Title: Economics of the energy sector
Original CoS Document (slug): tx-economics-of-the-energy-sector
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Created: 2022-08-27 20:24:26
Updated: 2022-09-05 03:00:00
Published: 2022-08-29 02:00:00
Converted: 2025-04-14T21:19:09.577322612
Renewable energy, on the surface, would seem to offer much to a world that is ever in need of increased production. Progress is usually much easier with the aid of money, and renewable energy is no exception. Renewables cost a tremendous amount of money, and while some say that the government is paying for much of this progress through grants and subsidies, the reality is that this money comes from the taxpayer’s pocket.
Government grants and subsidies, whether state or federal, still originate in the taxpayer’s paycheck. Many of these taxpayer dollars go to federal subsidies for the wind and solar industries. From 2010 to 2019, these subsidies totaled more than $70 billion according to Michael Schellenberger, founder and president of Environmental Progress and author of “Apocalypse Never.”
Texas alone has subsidized renewable energy by roughly $19 billion since 2006, according to Jason Isaac of the Texas Public Policy Foundation.
In total, the energy sector has been granted $230 billion in energy subsidies over the past decade, courtesy of the federal government. This does not include state subsidies that are also granted to many of the same facilities.
While many feel that this is hypocritical because the fossil fuel companies also receive heavy government subsidies, it has been found that for every unit of generated electricity, wind is subsidized 17 times and solar 75 times more than fossil fuels.
Oil and gas professional Weston Martinez stated that subsidies increase scarcity pricing because the market has been shrunk. This then forces consumers to pay higher prices.
Martinez added that building a hybrid micro-grid, capable of fusing fossil fuels into the solar process and thus providing reliable, 24-hour power would be the only road to making solar and wind power cost-effective over coal. Even this would still require the use of fossil fuels.
Texans were receiving roughly 25 percent of their energy from renewable sources by 2020; this plummeted to eight percent during the winter storm in February 2021, at one point even dipping to a low of 1.5 percent. Though this was the result of several different issues beyond the scope of this article, it did raise some concerns over the consistency, or lack thereof, of renewable energy. The blackouts in California and brownouts in South Africa have been pointed to as a possibility in the U.S. Energy Capital of Texas.
However, the Southwestern Electric Power Company (SWEPCO), which serves northeast Texas and parts of the Panhandle, are confident that this is unlikely. They explained that enough fossil fuel plants are being kept in service to fill any gaps in the power provided by renewable energy.
Many plants, however, are being closed due to the difficulties of transforming a fossil fuel plant to renewables. The current environmental regulations and codes make this a very costly endeavor.
Another factor not commonly known is the fact that European investors tend to see fossil fuels as “high risk.” While this might seem a non-issue to the average Texan, it is a fact that many of the investors in America’s energy sector are not Americans, but Europeans. Thus, it behooves the power companies to do what they can to keep both their investors and consumers happy.
Many large corporations are also asking for renewable energy credits. If these are not available in a certain locales, these corporations will often move their businesses elsewhere. This affects the local economies, businesses, and jobs.
This is why a discussion concerning renewable energy and fossil fuels is so important. But it is vital that participants in such a discussion be presented with honest facts, for and against.
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