Millions of Texans Are Freezing Right Now — Our Deregulated Electrical Grid Is to Blame

What Texans are suffering through is a failure of deregulation and markets — a neoliberal ideology promoted not just by the fossil-fuel-loving right, but even many environmentally conscious liberals.

Electric service trucks line up after a snowstorm, on February 16, 2021 in Fort Worth, Texas. (Ron Jenkins / Getty Images)

The Alamo is under two inches of snow. The daytime temperature for Austin is 20 degrees Fahrenheit. It’s 19 in Houston, 12 in Dallas, and 0 degrees in the panhandle. Texas, home to twenty-nine million Americans, is experiencing one of its coldest winters ever. Nearly unprecedented snow and ice have also created dangerous conditions on roads and have caused at least twenty-three deaths so far.

And to make matters much worse, Texas’s electricity grid is utterly failing. Most of the state’s vast wind power was knocked out of commission days ago due to the freezing temperatures, and about half of its gas-powered plants went off-line due to full gas pipelines. Blackouts across the state left over 2 million homes without power on Monday, 4 million on Tuesday, and still 2.7 million on Wednesday, during some of the coldest days the state has ever recorded. Moreover, rolling blackouts meant to last fifteen to forty-five minutes at a time have actually lasted over twenty-four hours for many Texans, a testament to the colossal failure of the electrical infrastructure.

Unfortunately, in Texas, no electricity also means no heat. Like the rest of the South, about three-fifths of the state’s households rely on electricity rather than gas for home heating. And their homes are built to release heat in hot weather, not retain heat in cold weather. In short: while the power’s out, there’s serious risk of freezing to death, particularly among the elderly and the poor.

What Texans are suffering through right now is not merely the failure of some nebulous technical artifact called the electrical grid. Nor is it simply the failure of variable renewable energy like wind power.

Instead, it’s a failure of deregulation and markets — an ideology promoted not just by the fossil-fuel-loving right, but even many environmentally conscious liberals.

Power Resources in the State

Despite reports that the blackouts were caused by wind turbines icing over and failing to deliver, the outage spans the whole range of generators across the state. Most of the missing power capacity, according to a director of the Texas grid operator, actually comes from traditional thermal generation. Gas plants, as the dominant generation resource in Texas, are particularly struggling with outages.

Texas, like most of the country, has seen a shift in its electrical generation resources, away from coal plants (and nuclear plants, outside Texas) and toward wind farms and gas plants. That shift stems from a market factor: the low wholesale electricity prices that wind and gas both fetch. For gas, that low price is due to the fracked gas revolution that has enabled cheaper production; for renewables, it’s due to rapidly falling prices of overseas wind and solar manufacturing to state-driven demand in the form of “renewable portfolio standards” and to state subsidies like renewable energy credits and federal production tax credits.

But behind those low prices is a troubling commonality between electricity generated from renewables and gas, made clear in the recent book Shorting the Grid by utility analyst Meredith Angwin: they’re both dependent on unreliable “just-in-time” production.

Wind power is only available when weather permits, and natural gas plants rely on a continuous delivery of fuel along a regional network of pipelines — pipelines that are stretched to the limit in extreme cold weather and that, by law, must deliver their gas for heating, as a human need, before power plant usage. In Texas’s last severe winter outage of 2011, the gas pipelines sometimes couldn’t even transmit any gas either way, because compressors didn’t have the electricity needed to pump it through. (Reports suggest the same thing happening now.) Relying on interdependent, just-in-time production for essential resources has downsides.

Worse still, because of the variability of renewables like wind, it requires additional resources to keep the lights on when it’s not available. Unfortunately, that means in practice securing more natural gas plants for backup power, as has been the case in the electrical systems of renewables leaders Germany and California. Germany has even built new coal plants since it started its Energiewende transition to renewables and is currently trying to convince the United States to approve its construction of a massive pipeline carrying natural gas from Russia to meet its just-in-time needs.

It will be days if not weeks before we have a full diagnosis of what exactly went wrong on the Texas grid, as well as the human toll these blackouts have caused. But one thing is certain: virtually all sources of electricity are failing to generate — and transmit — electricity right now due to the extreme weather.

However, there’s still a sign of hope in the state, and for all of us concerned with climate change: nuclear energy, the dominant source of clean energy in the United States and elsewhere in the world. Unlike natural gas and renewables, nuclear plants stockpile fuel on-site; it’s production when we need it, not “just-in-time.”

