Texas Senate Bill 7, as currently written, will lead to a more reliable and affordable energy grid by incentivizing wind and solar energy producers to provide necessary power to Texas homes and businesses without wrongfully passing the cost burden on to consumers.
The ERCOT market is experiencing the rapid replacement of dispatchable thermal power plants with variable wind and solar generation. What does that mean? Dispatchable generation refers to sources of electricity that are available on demand, such as thermal generation from nuclear and hydrocarbons. So, its output only varies by ±3%. On the other hand, wind and solar sources can vary by ±20% even in peak hours because they’re dependent on the weather.
Think about the grid like a restaurant. In order to provide a service, restaurants need waiters and cooks. Some workers show up consistently, while others can’t be counted on all the time. When those workers don’t show up, the restaurant must hire temporary workers to fill in. Temporary workers cost the restaurant extra money and those costs are usually passed on to the customers through higher prices.
If the less reliable workers showed up when they were needed, customers wouldn’t have to pay more. So, the restaurant decides to change its policy to reward reliability. The new policy incentivizes unreliable workers to be more reliable or to pay for the cost of hiring temporary workers.
SB 7 works the same way. If wind and solar aren’t able to generate the energy we need when we need it, Texas ratepayers should not have to shoulder the full cost to back them up. Right now, ratepayers are on the hook for the extra costs of temporary energy sources. That’s why SB 7 would require unreliable variable generators to find ways to become more reliable or pay the costs they impose.