Speaker 1: Hi everyone. So prolonged frigid temperatures this past weekend caused
Speaker 1: electricity demand and the Texas Power Grid or URCOT to
Speaker 1: explode and tripped more than a third of the state's
Speaker 1: generation offline. This scent power prices careening towards the nine
Speaker 1: thousand dollar per meguat our market price cap. Of course,
Speaker 1: any plant that manas to stay online hit the jackpot.
Speaker 1: Real time power sales on February seventeenth totaled nearly ten
Speaker 1: billion dollars, but many were not able to stay online.
Speaker 1: The extreme cold resulted in more than thirty thousand megawats
Speaker 1: of power plant outages in a situation where demand outstrips
Speaker 1: supply by thirty percent, and as most of us will
Speaker 1: know by now, this resulted in millions of Texans without power, heat,
Speaker 1: and clean water. We have to note that our hearts
Speaker 1: go out to our friends, family, colleagues, and everyone impacted
Speaker 1: by the storm, and we really hope things get back
Speaker 1: online as soon as possible. This week on the show,
Speaker 1: we've got Anastasia Dialinas, head of US Oil Research, and
Speaker 1: Nick Steckler, head of North American Power Research for BENF.
Speaker 1: They're going to tell us about how the state's power,
Speaker 1: oil and gas sectors all went down at once, and
Speaker 1: what Texas might consider to build back and build back
Speaker 1: better being if users can find ongoing covers the US power,
Speaker 1: oil and gas markets on bef dot com, the benif
Speaker 1: bobile app, and the Bloomberg terminal. As a reminder, be
Speaker 1: to not provide investment or strategy advice, and you can
Speaker 1: hear the full disclaimer at the end of the show.
Speaker 1: I'm Mark Taylor and you're listening to Switch on the
Speaker 1: BP podcast. Hi Nick, Hyanna, Hey, Hi make thanks for
Speaker 1: joining us today. So the first thing I guess we
Speaker 1: should jump into really with this topic is how did
Speaker 1: we get here. One of the first things to specify
Speaker 1: comparing it to other blackouts is that it actually wasn't
Speaker 1: the grid itself as much that failed, but more the
Speaker 1: power supply. So if we break down the electricity chain
Speaker 1: as generators, big power lines, smaller power lines, and then
Speaker 1: customers and their meters and things, it's really a short
Speaker 1: fall on the power generation side that's being experienced right now,
Speaker 1: and it's one that we really have rarely ever seen before.
Speaker 1: So the size of this capacity shortfall in Texas, the
Speaker 1: number of generators that are out of customers that have
Speaker 1: been cut off as a result is enormous. So how
Speaker 1: did this capacity shortfall happen? The timeline of events breaks
Speaker 1: down like this. Texas was starting to see very unseasonably
Speaker 1: cold weather going into Valentine's Day weekend, so February twelve,
Speaker 1: by Valentine's Day, the electric demand in Texas was already
Speaker 1: at the extreme planning scenario, so not that what they
Speaker 1: were expecting, but already there percentile extreme case by Valentine's Day,
Speaker 1: and then by the next day, by President's Day, for
Speaker 1: demand was set to blow past that and hit summer levels.
Speaker 1: And to to emphasize how critical that is, Texas is
Speaker 1: a summer peaking system, so winter is usually pretty relaxed
Speaker 1: in Texas. Generators generally their business model, especially if they're
Speaker 1: peaking generators, is to really gear for the summer. They
Speaker 1: make a lot of their money in the summer because
Speaker 1: demand is highest in the summer. It's about higher in
Speaker 1: the summer. But this time we saw summer level demand
Speaker 1: just pop up in Texas and the grid operator going
Speaker 1: into that weekend under forecast demand by about and that
Speaker 1: led to a sizeable similar capacity shortfall and a lot
Speaker 1: of customers having to be shut off as a result.