As of Tuesday morning, only one of the state’s four nuclear generation units has been knocked off-line, as a purely precautionary measure, due to freezing conditions. At one-quarter of nuclear generation off-line, that’s less than either the half or so of fossil fuel generation or three-quarters of the average wind generation that’s missing.

During the 2014 polar vortex, again only one of the state’s four nuclear generators went off-line, while gas plants alone amounted to almost three-quarters of lost capacity. And in 2011, during a freezing outage that almost rivaled the present case, none of the nuclear units in the state went off-line; according to the Texas grid operator’s study, nuclear was the only type of generation in Texas that survived the weather intact.

In fact, based on daily reports from the Nuclear Regulatory Commission, that one nuclear generator in Texas was the only one to go off-line in the past few days, among all ninety-one generators across the country that were running last week. That’s in spite of record-setting frigid temperatures all across the country, causing power outages also in the neighboring Southwestern Power Pool and Midcontinent Independent System Operator (MISO) electricity grids.

Unlike any fossil fuel plants that manage to stay running in this time of need, nuclear plants emit virtually no carbon into the atmosphere. That’s a technical quality that should unite those interested in electrical reliability — like the entire state of Texas right now — and those interested in decarbonization.

Electric Culture War

Instead of grappling with the ever-increasing dependence on just-in-time natural gas and renewables, as a matter of planning production to meet society’s needs, people find a culture war to wage instead. Renewables vs. fossil fuels. “The windmills failed like the silly fashion accessories they are, and people in Texas died,” declared Fox News’s Tucker Carlson. Instead of productive technologies that both meet social needs in particular ways with particular trade-offs to plan around, it’s one good, one bad.

Right now, both kinds of resources have failed the state. Indeed, fossil fuel generation comprises the majority of the lost generation in the Texas grid, but is it really so comforting to renewables advocates that wind power is performing poorly in this time of need but more expectedly so than fossil fuels? And still worse than what the grid was relying on it for?

This culture war obscures the actual challenges of production. The fossil fuels proponents don’t get (or don’t mind) that the coal and gas they hold so dear is emitting so much carbon that it causes illness and death, or that it radically alters the climate, leading to more and more extreme weather events like the present one. The renewables proponents don’t get (or don’t mind) that reshaping our electrical system to be even more dependent on that increasingly unpredictable weather is going to be a difficult pill for most people to swallow. Tell the probably millions of Texans who just survived frigid nights without power, heat, or cooking that we’re going to “electrify everything” — and with more of that renewable energy to boot. Perhaps convincing millions of Texans just isn’t even a goal for them; enlisting in the culture war is far easier.

At the end of the day, the fossil fuel culture warriors are by far the more despicable of the two. On Tuesday night, Texas governor Greg Abbott went on Fox News commentator Sean Hannity’s program to pin his state’s failure to produce an essential good — and ensuing humanitarian crisis — on wind and solar power. But it’s not like California liberals and Green New Deal socialists are behind the $46.5 billion invested in wind turbines across the state. It was instead a massive capitalist endeavor whose profitability rested on generous tax credits for wind power, which is the only reason for billionaire Warren Buffett’s investment for example, and which even President Trump himself extended (twice).

And, crucially, it’s the result of the mostly deregulated electricity sector in America — and the invisible hand.

The Two Kinds of Grids in America

Electricity is generated at power plants, transmitted across power lines, and distributed to homes and businesses as consumers. That’s the technical, engineering layer of our electricity grid, “the largest machine in the world.” The fundamental objective is reliable power generation — any customer who wants to turn on a kitchen light, or power a hospital, can do so at any time he or she wishes. But if there’s not enough supply to meet demand at any point in time — a particularly hot summer day with millions of air conditioners humming away — the grid operator has to cut power to whole swathes of the Texan population in the form of blackouts, which is what’s happening in Texas right now. It’s breadlines — but for electricity.

That’s the technical side of an electrical grid, but who directs all this activity and investment? And who profits? In America, there are two fundamental organizations of all that, depending on where you live.

