One Year After Texas Blackout, Fears Remain, Headwinds Increase for Gas

February 13, 2022

The Fox News disinformation notwithstanding, last year’s Texas blackout was overwhelmingly a failure of Texas’ natural gas infrastructure, which was vulnerable to the cold at the wellhead, in the pipelines, and in the unweatherized power plants. Nuclear and coal failed as well, see above.

In the past year, power plants have been weatherized, although no one seems sure what that means exactly, but pipelines and wellheads have not been subject to new regulation.

Houston Chronicle:

A year ago, a blast of frigid weather swept across the state, paralyzing the power grid and setting off a catastrophe. Power generators went offline, leaving millions in the dark for days without heat or water. Frozen pipes ruptured, damaging tens of thousands of homes in Houston alone. The state’s overwhelmed electrical grid came within five minutes of a total collapse.

Hundreds of Texans died from a variety of freeze-related causes, including automobile wrecks, hypothermia and carbon monoxide poisoning from fires or generators brought inside their homes.

In a place all too familiar with natural disasters, many still remain shocked by the failures of the electrical grid and government leaders, who failed to heed prior warnings about the importance of ensuring power plants prepared for winter storms.

Add to that the fear that another winter storm could spell disaster once more, even as residents across Houston and Texas still are fixing property damage, awaiting the results of lawsuits and mourning those lost in last year’s freeze.

“I think about her every day,” William said of his mother. “If it weren’t for that freeze, I feel like she would still be alive.”

RMI (Rocky Mountain Institute):

This past year was tough for natural gas in the US electricity sector. Headline-grabbing events like Winter Storm Uri and the blackouts in Texas in February—caused in large part by the failure of gas delivery and power infrastructure in extreme weather conditions—illustrated how fuel insecurity and high prices can cost consumers billions of dollars.

Amid the ongoing volatility in natural gas prices, and the continued trend of falling prices for renewable energy and storage technologies, numerous gas power projects have been canceled before commencing construction. A few high-profile cases, like the cancellation of a long-proposed gas-fired plant in Minnesota in June, illustrate a broader shift: utilities and investors increasingly prioritize clean energy as a lower-cost, lower-risk option than continued investment in new gas plants.

And yet, there remains a long tail of gas plants still proposed for construction in the United States, even as their economic prospects dim. In fact, utilities and other investors plan to invest more than $50 billion in new gas power plants over the next decade. But a new RMI study released today details how at least 80 percent of these projects could be cost-effectively avoided by prioritizing investments in clean energy instead. And a set of economic and policy trends, ranging from volatile gas prices to policy priorities around public health and job creation, threaten the viability of nearly all new gas projects.

The trends have been shifting against new gas plants in the United States for several years. RMI analysis starting in 2018 documented how “clean energy portfolios”—combinations of wind, solar, energy efficiency, demand response, and battery energy storage that can provide the same reliability services as a gas-fired power plant—are increasingly economical compared with new gas plants. And since 2018, the capacity of new gas plants entering service has fallen every year, on track in 2021 to hit the lowest level since 2010.

Even more telling, over 50 percent of gas plants proposed to come online in the past two years have been canceled prior to construction as clean energy resources have become more and more competitive (Exhibit 1). This is true for restructured markets as well as for vertically integrated utilities.

Currently, new gas plants make up less than 10 percent of new capacity in interconnection queues, while renewables and storage dominate planned construction. This is reflective of shifting economics—where utilities have run modern, all-source competitive procurement processes to select the least-cost, least-risk resources to maintain grid reliability, they have overwhelmingly chosen clean energy portfolios.

Stiffening Headwinds for New Gas Power Plants

In addition to raw economics leading to gas project cancellations, a growing set of economic and policy trends threaten the viability of any new gas-fired power project proposed for construction in the United States. RMI’s study quantifies six risk factors and their impacts on the viability of new gas power plants (Exhibit 2):

  • Renewable energy prices: If renewables cost declines continue at their recent pace, 91 percent of new gas plants will be uneconomic relative to CEPs at their proposed construction date.
  • Gas price volatility: If gas price trajectories return to 2021 highs, 88 percent of new gas plants will be uneconomic relative to CEPs.
  • Costs of fuel security: If gas plants are required to bear the cost of securing reliable fuel supply to guard against the kind of outages on display in February 2021 in Texas, 95 percent of proposed gas plants would be uneconomic.
  • Focus on job creation: If policymakers continue to prioritize job creation, 100 percent of proposed gas plants are threatened, as clean energy portfolios lead to higher net job creation than new gas plants.
  • Focus on human health: If policymakers account for the cost of human health impacts of pollution from new gas-fired power plants, 94 percent of new gas plants would be uneconomic.
  • Reducing community impacts: If policymakers prioritize minimizing impacts to marginalized communities due to new gas plant construction and operations, 88 percent of proposed gas plants are threatened.

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