The bottom line is that the fighting in the Ukraine has caused a great demand in the United States exporting Liquid Natural Gas to other countries. Since 47 % of Texas electricity generation is from natural gas this has created a supply and demand issue.
The world as a whole is relying quite a bit more on the U.S. to fill the hole in the market for fuel and energy. Natural gas is a cheap fuel source but not when it is being relied upon to help a serious world political crisis.
We are seeing electric rates that are starting to look like prices in California. The weird thing is that while Texas electric prices are going up solar installations are sneaking in the back door promising to help ease the burden.
I love solar and want it for my own home but I see an added dilemma. Solar has been implemented in California in a big way over the last decade and this has added significantly to how their electricity generation infrastructure is fashioned.
When you don’t have a fully off-grid solar installation and you are selling solar back to the provider based on government incentives to do so it creates some complicated problems.
Those problems are hidden because the government incentivizes the electric companies, the residential home owners, etc. with money to make it worth their while.
There are natural gas plants that are needed to work in tandem with residential solar so that peak demand periods are handled correctly because solar is not able to meet the needs of their customers 24/7 unless each home comes equipped with the batteries and KW installation to cover them.
Solar coming in on the back-end of these high Texas electricity prices because of the Ukraine crisis sets Texas up with a similar energy generation framework.
Solar generation comes with government incentives and subsidies and over time as these drop off you get higher transmission and delivery charges because of the complex nature of this framework as has been shown to happen in California.
We as a people are optimistic that green energy will save the environment and be cheaper for the consumer but as can be seen in California it has created more headaches to their prices.
I don’t want to blame solar for electricity price problems as a whole but it should be done smartly and not just as political window dressing to win votes. I think off-grid solar incentives makes more sense as it doesn’t complicate the electric grid in such a way where natural gas generation plants have to constantly be switched on and off depending on what solar is doing.
Turning on and off fossil fuel generation to make solar work is creating serious electric rate pricing concerns in California and I suspect that will be coming to Texas as well. In my opinion the Ukraine problem is temporary but the solar buy back programs to retail electric providers and generation companies is not the best way to implement green energy solutions.
The high electricity generation cost of sometimes available electricity sources was made strategically affordable by cheap natural gas prices and this very well could be coming to a close. Electricity prices in North America and Europe are showing just what high natural gas prices will do even if their are intermittent renewable sources like wind and solar. There always has to be a combined effort of both renewable and fossil fuel/nuclear to make electricity service affordable to the masses.
When an sometimes available resource (like solar) is added to the Texas electric grid in mass, you get added transmission cost along with another backup generation source (like natural gas generation facilities) to cover for cloudy days and peak demand periods. This type of generation and transmission system is succumbed by large capital investment that shows up in your electric rates and taxes. We pay the cost back through these hidden areas of taxes and rates. The politicians know we won’t get mad about for years to come because it takes awhile for the population to feel the pain and to start asking questions. Electric prices have been so cheap because of natural gas which has always been a low-cost alternative to other fossil fuels and nuclear. Solar and wind give us electricity 20 – 40% of the time but the rest of the time those generation sources relied upon natural gas generation to be viable in the market place.
When natural gas prices go up of course electricity rates will go up. Closing down nuclear plants and coal plants which offered consistent base-load energy generation is really going to bite us right now as natural gas prices continue to go up.
Donny has been writing about the deregulated energy markets since early 2007. His knowledge has helped consumers lower their electricity cost.