In traditional grids, vertically integrated monopoly utilities mostly own generation, transmission, and distribution assets and sell that electricity to households and businesses in accordance with state public services commissions. Those commissions set the consumer prices the utilities are allowed to charge, and they approve the utility’s investments into particular kinds of resources, say, X amount of power capacity overall with Y amount of it being low-carbon. That’s the setup in much of the Southeast, Central, and Western states, as well as the federally owned Tennessee Valley Authority, harkening back to the New Deal.

But in the other kind of grid, known as “restructured” or deregulated grids, electrical assets are independently owned and generators compete with each other, on regional markets, to generate and sell electricity to middle-man utilities who then distribute that electricity to homes and businesses. Today, most states get their electricity in such deregulated markets, operated by regional transmission organizations (RTOs) like the California ISO, the PJM Interconnection, ISO New England, and the grid operator for Texas, the Electric Reliability Council of Texas (ERCOT).

Instead of state agencies regulating the business of monopoly utilities in a centralized manner, deregulated grids create a series of perpetual auctions running across the country. Electricity arrives in your home as the result of nonstop bidding and profit-maximization. Put very simply, does Alice’s natural gas plant generate the next unit of electricity that feeds into the grid, or does it come from Bob’s wind farm? Place your bets, Alice and Bob, and let’s see who wins!

Now imagine that happening every five minutes every single day, twenty-four hours a day. There’s also a separate auction for day-ahead dispatch (who plans to generate it twenty-four hours from now?) and, in most RTOs except for Texas, an auction for reserving some amount of power capacity over a year in advance (who plans to have power available in a year?), a market-based perversion of centralized planning.

“Energy Auctions” Create Mass Blackouts

If the fundamental objective of a grid is to produce enough electricity to meet demand at all times — in other words, reliability — then how does the deregulated market accomplish it? Not through direct coordination of productive assets but through an endlessly complicated system of auctions, requests, incentives, and price signals. Regardless, the blackouts in Texas prove that it doesn’t always accomplish reliability, just like it didn’t in 2011, the last time extreme weather led to major blackouts in Texas, or last summer in California, to pick only a few examples.

What’s worse, there’s nobody to blame because, hey, the grid operator is just the auctioneer who set up the technocratic process to incentivize private development of those productive assets. With wholesale electricity prices hovering at the $9000/MWh maximum price, about three hundred times the normal price, scarcity of life’s necessities means scarcity price signals to encourage future investment. But with average prices far lower due to increasing gas and wind, it’s not economical for private plant owners to weatherize their plants better. Truly, it’s the invisible hand that keeps your lights on — too bad that hand is just as ephemeral as the electricity that powers them.

The intensity of that dogmatic belief is unique to the Texas grid, which, for political reasons, stands in almost total isolation from the two West and East grid systems in the United States. Grid operators in other deregulated markets have other technocratic measures to ensure “resource adequacy” — the availability of enough generators to meet potential demand — albeit still as the result of auctions or market incentives, not direct investment by centralized entities.

As usual with deregulation, the real objective of profits quietly usurps the stated one. Just a month ago the president of ERCOT justified the thin reserve margins for power supply on the Texas grid: theirs is “a market structure that can have very bracing outcomes (chuckles) — but also very profitable outcomes, for those [generators] who are there and providing services for those times that we have scarcity pricing and prices go quite high. That can be a really good day.” And late Monday night, the Public Utility Commission of Texas issued an executive order for ERCOT to ensure those scarcity prices in the wholesale market were properly (extraordinarily) high — so that owners of any generators that stay afloat can have that “really good day.”

Vertically integrated utilities, on the other hand, rely on “integrated resource planning,” in concert with state regulators, to determine what resources they themselves will invest in. At least in these grids, the hand is visible and identifiable, and in the case of the TVA grid it’s federally owned and, to some degree, accountable to democratic politics.

Environmentalists for Neoliberal Deregulation

Deregulated electricity markets aren’t a historical burden; they’re a relatively recent political invention. Begun under the Clinton administration and finalized under the Bush administration, restructuring electricity in America was a bipartisan project of neoliberalism, a continuation of markets über alles. It began here just several years after the Thatcher government deregulated the UK electrical system.

Instead of recognizing it as the enemy of the political left, environmentally conscious greens have generally sided with the neoliberalization of energy. Despite the best efforts of labor leaders like Tony Mazzocchi, environmentalism since the 1970s drifted away from workers and production and toward individuals and consumption. Their “small is beautiful” outlook favored deregulation — the decentralization of capital and control into more, and smaller, capitalists’ hands, so long as those capitalists promised green development like solar panels rather than big harmful factories and nuclear power plants in need of a workforce.

