My phone buzzed with an incoming text just before midnight on Christmas Eve. “ConEd Alert,” the message read. “Please conserve energy.” New York’s power grid was at the breaking point, our power company warned us, owing to “extreme cold, high energy use & interstate equipment problems.” To help stave off a blackout, we were advised, we should lower our thermostats and “postpone running appliances.”

Oh, and one more thing, Con Edison added: “We wish everyone safe & happy holidays.” Now, my home isn’t one where milk and cookies are left out for Santa or stockings are hung by the chimney with care. But we do enjoy having lights and heat during the holiday season. In the end, most New Yorkers squeaked through the emergency without losing power. In the Southeast, many households weren’t so lucky. Millions across North Carolina, Tennessee, and other states lost electricity. Some outages were caused by downed powerlines. In other cases, power companies deliberately cut off power to large groups of customers, a process known as “load shedding.” The utilities simply didn’t have enough electricity to go around.

Weather-related grid failures—resulting both from high and low temperatures—are a growing threat. California residents suffered through power outages during a 2020 heat wave and barely dodged more rolling blackouts last summer. In 2021, a stretch of frigid weather in Texas triggered power failures that led to nearly 250 deaths. A Wall Street Journal investigation last year showed that prolonged blackouts from all causes have more than doubled since 2013.

After major energy shortfalls, officials often mumble something about “the increasing frequency of extreme weather events due to climate change.” These excuses fall flat. Yes, the weather outside was frightful this past Christmas—temperatures reached single digits. But that’s not unprecedented for my area. We generally get one or two hard cold snaps each winter. Even the southern U.S. can expect an Arctic blast every two or three years. So what made this cold wave a crisis rather than an inconvenience?

The problem isn’t the weather. It’s the power grid. Most of us take our electric power for granted. We might not understand how the grid works, but we assume the experts know what they’re doing. It turns out the experts are nervous as hell. “Everything is tied to having electricity, and yet we’re not focusing on the reliability of the grid,” Curt Morgan, CEO of the power-plant operator Vistra Corp., told the Journal. “That’s absurd, and that’s frightening.” The federal and regional agencies tasked with keeping the grid running smoothly keep issuing warnings: We don’t have enough power to cope even with normal swings in the weather, they say. More blackouts are coming.

Let that sink in. The U.S. leads the world in innovation: digital tech, pharmaceuticals, spaceflight… And yet our power sources are becoming undependable. The infrastructure that delivers that power to users is getting old and fragile. And it’s all part of the plan. I don’t mean that our power grid is the victim of some evil-mastermind conspiracy. What I mean is that the sorry state of our electrical system is the direct result of very deliberate, if mostly wrongheaded, policy decisions. For three decades, political leaders, regulators, and energy technocrats have been working to make our grid more efficient, more market-driven, and of course, greener. In the process, they’ve implemented a lot of innovative—one might even say, experimental—ideas about how the grid should operate. Most of these experiments aren’t working very well.

“Everybody talks about what I call the ‘could’ grid,” energy analyst Meredith Angwin told me. That’s the futuristic grid we could have, the one Biden talks about in speeches and that you read about on tech blogs. It will be powered by giant solar farms and offshore constellations of wind turbines. It will have long-distance transmission lines to shuttle power from, say, sunny Arizona to gloomy Chicago, and huge battery arrays to fill any gaps in supply. Angwin is the author of Shorting the Grid: The Hidden Fragility of Our Electric Grid. She writes that, while energy wonks and policymakers fantasize about the could grid, the actual grid—the one that’s delivering power to your home right now—is “going downhill.”

I’ve seen the problem first-hand where I live. Former New York Governor Andrew Cuomo pledged that the state would achieve “100 percent carbon-free electricity by 2040.” He committed to huge expenditures on wind and solar development. He shut down fracking and blocked new natural-gas pipelines. New York was “poised to adopt the country’s most ambitious climate targets,” David Roberts exulted at Vox. In a particularly deft display of political thuggery, Cuomo also orchestrated a plan to force the retirement of Indian Point, the big nuclear plant 40 miles north of New York City. The governor wanted New York to be the test case for the could grid, in other words.

It didn’t work. Before it was closed, Indian Point was making 25 percent of New York City’s electricity. It made more juice than all the state’s wind and solar facilities combined. That power was utterly reliable and carbon-free. Today, Indian Point is being cut up for scrap. But while it was headed to retirement, two new natural-gas plants were being built. (Cuomo might have tried to phase out natural gas, but the power companies know they can’t make enough electricity without it.) So downstate New York now gets over 80 percent of its power from fossil fuels. Our carbon emissions have shot up. Electricity prices have climbed even more. And we still don’t have enough power for high-demand days. Hence those Christmas Eve texts.

How did we get into this mess? The problems started in the 1990s when federal officials launched a series of reforms meant to deregulate our power system. Under the traditional model, a vertically integrated utility owned most everything, from the generating plants to the power line running into your house. It was a government-approved monopoly: The state regulator approved the utility’s major infrastructure investments as well as the rates it is allowed to charge customers. Under this plan, utilities were generally guaranteed a modest but predictable profit. They had strong incentives to build a highly reliable grid, but not many incentives to lower prices. In fact, the relationship between regulators and utilities often tended toward cronyism. It was not a perfect system.

