talk about Great British Baking Show
The People Have Spoken
Last time, I debated whether wind and solar make gas more valuable. An illustrative point is that California has now extended the life of gas plants that were supposed to close, just so they can keep the lights on when the sun goes down. Wind and solar don’t physically need natural gas to complement them, but they do need flexible power plants that can match the rise and fall of renewable generation. Policies that only support wind and solar without thinking about the on-demand power to match them are missing the full picture.
Here’s what you had to say about that:
It’s gotta be the end of gas. We’re going through short term growing pains, but with technologies like liquid air energy storage in addition to batteries, I don’t see how gas competes.
~PJ Bentley, Librarian obsessed with clean energy
Even if you are transitioning away from fossil fuels, they will be necessary – as well as the incumbent infrastructure, which can deliver new solutions. It is not a slight on renewables to expect gas to continue to play this important role and you highlight it clearly, fairly and without bias. California’s demand will always be a challenge and gas must be a piece to achieve climate solutions.
~ Frank Maisano, energy expert at Bracewell PRG
I think that you are correct in the sense that we need to rely on multiple resources. It can’t all be wind and solar. But, if we build more gas, we are locking ourselves in for decades to come, as investors will demand a return on their investment.
~ Donna Attanasio, senior advisor, GWU Law School's energy law program
From the Twitter-verse:
Author’s note: I regret to inform you that I did not receive any photographic evidence of readers trying out the tiki drink recommendation from last time. The lengthy list of obscure prerequisites can indeed be daunting. Should you make the voyage, I will gladly accept a call-back in future editions of Bright Ideas.
California and Texas aren’t just the two most populous and economically vibrant states in the union. They also built themselves into powerhouses of carbon free power, through wildly divergent means.
For a little primer on their differences, try this coverage of California Gov. Gavin Newsom’s recent pledge to ban new gas-powered car sales by 2035. Then contrast with this fascinating episode of the podcast Political Climate, which recounts the original Republican impetus to transform Texas into a wind power hub. Turns out, George W. Bush liked wind as governor, and ran with it as a source of competition and local jobs.
And now, let’s rumble.
Good plans, good outcomes
California boldly proved that proactive state policy and planning can create a clean energy utopia.
Years ago, when we all knew how scary climate change would be but the U.S. refused to do anything about it, California stepped in to lead. Republican Gov. Arnold Schwarzenegger passed a statewide carbon reduction law that set clean energy efforts in motion in 2006. He followed up with a multi-year rooftop solar program called the California Solar Initiative, designed to phase out once the incentives incubated a sustainable solar market. It worked.
The results speak for themselves: California powers the world’s fifth largest economy with a tremendous amount of clean energy, which keeps growing each year. As of 2018, large hydropower made 11 percent of the state’s power production, other renewables delivered 32 percent, and nuclear more than 9 percent. That’s more than half carbon-free, compared to natural gas, at 47 percent of in-state generation.
That clean energy influx supports jobs, spanning blue collar installation work and high-tech innovation. More solar and more battery capacity is operating here than in any other state. And strict vehicle pollution policies have made California a leader in clean transportation.
The stunning success of U.S. solar power owes a great deal to California, for seeing the potential when it was still an expensive, little-loved technology. The investments here brought down costs for everyone else, Texas included. Similarly, California forced its utilities to build giant batteries before those were common tools for storing hours of electricity. That early start helped them react quickly to unforeseen events, like when the Aliso Canyon gas leak left Southern California short on gas supplies. Now other states have followed California’s lead on batteries, including Texas.
California-based companies supply these technologies to the rest of the country and world. The biggest rooftop solar company, Sunrun, is headquartered in San Francisco. Electric car leader Tesla operates out of the South Bay, also home to numerous energy storage startups.
The Golden State chose to act because it saw it as the right thing to do. Now that leadership delivers jobs and tax revenue and the opportunity to serve other states that follow this example. Bold government action needn’t stymie economic opportunity; it can create it in ways that the private sector alone cannot.
Giddyup. (Suzano Wind Farm, Texas. Photo courtesy of AWEA)
Good competition, good outcomes
Texas shows that a free market, with a bit of coordinated infrastructure planning, produces a clean energy bonanza while keeping costs low for everybody. Oh yeah, and we’ve got five times as much wind power as bold California.
ERCOT, the major power market in Texas, gets as close to the ideal free market as anywhere in the U.S. It erects minimal guardrails, leaving private investors considerable latitude to build power plants and run them as they see fit. The threat of scarcity drives power prices up (with a cap, it can’t go to infinity), incentivizing power plant owners to show up during price spikes and reap windfalls in a matter of minutes or hours.
