Story in Brief:
The southern United States, currently facing freezing temperatures, are now struggling with significant power failures overwhelming the energy grid, and causing wholesale prices of electricity to exponentially rise. The sudden shut down of half the power generation capacity in Texas has caused an astronomical 10,000 per cent increase in wholesale electricity prices.
The consequential financial struggles will be faced by many, from individual Texan households, to European energy companies. This weekend is seeing the start of monetary costs being counted. Last Sunday, the wholesale power prices raised from the typical 12 cents to a $9 a kilowatt-hour electricity rate. These staggering bills are faced by customers who selected floating-rate contracts, tied to wholesale prices, in the state’s freewheeling electric market. Emergency meetings are behind held between senior state officials and legislators to discuss relief for these customers. Energy retailers are also facing financial pressure after being forced to buy extra power in the spot market to meet the unexpected demand caused by the storm.
Consider the effects of damage to vital equipment during the storm, from frozen wind turbines, to gas wells and within the nuclear industry. These damages to gas and other non-renewable energies have had a far greater impact on the system since they contribute more to the grid, compared with wind power. When critics explained Texas’ loss of nearly half its wind-energy capacity as a result of frozen turbines, they failed to mention that double that amount was being lost from gas and other non-renewable supplies, for example, coal and nuclear. Additionally, consider if Texas could source their energy from elsewhere, noting how Texas’ independent power grid presents a fragile infrastructure when under strain.