Texas vs. UK Energy Market Crisis
2021 has been a tough year for the traditional energy industry. Here in the US, Texas experienced an historic winter storm this past February that resulted in a near-statewide grid blackout. With record cold temperatures blanketing the state, natural gas lines froze and prevented the transmission of natural gas to homes, businesses and basic infrastructure. The lack of pressure in the natural gas pipelines led to a significant shortfall in electric production — had we weatherized well heads and pipelines there would have likely been enough pressure to keep the lights on. This massive grid failure affected 90 percent of the state and forced millions of Texans to battle unfettered cold because of predictable fossil-fuel infrastructure failures. With so much demand for a limited supply of available gas, the energy market began to fluctuate, resulting in incredible price spikes that affected many consumers throughout the state.
Across the pond, the UK is currently battling their own energy crisis. While not the result of a single instance of extreme weather and frozen fossil-fuel infrastructure, the UK is experiencing major gas shortages due to low supply following last winter, which was colder and longer than previous years — a harbinger of climate change effects. Already in immediate need for more fuel, market economics and neighboring countries are also playing a role. As China has begun to reopen after relaxation of COVID restrictions, the country has seen a major uptick in demand for gas, leaving less supply that would otherwise flow to the UK. At the same time, Russia is not supplying as much natural gas to the energy market as it had prior to the pandemic.
The energy crisis in the UK has drastically increased prices for all consumers, where natural gas prices have hit a 13-year high, totaling 293 pence per therm ($4.00) in October compared to 59.45 pence per therm ($0.81) just 10 months before — a 5x increase in just one year. Smaller retail energy providers who were mismanaged and not properly hedged were left with no choice but to “go bust,” while larger “big-6” retailers asked for government assistance to stay afloat.
So what’s next for energy?
These two crises point to a particular problem: over-reliance on fossil fuels. Both Texas and the UK rely on fossil fuels for nearly half of their respective regions’ energy. But as weather patterns continue to change, such as the historic winter storm in Texas and a prolonged and cooler winter in the UK, the old ways of relying on fossil fuel for a majority of energy supply has simply become untenable. This market inflation makes it clear we need to accelerate the construction of low cost renewables.
As we begin to diversify our energy sources and accelerate electrification, countries, communities and individuals are provided with more options to (quite literally) power their lives. This critical energy transition to renewables — from solar generation to wind energy — provides us with new energy freedoms that just aren’t possible with fossil fuels. This is especially true in a deregulated state like Texas, where consumers have more access to energy choice and can participate more directly in how they source their energy, such as using EVs or opting into community solar projects.
So, while 2021 has been a tough year for “traditional energy” like natural gas and other fossil fuels, it’s shown a spotlight on the power and importance of renewable energy in driving our energy future. Wind and solar energy generation have increased steadily over the past 10 years. In Texas, wind surpassed coal production for the first time in 2020, accounting for 23 percent of energy generation for the state. Note, this is not due to governmental regulation — wind and solar electricity generation costs significantly less than fossil-fuel based power plants. We’re seeing steady movement towards increased adoption of these alternatives.
For every single dollar spent on maintaining fossil-fueled energy supply, we divert dollars away from renewable generation becoming more and more ubiquitous. Instead, those funds can be used for additional research and investment into the development of mass scale battery storage, which will allow us to harness the true potential of solar and wind energy. By continuing to rely on the fossil-fuel industry as we do today, we are essentially headed towards a future in which we’re entirely reliant on antiquated fuel sources. It’s akin to running modern businesses using traditional mail and typewriters — it’s simply not efficient. And the consequences of failing to adapt our energy system to today’s reality are grim — it affects our ability to generate power as we’ve become accustomed, breathe clean air, and will cause lasting, irreversible harm to the planet.
Both crises highlight the drastic and immediate need for energy diversification and more investment in renewable generation. By investing in renewable energy, its generation, and its storage, we’re guaranteeing more energy stability. Without this, countries will continue to depend on supply chains subject to market demands and volatility. It’s untenable to continue forward in this manner: the future is renewable energy. We have our marching orders, we know what to do. It’s time for our respective governments to get on board.