Speaker 1: The second thing, which is also very important, which is
Speaker 1: once we account for the fact that plants weren't really
Speaker 1: ready for this. They weren't expecting this, They weren't expecting
Speaker 1: such a rare storm to occur. That storm came through
Speaker 1: and knocked a lot of plants offline with his physical force,
Speaker 1: with the cold and with the ice. So it's really
Speaker 1: two parts. Plants weren't ready for just the sheer amount
Speaker 1: of demand, but then once it hit the ones that
Speaker 1: were online. The plants that were online got hit and
Speaker 1: taken out in record numbers. A couple of things. What
Speaker 1: does it mean to get ready for summer demand? What
Speaker 1: are they doing right now? Typic to prepped for for summer.
Speaker 1: So normally ahead of the summer you'll see plants getting ready,
Speaker 1: you know, staffing, reviewing equipment, making sure that their failure
Speaker 1: rate is going to be really low, generally so they
Speaker 1: can capture price spikes, because that is when they make
Speaker 1: the most of their money. Some plants that don't see
Speaker 1: a big revenue opportunity in the winter will just sometimes
Speaker 1: shut down for for the time being and wait till summer,
Speaker 1: and so they rely on the guidance from the grid
Speaker 1: operator to be ready to go. And in this case,
Speaker 1: the grid operator was expecting about fifty eight giga wats
Speaker 1: of demand for the winter as peak, and we ended
Speaker 1: up seeing about seventy five gigawatts of demand that customers wanted.
Speaker 1: I say wanted because thus customers never actually got to
Speaker 1: pull that much demand because they caught kurt tailed. But
Speaker 1: that's where it was headed going into February. Can you
Speaker 1: explain that a little bit, that concept a little bit
Speaker 1: for people that might not be familiar. They got curtailed.
Speaker 1: What does that mean? Yeah, So the instruction from the
Speaker 1: grid operators called ARCOTT is to all the utilities, the
Speaker 1: different electric utilities in Texas to shut off different parts
Speaker 1: of their regional grids. And that's to conserve energy. Because
Speaker 1: there was no way that ARCOT had enough capacity to
Speaker 1: be able to meet all seventy five gigawatts of of
Speaker 1: demand in the market. So as a matter of conservation
Speaker 1: and keeping the grid afloat, they had to tell the
Speaker 1: regional utilities, hey, go go flip off some of your
Speaker 1: different substations and pull customers offline. Okay, so some of
Speaker 1: them got curtailed, but you also said that some couldn't
Speaker 1: turn on at all. Why is that? You know? I
Speaker 1: heard on another podcast this morning that you know, plants
Speaker 1: in North Dakota, South Dakota they run in the winter,
Speaker 1: gas plants. Why couldn't the ones in Texas? Why did they?
Speaker 1: I guess you said they froze. Looking at the data
Speaker 1: on outages, which is still coming in, right, we're still
Speaker 1: in the middle of this as of today. But plants
Speaker 1: across all different types, so all generation technologies cold nuclear,
Speaker 1: natural gas, wind have seen issues with freeze. So ice
Speaker 1: accumulating components locking up probably the biggest issue we've seen
Speaker 1: so far. It makes sense. The biggest issue, because natural
Speaker 1: gas is the largest share of their cup power mix,
Speaker 1: is that that plants can't get fuel natural gas plants
Speaker 1: not getting fuel is probably the largest source of outage.
Speaker 1: I mean, the freeze not only affects plants and the
Speaker 1: machinery at the power plants themselves, but also is definitely
Speaker 1: hitting the oil fields. Texas is home to about of
Speaker 1: US natural gas and about half of oil production. Right,
Speaker 1: It's a huge state when it comes to supply of
Speaker 1: oil and gas. But even some of the biggest oil
Speaker 1: fields like the Permian out in West Texas got snow
Speaker 1: and ice and freezing cold temperatures. And again, just like
Speaker 1: with power gin, cold temperatures are certainly not unique to
Speaker 1: oil and gas production. North Dakota gets them all the time,
Speaker 1: but you need to be ready for them. And the
Speaker 1: things that can happen in oil and gas production is
Speaker 1: that first all reservoirs not only have oil and gas
Speaker 1: in them, but a good amount of water. That water
Speaker 1: has to be extracted with the oil and gas and
Speaker 1: then processed and separated from the gas stream and the
Speaker 1: oil stream that can then flow onto customers. If it's freezing,
Speaker 1: that water can freeze in the pipes and freezing the
Speaker 1: valves if they're not insulated and weatherized, and that is
Speaker 1: exactly what was happening, and so suddenly they couldn't extract
Speaker 1: as much oil and gas. Liquids are freezing in the
Speaker 1: pipelines because a lot of pipelines, especially out in the
Speaker 1: fields in West Texas, are above ground because they're not
Speaker 1: used to being cold as opposed to in other parts
Speaker 1: of the country where they'll bury them to keep them
Speaker 1: a bit warmer. So a lot of the oil and
Speaker 1: gas infrastructure was also freezing up and having a lot
Speaker 1: of issues due to the cold weather, and that meant
Speaker 1: that a lot of producers had to shut in well
Speaker 1: shut in production, and production has dropped off considerably. We've
Speaker 1: heard reports of up to you know, of some of
Speaker 1: the production out in Permian might be shut in occidental.