The state supplemented that market-based approach with some proactive planning: Republican leaders approved a pre-emptive buildout of wires between the windy western part of the state and the population centers in the East. That way, when the expected wind boom materialized, private developers could get their electrons to market. Gov. George W. Bush approved pro-wind policies, and Gov. Rick Perry oversaw the buildout of the wires.
Texas offers developers plenty of wide open land and relatively simple permitting compared to persnickety California. And clean power producers don’t need to wait for contract from a monopoly utility to build their projects, they can just go for it. In fact, renewables and batteries now dominate the list of all the power plants trying to hook up to the grid, with just a small minority of new gas plants moving along.
The dirt cheap operating costs of wind and solar plants give them an edge in the power markets, when they can produce. Just this year, a flurry of battery construction shows investors think they can make money on those projects as well.
It turns out, freeing up competition pushes prices down. In Texas, renewables lower the average power price, so people get cleaner power and pay less for it. And the market free-for-all has, so far, succeeded in ensuring enough power for the state.
Compare that to California: the public shouldered the costs of incentivizing clean energy, and still pays extra for old, expensive solar. Since the state doesn’t trust the market to provide enough capacity in a pinch (they had a bad trip with Enron back in 2001), utilities and their customers pay “capacity payments” to plants to sit around and be helpful in moments of scarcity.
California built an entire bureaucracy around deciding how many plants to pay to sit around to ensure enough power. They still managed to run out of electricity in August, as a result of power plant retirements planned 10 years ago and the basic dynamics of when solar plants produce. If you’re going to pay extra to centrally plan, you should at least get it right, right?
West Coast Best Coast
Ok, we had a little blip this summer. But those rolling blackouts that everyone talked so much about, that really meant some targeted areas each lost power in a controlled manner for an hour or so, and that only lasted a couple hours on a couple days in the midst of an historic heat wave. A heat wave that unexpectedly slammed our neighboring states, whom we usually trade electricity with, but who needed extra for their own air-conditioning.
But hey, this is complicated stuff, and the grid is a massive system of countless variables that affect each other as it evolves. When supply of electricity ran low, Californians banded together to reduce their consumption, proving that collective action really works to solve grid problems. Now we’re turning our famed energy bureaucracy to understanding what happened, so all those other states can learn from our example, once again.
Speaking of collective action, it sure seems like that’s what allowed Texas to thrive. It took concerted government infrastructure planning to lay the groundwork for your beloved ERCOT market to do its thing. You can say you’re all about the market, but good policy had to come first.
How California does it.
The Texas Way
Here in Texas, we let people help supply the grid—we just think they should get paid for it. We haven’t run out of electricity yet.
But we agree with you that the grid is a complex system with tons of moving parts. That’s why we don’t trust any one central authority to dictate how much power capacity we’re going to need. It’s too complex for one group of people to think through everything that could happen (even if they had a decade to prepare, apparently). Letting hundreds or thousands of power producers make their own bets creates a distributed intelligence; investment flows to places where it looks most valuable. When those spots fill up, investment flows elsewhere.
Texas created a system where even the oil companies, given the full range of options, are buying solar power to make their own operations cheaper. Self interest serving the greater good, what’s not to like?
That’s it, that’s the debate! Esteemed readers, which system do you prefer? Reply to the email or tweet me @JulianSpector with your one sentence verdict, and your words could end up in next week’s letter. Be sure to tell me how to attribute your remarks, like name, location, connection to clean energy, etc.
There’s no better time for British Baking
In times like these, we need symbols of hope, and it’s hard to find a better incarnation than the triumphant return of the Great British Baking Show, streaming weekly on Netflix.
This season shows that, with proper planning, some degree of normalcy is possible in a pandemic. The producers erected a tent in the verdant English countryside, and had all the amateur bakers camp out there for the duration of filming. This quarantine pastry bubble has already proven safer than the White House.
Beyond that, the show feels even more perfectly calibrated to our secluded lives. This is a production that finds Shakespearean drama in the baking of biscuits, the icing of hot cakes, the sogginess of bottoms. If you know what to look for, everyday tasks like weighing your flour or properly browning a caramel can indeed take on heroic stakes: there’s a right way and a wrong way, and it’s up to you to choose the path of justice. With that mindset, who cares about being stuck in one room for hours?
It’s refreshing to see people touching people, making food with their hands and sharing it, laughing and crying together, all without exposing anyone to physical harm (except for extremely underbaked batter, but even that’s probably fine). And for the first time in the history of the franchise, you may even be tempted to recreate a dish at home. You’ve got a week to fill before the next episode.