So, in 1999, the Federal Energy Regulatory Commission (FERC) issued a ruling encouraging alternatives to the traditional utility model. They created quasi-public agencies known as Regional Transmission Organizations (or RTOs) that supervise power distribution in regions made up of one or more states. (Not all states have made the switch; some still rely on traditional utilities.) Under this system, your power now comes from a whole array of companies. The RTO simply sets the ground rules for how they compete. If a new business thinks it can produce power competitively—from wind, solar, natural gas, whatever—it’s free to build a plant and start peddling watts.

For a free-market fan like me, this sounds promising. More competition should mean more innovation and lower prices, right? But far from simplifying energy markets, Angwin argues, the RTO model has led to “overlapping thickets of regulation.” The rules involving how companies buy and sell power are so byzantine that almost no one understands them—except insiders who shamelessly game the system. (Remember Enron? This was one of their rackets.) Worse, the RTO system creates perverse incentives that erode grid reliability.

Here’s why: The RTOs hold auctions in which power plants offer to sell their power in five-minute intervals. The companies that offer the cheapest power get the business, of course, while higher-priced producers have to take their generators offline. (Too much electricity on the grid is just bad as too little, so the RTO must exactly match power production and consumption on a second-by-second basis.) The auction system is a boon to solar and wind producers. Their panels and turbines sit idle most of the time. But when the sun shines or the wind blows, they produce torrents of very cheap power that they can sell into the grid at a moment’s notice. Nuclear and coal plants, on the other hand, are at their best producing steady “baseload” power 24/7. These plants lose money any time they have to throttle down.

The RTO auction system therefore rewards intermittent wind and solar producers while penalizing the baseload providers. This is one reason so many coal and nuclear plants have closed in recent years. For fans of the could grid, of course, this is exactly the point. To make the transition to renewable energy even faster, the federal government and most states also offer huge subsidies to wind and solar producers. (Fortunately, many policymakers are belatedly recognizing that nuclear power is a zero-carbon energy source and including it in subsidy programs. A better plan would be to reduce market-distorting subsidies across the board.)

The long-term trend is clear: As more of our power comes from intermittent renewables—and baseload power disappears—the grid gets harder to manage. Take California, which leads the nation in solar-power capacity. On sunny days, solar panels produce more power than the state needs. But then comes sundown. Suddenly, the grid needs all the power it can get. Since California has already shuttered almost all its coal plants—and all but one nuclear plant—it has only two options. One: Import power from nearby states (most of which do burn coal, which is why they have power to export). Two: Burn lots of natural gas.

Natural-gas plants are easier to crank up quickly to meet rising demand. And ever since the fracking revolution of the late aughts, gas is one of the cheaper sources of energy. That makes natural gas the dirty secret of the “renewable power” revolution: Since neither wind nor solar can be counted on to deliver power at all times, efforts to increase those sources also require building a backup network of gas-fired power plants. Advocates for “zero-carbon” power like to tout all the wind and solar resources the U.S. has added to the grid over the past two decades. They usually don’t mention that, over the same period, we’ve doubled the amount of gas we burn to make electricity.

Three decades ago, our power grid was based on a mix of dependable energy sources, mostly coal, gas, nuclear, and hydropower. If one source faltered, others could step up production. If we stay on our current path, we’ll have a grid that runs mostly on intermittent wind and solar combined with on-again-off-again natural-gas plants trying to keep up with wild swings in renewable output. We’ve eliminated our safety margin. And that ramping up and down of different power sources is hard on infrastructure. Power-plant components wear out faster; transformers overheat. Our grid is crumbling under the strain.

The growing reliance on natural gas also brings big risks. Coal plants keep piles of fuel sitting on site. Nuclear plants have months of fuel already in their reactors. But a natural-gas-fired power plant gets its fuel through a pipeline on a minute-by-minute basis. During the pandemic, we learned that just-in-time supply chains can be vulnerable to disruption. We need to recognize that making our entire power grid dependent on just-in-time gas deliveries is insanely reckless. During cold spells homeowners burn more gas for heating. That leaves power generators short of fuel just when they need it most.

What’s the answer? First, a big dose of realism. We can’t run the grid without baseload power plants. It’s great to retire dirty coal plants, but we need to replace them with other dependable power sources. That makes it critical to preserve our existing nuclear plants, and to speed up plans for building new ones. We also need to unwind the perverse incentives in our RTO networks; power companies should be rewarded, not penalized, for providing reliable energy. And let’s hack back the regulations that make it hard to build new powerlines, power plants, or pretty much any sort of infrastructure today.

In the end, the Christmas cold snap lasted only a couple of days. Worse ones will come. We’re the nation of Apple and SpaceX. We ought to be able to keep the lights on.

Photo: Tiado

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