Speaker 1: Some other companies have announced that they've had to shut
Speaker 1: significant parts of their operations as well. So let's pause
Speaker 1: there for a second. And you know, we said to
Speaker 1: the top we're going to talk about building back better.
Speaker 1: So one issue I guess we've uncovered is supply what
Speaker 1: would it mean to build back better here, bury the
Speaker 1: pipes or how else would they weatherize them? And would
Speaker 1: it be worth it? So I think one of the
Speaker 1: big questions here is just how do you solve this,
Speaker 1: Like what's the what's the answer to this problem to
Speaker 1: make sure it doesn't happen again. And one of the
Speaker 1: things that I think both regulators, policy makers, oil and
Speaker 1: gas companies themselves, power companies will have to determine is
Speaker 1: what's the likelihood of this type of event to happen again,
Speaker 1: Like what's the necessity to build back better or to
Speaker 1: significantly change the infrastructure. Because there are things that can
Speaker 1: be done from the oil and gas perspective, you could
Speaker 1: insulate pipes, bury them, weatherize equipment. All of that is
Speaker 1: fairly costly. It has a lot of capital expense. You
Speaker 1: think about pipelines especially, I mean some of them are small,
Speaker 1: but some can go hundreds thousands of miles right, So
Speaker 1: to instigate reform at that level is going to be
Speaker 1: a huge investment in infrastructure. Um. And this is oil
Speaker 1: and gas infrastructure that's trying to cut back on capital
Speaker 1: cost not grow them. In general, you know, there's a
Speaker 1: lot of hesitancy to even invest in new pipelines updated
Speaker 1: pipelines anyways. So whether or not you want to put
Speaker 1: all that money into investing in this infrastructure if this
Speaker 1: is a once in a hundred year storm, um, it's
Speaker 1: unclear if that will be worthwhile. But there are maybe
Speaker 1: things on the especially on the oil and gas side,
Speaker 1: that you could do that could help at least alleviate it.
Speaker 1: Like one thing is Nick mentioned is there's a lot
Speaker 1: of policies and emergency measures being called in on the
Speaker 1: gas side to prioritize different customer bases. So like if
Speaker 1: you think about US natural gas, sure it goes to
Speaker 1: power homes for heating, it goes to electricity generation. But
Speaker 1: we also have sizeable markets for exports, both pipelines to
Speaker 1: Mexico export via l n G terminals. A lot of
Speaker 1: industrial facilities utilized natural gas. Texas exports a lot of
Speaker 1: it out of state. Two places like California, the governor
Speaker 1: and the others have tried to put in emergency measures
Speaker 1: saying please like industrial facilities have kind of stopped running
Speaker 1: for the most part. We've had oil refineries. A lot
Speaker 1: of X and refineries have shut down and are returning
Speaker 1: any gas in power that they would normally use to
Speaker 1: the grid to try and help increase that supply. A
Speaker 1: lot of the l G terminals have stopped exports and
Speaker 1: any gas that they usually would receive is therefore available
Speaker 1: to the grid. Does that help if the pipes are frozen? Well,
Speaker 1: so there's two things right, Like the pipes out in
Speaker 1: the oil fields are probably frozen and having trouble getting
Speaker 1: gas back to supply. There's underground storage across the state.
Speaker 1: There are major pipelines that are underground and better protected.