To see the green deregulation at work today, one can look to the TVA, a massive federally owned utility that’s still kicking after its New Deal origin story. Obama tried to privatize it entirely, until labor pushed back. Similarly today, greens like the Southern Alliance for Clean Energy (SACE) don’t see the TVA as a necessary strategic terrain that should never be yielded to market forces; they see it as an obsolete relic that doesn’t care about installing more wind and solar power to go with its copious hydropower, nuclear power, and, to be sure, fossil power.

That’s why SACE has formed a “Tennesseans for Solar Choice” coalition along with a small business association, a solar industry association, and a Tea Party conservatives group that wants to break up the TVA, “an outdated, federally-sanctioned monopoly, that appears to be working against consumer choice and energy freedom.” If they have their way, TVA would lose its largest customer — the public utility of Memphis, Tennessee — breaking an eighty-year arrangement to purchase power and losing about 10 percent of its revenue. Instead, Memphis would build its own solar power and enter the deregulated MISO market — which will require it to build around four new gas plants for reliability.

A similar greens vs. federally owned power conflict happened several years ago at the Bonneville Power Administration (BPA), another holdover from the New Deal attitudes toward electricity. BPA is a bit like a mini-TVA that also purchases some of its power from others. In 2011 it was ordered by federal electricity overseers FERC to prioritize private wind farms over its own federallyowned hydropower dams. Greens like the Renewable Northwest Project celebrated the order, which ensured that private owners like Warren Buffett’s MidAmerican Energy could collect lucrative production tax credits and renewable energy credits on the electricity their wind power generates.

Perhaps the epicenter of greens for deregulation is California, where a fervor for solar power has been driven by powerful green NGOs like the Sierra Club and Friends of the Earth, and, of course, the solar industry. In its state-mandated expansion of solar farms, coupled with rooftop solar for the virtuous and the affluent, California is reshaping its grid in the name of “flexibility,” perhaps not unlike the way it’s now reshaping its labor relations in the name of “flexibility” with Prop 22. More market competition, more decentralization — everyone is a homo economicus that is simultaneously (gig) worker and their own boss, energy consumer and producer.

Last year, after a heatwave caused statewide rolling blackouts, California decided that maybe it had an electricity supply problem after all, due to its increasing dependence on solar power and natural gas. In 2016 green NGOs convinced the state that its last remaining nuclear power plant could be shut down and all its power would be replaced with renewables instead. Now they’re angry that the state’s Public Utilities Commission wants to resurrect gas plants to meet the state’s reliability needs post-blackouts.

We Need a Big Alternative

One way to surpass the renewables vs. fossil fuels culture war might be found in nuclear energy. That echoes what a union president in the TVA told Jacobin last year. The TVA, by the way, has not only withstood the similarly frigid temperatures without any outages; it has been producing 45 percent carbon-free electricity the whole time, most of that from its nuclear power plants.

But if nuclear energy is so great, then why isn’t there more of it? Why are perfectly operational plants closing? It’s not for the sake of the climate. When a nuclear plant closes, it inevitably results in more burning of fossil fuels, as can be seen in Vermont, in New York, in Germany, and in Japan.

Instead, nuclear energy is under threat in the United States for the same reason there’s so much natural gas and renewable generation in America today: in the presence of these ever-cheaper resources, nuclear energy is just no longer profitable enough on our deregulated electricity markets.

We should be fighting like hell to protect America’s fleet of 56 nuclear power plants, not just for the sake of reliable, clean electricity, but also to protect their many high-paying union jobs, particularly in rural communities. That means demanding state subsidies for nuclear plants, like we provide to much more scarcely staffed solar and wind farms, even for those with private and not public owners — so long as they maintain close cooperation with federal regulators and with their unions. The labor movement’s recently formed Climate Jobs Illinois coalition is doing exactly that.

Rather than meeting Tucker Carlson on the culture battlefield over renewables, the Left must approach the subject of energy with concerns about production. That means breaking with the environmentally conscious liberals and NGOs in their quest to restructure the economy into more competitive markets and profit-seeking, just with more wind and solar.

We’ve made a lot of progress abandoning the “small is beautiful,” consumer-side environmentalism birthed in the 1970s. Now let’s get serious about the producer side.