Chronic shortage of baseload reserve capacity – Despite protests from renewables advocates, the state’s market- based grid system simply has not provided the necessary incentives for the construction of new baseload capacity for well over a decade now, a role that wind and solar are incapable of filling. This year’s event – the second in the past 11 years – exposed several fundamental weaknesses in the Texas power grid that are simply undeniable: Historically, such events have hit the state about once every decade. Of course, the reality is that Texas power consumers have a stark choice facing them: They are either ultimately going to foot the bill for fixing the grid that failed them so miserably during February one way or another, or they are going to remain vulnerable to similar freeze events in the future. Coming on the heels of several strong tornadoes, some northern parts of Texas are experiencing blizzard conditions with wind gusts up to 50 mph and as much as 13 inches of snow forecast. Highway 82 on December 27, … 2015 in Lubbock, Texas. LUBBOCK, TEXAS – DECEMBER 27: Snow blankets Marsha Sharp Freeway on U.S. “The $8.3 billion in costs to consumers is absolutely raising the cost for Texas consumers but it isn’t raising the reliability for them,” said Michele Richmond, executive director of Texas Competitive Power Advocates, a trade association representing power generators and wholesale electricity marketers. Judging from the reaction by the state’s power generators, you would think that profiting in the Texas electricity sector was some sort of novel concept. Its proposal would be for electricity consumers to reimburse it for the cost of building and operating the plants under a formula that would guarantee it would generate a seemingly reasonable 9.3 percent rate of return on the investment. The catch in the plan? Berkshire Hathaway, being a company in business to generate profits to investors, proposes to make a profit from this enterprise as well. These two features, not currently present in the state’s existing power plants, would alleviate the issues that arose when both plants and pipelines froze up in some areas, often because the state’s grid managers at the Electric Reliability Council of Texas (ERCOT) cut off electricity to them as part of its rolling blackouts. The plants would be winterized to withstand the kinds of deep freezing temperatures that lingered across the state for four days, and they would maintain enough storage capacity to house 7 days of natural gas supply on-site. The plan would involve the construction of 10 new natural gas-fired power plants strategically located around the state. As reported by the Houston Chronicle, the plan would be for Berkshire Hathaway to finance the building of 10,000 megawatts of new, natural gas-fired generating capacity at a total cost of $8 billion that would serve as reserve capacity to be activated during weather emergency events like the one that killed more than 100 Texans during the week of February 14-20. (Photo by Johannes EISELE / AFP) (Photo credit should read JOHANNES EISELE/AFP via Getty Images)Īs Texas political leaders continue to cast about for the right solutions to the flaws in the state’s power grid and its management that led to catastrophic blackouts during the mid-February arctic freeze event, Warren Buffett’s Berkshire HathawayĮntered the debate late last week with a novel proposal. Warren Buffett (C), CEO of Berkshire Hathaway, is surrounded by press and fans as he arrives at the … 2019 annual shareholders meeting in Omaha, Nebraska, May 4, 2019.
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