Speaker 1: So there is some flexibility within the system where gas
Speaker 1: can move. And that is that I think the question
Speaker 1: if any gas that is available should be prioritized to
Speaker 1: the customers that needed essentially, so if we're talking about
Speaker 1: frozen gas lines, you know, getting too gas plants, it's
Speaker 1: not necessarily like at the plant itself, but it's somewhere
Speaker 1: along the miles and miles of pipeline that's blocking the
Speaker 1: gas room getting to that plant most likely. Yeah, on
Speaker 1: natural gas. Another key thing to remember too is that
Speaker 1: the water vapor is only present in the gas until
Speaker 1: it's processed. Once natural gas is processed at a processing plant,
Speaker 1: which is usually pretty close to the oil field itself,
Speaker 1: then it becomes almost pure methane or pipeline spec methane
Speaker 1: that is not going to freeze as easily at current temperatures. Right.
Speaker 1: The trouble is when it's still towards the wellhead mixed
Speaker 1: with water, that water vapor freezes and then you have
Speaker 1: sort of a slushy mix trying to flow through this
Speaker 1: pipe of sort of froze some of your frozen water.
Speaker 1: And some natural gas oil pipelines have also seen some
Speaker 1: freezing issues where the oil thickens or starts to freeze,
Speaker 1: and so therefore some a lot of oil pipelines have
Speaker 1: stopped flowing. But on the natural gas side. Once you're
Speaker 1: talking about pipelines kind of closer to the city center
Speaker 1: near the demand markets, those are probably able to flow
Speaker 1: any gas that is in them, but it's probably just
Speaker 1: not reaching that far because of the freezing at the
Speaker 1: source exactly, And any any gas that does get there,
Speaker 1: you want to make sure it's available for home heating
Speaker 1: and power gen and sort of the two prioritized uses
Speaker 1: for it. And I like your point that investors and
Speaker 1: regulators are going to have to decide whether this is
Speaker 1: going to in the future going to be a likely
Speaker 1: enough occurrence to invest in these things. Texas an interesting
Speaker 1: situation on the power side because it's such a deregulated
Speaker 1: power market relative to the other regions that if things
Speaker 1: proceed as normal and regulators don't step in and start
Speaker 1: to require any of this stuff, the way the market
Speaker 1: bakes in this probability is through power presses. So power
Speaker 1: presses are at their cap right now, but basically nine
Speaker 1: thousand dollars for the last few days. Generators that are
Speaker 1: able to survive this are making years worth of revenue
Speaker 1: in just these few days. And if the market stays
Speaker 1: as is, you know, if something there's no major overall
Speaker 1: of the market going forward, Investors the only these power
Speaker 1: plants will say, maybe it's worth paying five percent more
Speaker 1: for our Win turbine kit to have a heater that
Speaker 1: can heat the blades and help us capture those price
Speaker 1: spikes when they happen. What's it going to be once
Speaker 1: every ten years? I don't I don't know, but that's
Speaker 1: the math that there the probability that they're going to
Speaker 1: be looking at. We could also see, of course, regulators
Speaker 1: come in and just mandate something in PGM. In the
Speaker 1: mid Atlantic, in the Northeast US power markets, gas power
Speaker 1: plants are mandated for reliability purposes to have oil tanks
Speaker 1: on site so one to five days of oil, and
Speaker 1: also the gas ruins have to be able to burn
Speaker 1: that oil. So there's there's also regulatory measures that could
Speaker 1: require plans to do those types of things. But investors,
Speaker 1: like I said, might also just choose to do it
Speaker 1: in arcot to be able to be available during these
Speaker 1: times and capitalize on really expensive power. And let's not
Speaker 1: forget this is Texas, right, It's pride itself on not
Speaker 1: too much regulation. Has there been a hint of which
Speaker 1: way it's likely to go? In investor driven or regulation driven.
Speaker 1: There's a lot of debate about it. There's a lot
Speaker 1: of philosophical debate about the markets, and there there was
Speaker 1: even before this event. But we're still really dissecting what
Speaker 1: exactly happened. Orcott really hasn't released all that much information.
Speaker 1: I think they're busy taking care of get just getting
Speaker 1: people power as soon as possible, but it soon after.
Speaker 1: I think there will be a really really good debate
Speaker 1: about planning for this this winter going into it, and
Speaker 1: then the physical effects of the storm on the power plants,
Speaker 1: and and which plants better. Right now, it's not obvious
Speaker 1: that one one particular plant was really guilty of failing
Speaker 1: more than any other. So we've talked about supply, We've
Speaker 1: talked about power plants and making those a bit more resilient,
Speaker 1: and the decision whether to regulate or invest in resiliency.
Speaker 1: We should probably talk a minute about Texas as an island.
Speaker 1: You know, they probably could have solved this if they
Speaker 1: were connected to another source of power, another market. Is
Speaker 1: that is that fair to say? It is? There's very
Speaker 1: little electrical connection to the neighboring grids. Is a priority
Speaker 1: of the Biden administration to harden the transmission, the US
Speaker 1: Transmission Network improve electrical resiliency. Texas has kept did that
Speaker 1: way for you know, as long as they could. They
Speaker 1: benefit from not having to be regulated by the federal
Speaker 1: the Federal regulator FIRK, because they don't exchange much power
Speaker 1: with with their neighbors and so we could see more interconnection.
Speaker 1: It definitely would have helped to be more interconnected with
Speaker 1: with the neighboring regions. It would have just been more
Speaker 1: supply that was available into the market when basically of
Speaker 1: the fleet was offline and they were had this this
Speaker 1: unprecedented capacity short falls. At the same time, like I said,
Speaker 1: they might be reluctant to make those connections because of
Speaker 1: the because of the regulatory implications. And there's a parallel
Speaker 1: here to what happened in California last summer. There were
Speaker 1: impacts across the whole region. It wasn't just Texas. The
Speaker 1: reason we're talking about Texas today is because it was
Speaker 1: impacted the worse and the severity of the cutoffs was
Speaker 1: so extreme, and most of the millions of people that
Speaker 1: are without power are in Texas, but throughout the Midwest.
Speaker 1: This storm really took its holl and last summer when
Speaker 1: we were talking about California. It was a similar story.
Speaker 1: California was was hit really badly by the heat wave,
Speaker 1: but so were its neighbors, and so the connections between
Speaker 1: regions were a bit a little bit contentious because when
Speaker 1: one region suffering, they're not necessarily gonna be pushing power
Speaker 1: to to the other. It's hard to predict what the
Speaker 1: interconnections would really do. But I think in general there's
Speaker 1: a push to improve infrastructure and and build a more
Speaker 1: robust power I don't anticipate there'll be many regulatory changes
Speaker 1: on I haven't heard of much talk around regulatory changes
Speaker 1: on the gas side. So the things I could see
Speaker 1: happening would be requiring more winterization of gas infrastructure, and
Speaker 1: the other one would be some type of more formalized
Speaker 1: prioritization of important customers if there is a shortage of gas. Right,
Speaker 1: But that's difficult because especially if you look at Texas
Speaker 1: and US gas markets in general. At sports are sort
Speaker 1: of a major story nowadays in a major port of revenue,
Speaker 1: and it's winter, and so to say that to try
Speaker 1: and be increasing our exports of things like l en
Speaker 1: G and then to suddenly tell all the customers that
Speaker 1: are trying to buy it. Well, actually, there's also this
Speaker 1: big risk that in the middle of winter, when it
Speaker 1: might be cold in Asia and Europe, we might actually
Speaker 1: cut off that supply because we have cold here in
Speaker 1: the US. That's not a great story to customers, especially
Speaker 1: when there's already questions around the emissions associated with us
Speaker 1: L energy and you know, the cost and everything else.
Speaker 1: So I anticipate there would be a lot of pushback
Speaker 1: in terms of formally mandating sort of stay within the
Speaker 1: state or prioritization of state actors outside of a free
Speaker 1: market sort of system um and better controls in place.
Speaker 1: You can also question, you know, Texas and all the
Speaker 1: storage that is in Texas is still a major supply
Speaker 1: to other parts of the country even right and a
Speaker 1: lot of the country is having a lot of cold
Speaker 1: weather as well. So this isn't just sort of Texas
Speaker 1: as an island and you can treat it as such.
Speaker 1: You have to remember that there are other customers at
Speaker 1: the other or end of that who are also being
Speaker 1: cut off from supplies. It sounds like you're saying that
Speaker 1: the producers don't need regulators to tell them that they
Speaker 1: just missed an opportunity to sell a lot more gas. Yeah,
Speaker 1: I think that would be right. But whether or not
Speaker 1: they'll invest in winterization is another question too, because as
Speaker 1: I mentioned, a lot of producers are really really focused
Speaker 1: on cutting capital expenditure right now. Investing in new production
Speaker 1: is not a priority. Certainly investing in new infrastructure is
Speaker 1: probably not a priority. Their prioritization is debt reduction. Their
Speaker 1: prioritization is increasing cash flow, increasing dividends shareholders, And so
Speaker 1: to try and fit in, you know, increased expenditure on
Speaker 1: winterization might be also tough because they're trying to balance
Speaker 1: out whether or not they grow production five percent or
Speaker 1: two percent, let alone, you know, don't invest in new production,
Speaker 1: don't invest in new drilling, and instead invest in winter
Speaker 1: rizing existing pieces. So again that comes back to do
Speaker 1: we think this is a fluke event or is it
Speaker 1: going to happen every winter? That will I think be
Speaker 1: the deciding factor there. There's so many parallels on the
Speaker 1: power side because the market has embraced these price spikes
Speaker 1: as the signal to investors, and when they miss them,
Speaker 1: they say, these are the steps that I need to
Speaker 1: take to be able to be there and capture that
Speaker 1: that price spike. Next time. But the question going forward
Speaker 1: on the power side is just because so many people
Speaker 1: were adversely impacted and reliability is really so important for
Speaker 1: power that consumers and investors are like, I don't know
Speaker 1: if they're going to be able to tolerate this volatility
Speaker 1: going forward. So do you think there will be a
Speaker 1: policy intervention or do you think the market will figure
Speaker 1: it out itself on the power side, It's really hard
Speaker 1: to predict. Texas is the only market like this in
Speaker 1: the United States. The other or regional energy markets have
Speaker 1: have opted for a capacity market mechanism where they do
Speaker 1: pay plants just to be there and be around and
Speaker 1: do all the accounting to make sure that there's enough
Speaker 1: megawatts on that it's you know, Super Bowl Sunday, that
Speaker 1: major day where everybody's going to be pulling power, and
Speaker 1: and Texas really just leaves it to the to the price,
Speaker 1: the price opportunity for power plants to make money. So
Speaker 1: it seems like the standard way forward, if they weren't
Speaker 1: to change their market design, would be for our cot
Speaker 1: next time around, say okay, we need to in our
Speaker 1: long term planning signal that there should be more power
Speaker 1: in the winter and potentially juice up the one tool
Speaker 1: that they have, which is their scarcity adder, which adds
Speaker 1: a little bit of actually quite a lot of of
Speaker 1: potency to real time energy prices. But but that's really it.
Speaker 1: So it would still be investors just betting that that
Speaker 1: there might be a scarcity in the winter and that
Speaker 1: they could make more money during those periods selling energy
Speaker 1: as opposed to getting a direct payment for being around
Speaker 1: and being available throughout the year. In the end, the
Speaker 1: retail consumer pays for all of this, I guess right
Speaker 1: under that model, right, So it's just gonna be end
Speaker 1: up being a bunch of angry Texans with high, very
Speaker 1: high electricity bills. The actual math could be a bit
Speaker 1: hard for consumers to do. But what regulators and economists
Speaker 1: are gonna do is they're gonna look at the average
Speaker 1: price of power over time in Texas, which has been
Speaker 1: quite cheap in a lot of years because of competition
Speaker 1: because of this, right, because because of competition, because of
Speaker 1: cheap natural gas. But then you also have to count
Speaker 1: for these periods and these massive blow ups. And that's
Speaker 1: why I say, I don't know, We'll see when we
Speaker 1: average it out which region has cheaper power. If let's
Speaker 1: say they work out to be roughly the same. I
Speaker 1: don't know if consumers would want to opt for this
Speaker 1: more volatile model. And then of course we need to
Speaker 1: look at the number of hours and the number of
Speaker 1: customers that were without power and compare that, because I
Speaker 1: know this period is definitely way beyond what's what's considered acceptable. Nick,
Speaker 1: I have a question, what's the role if we think
Speaker 1: forward sort of longer term, what's the role of batteries
Speaker 1: and electric vehicles, Like are they going to potentially be
Speaker 1: a saving grace in a situation like this? I mean,
Speaker 1: I know there's a lot of stories of Texans at
Speaker 1: the moment going into their cars, turning on the engine
Speaker 1: and using that as a way to stay warm, heat
Speaker 1: up during when their house doesn't have power. Like if
Speaker 1: everybody has electric vehicles, can they suddenly just charge your
Speaker 1: house off their car. Well, batteries perform better in a
Speaker 1: situation like this, And if there were more batteries in
Speaker 1: the grid, would that have helped or no? Yeah, it
Speaker 1: begs the question what other technologies might have helped? And
Speaker 1: then in the mediate term I listed some of the
Speaker 1: possible solutions. Natural gas plants could have oil on site,
Speaker 1: consumers could definitely have more generation capacity at their homes.
Speaker 1: Home gen SAIDs batteries. Of course, potentially solar paired with
Speaker 1: batteries is going to be a rush for for consumers
Speaker 1: to you know, outfit their homes to be better equipped.
Speaker 1: But in the longer term, when we look at the
Speaker 1: large scale fleet of generators, given that every single type
Speaker 1: of generator had had problems, I think it's kind of
Speaker 1: a win for the alternative technologies as we look to
Speaker 1: move to higher and higher pennetrations of clean energy on
Speaker 1: the grid. Let's say, let's take Biden's plan of getting
Speaker 1: a hundred percent clean to achieve that you need to
Speaker 1: replace natural gas, and this looks more like a mark
Speaker 1: on natural gases record than anything else, which means natural
Speaker 1: gas is usually a fairly reliable feel. It's seen as
Speaker 1: the backup. It's there when when the wind isn't blowing.
Speaker 1: It's to be clear, no wind and natural gas are
Speaker 1: going to be very important for quite a while on
Speaker 1: the grid. But in getting to the high penetrations that
Speaker 1: a lot of policymakers want, this might be an indicator
Speaker 1: that we really do need some other technology that might
Speaker 1: be available, and I think people might look to more
Speaker 1: battery storage, of course, but will it have enough duration.
Speaker 1: We're not sure yet. We're not sure if lithium ion
Speaker 1: batteries could ride through multiple days like this. Maybe it's
Speaker 1: a wind for small scale nuclear, for advanced nuclear reactors
Speaker 1: which have been getting slaughtered by cheap natural gas. No,
Speaker 1: you know, there's been R and D spending, but nobody
Speaker 1: wants to really take a bet on one of those
Speaker 1: because there's so much more expensive. Well, small scale nuclear
Speaker 1: could have really raked it in during this period if
Speaker 1: it was available, and and it would have been a
Speaker 1: win for them over natural gas and potentially other technologies
Speaker 1: as well. So can you close this out with really,
Speaker 1: just when do you think Texans will get power again? Yeah,
Speaker 1: so we've been talking about the long term implications of
Speaker 1: the power mix, but the truth is the situation is
Speaker 1: still really dire right now, and the grid operators bringing
Speaker 1: plants back online to have the capacity to be able
Speaker 1: to supply customers, and once those plants are ready, they're
Speaker 1: reconnecting customers. They are still right now, it's Thursday, and
Speaker 1: they are in the worst form of cutoffs. So the
Speaker 1: most extreme conservation measures those This is going to extend
Speaker 1: until Friday, and at that point we could start to
Speaker 1: see if the generation capacity is ready, we could start
Speaker 1: to see more of the Texas power grid connecting back
Speaker 1: up to customers and people getting power. But that this
Speaker 1: weekend it feels like the most stoptimistic scenario for everyone
Speaker 1: having power back. I hope they get it back as
Speaker 1: soon as they possibly can. Nick Anna, thanks for joining
Speaker 1: us today. Thank you, thank you. Today's episode of Switched
Speaker 1: On was edited by Rex Warner with gray Stoke Media.
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