Fermi Energia is an Estonian company whose mission is to provide its home country with an independent, clean, safe and affordable electricity production system … [Read More...] about Atomic Show #291 – Kalev Kallemets, Fermi Energia
By Meredith Angwin
When we hear something terrible has happened to someone we know, we are concerned for them. We are worried. We want to help.
And let’s face it, we are also concerned that something like that might happen to US.
Our self-concern often takes the form of a list: “All the reasons this won’t happen to me.”
- I don’t smoke.
- I’m not overweight.
- I have a very new car with safety sensors.
While this self-talk is not a huge deal, the same thing becomes a huge deal when people begin explaining that the Texas blackout was because…well, Texas is Unique. Something like that would never happen to us! And then…. here comes the list.
Five Ways Texas Is Supposedly Unique
The usual list of “why it won’t happen here” is because Texas is Unique, and here are the ways it is unique and how it brought about it’s own problems.
The thesis is simple: Texas is not a warning to us. Texas can merely serve as a bad example of bad choices.
(This section is abstracted from an assortment of pundits in other states.)
These are supposedly the problems unique to Texas.
- Texas isn’t attached strongly to other grids, so the neighbors couldn’t help it.
- Texas didn’t want to be ruled by FERC (Federal Energy Regulatory Commission), so it had all sorts of problems that obeying FERC would have solved.
- Texas doesn’t have a capacity market: such a market would have saved it from blackouts
- Texas didn’t bother to winterize anything on its grid.
- Texas built its market around total freedom for prices to rise. Other markets are more orderly.
As in everything, there is SOME truth in many of these statements, but overall….sorry. I wish Texas was unique. The fundamental problem is the way RTOs (Regional Transmission Organizations) are designed and managed. Two-thirds of the country is in an RTO area. The way things happened in Texas can be the way they happen…in any place that has restructured its electricity markets.
Five Ways Texas Is Just Like the Rest of the RTOs
Let’s go through these myths, one by one
1) Texas goes it alone. Indeed, the ERCOT (Electricity Reliability Council of Texas) area of Texas did choose not to be strongly connected to neighboring grids. However, connection to neighboring grids would not have helped. As I have pointed out in my book, the neighbors are having the same weather you are having. In the case of Texas, several nearby states were also having rolling blackouts due to cold weather. None was as extreme as Texas (where the whole grid almost collapsed) but none would have “shed load” to their own people to ship help to Texas, even if they were completely connected.
2) No FERC oversight. Nobody ever tells me what FERC ruling would have solved Texas’s problems. FERC does not require large reserve margins. FERC does not care whether plants have fuel stored on site. FERC does not require winterization. I am willing to be corrected on this, but if someone would send me a link to the FERC order or FERC ruling that would have saved the Texas grid, that would be great. I also think it would be a miracle, since the order or ruling does not exist.
3) Capacity market! Capacity market! ISO-NE (Independent System Operator – New England) has a capacity market, the total size of which is annually almost as large as the realtime energy market. On page 100 of Shorting the Grid, I show an ISO-NE chart which shows that the energy market in 2018 was 6 billion dollars, and the capacity market was 3.6 billion. Yes, we have a capacity market in New England.
And quite a few chapters in Shorting the Grid are stories of watching ISO-NE try to get plants to live up to their capacity obligations in bad weather. The Winter Reliability chapter, the Jump Ball chapters, the chapter on “harder than it has to be—planning for winter.”
A capacity market would not have helped Texas.
4) Winterize the grid. This was a failure of Texas planning. Sort of. I mean, if they had spent some money on winterization, people would not have died, the grid would have been in much better shape without multi-day power outages, and so forth. I think they should have winterized the grid.
However, this is not a situation unique to Texas. Right here in New England, with our own RTO system, we have lots of drama on the grid in winter. We can look backwards (bridges being raised at rush hour to let oil tankers through) or forward (to many ISO-NE scenarios that include rolling blackouts in the winter of 2025-26.)
In short, everyone should winterize their grids. But each grid will encounter winter conditions that are extreme compared to the usual winters. For that, what you need is a robust grid with (for example) some nuclear plants with fuel stored on site, so the problems of winter do not become grid-wide catastrophes. Just-in-time renewables plus Just-in-Time natural gas is a recipe for the kind of disaster Texas had, and the kind that is embedded in many of ISO-NE’s future scenarios. (As well as California’s oft-repeated summer experiences of rolling blackouts.) Texas is not unique.
5) Total freedom in the Texas market. I think that one advantage of energy-only markets is that the markets basically pay for what the customers pay for (kWh) without the complex MOPR, CASPR, Pay for Performance rules that capacity markets grow. That said, once you have an RTO system, putting caps on how much customers have to pay (California did that in 2001) or not putting much of a cap on what customers have to pay ($9 per kWh in Texas) leads to the same results.
The RTO leads to high prices and rolling blackouts.
As Professor William Hogan of Harvard, one of the architects of the Texas system, said in a recent interview with the Harvard Crimson, the state’s electricity market had “worked as designed.”
Others were upset that rolling blackouts still happened when the auction price was below $9 per kWh. While I am not an economist, it is clear to me that market caps or not, RTOs lead to expensive, fragile grids. It’s not about those crazy people in the Lone State. It’s about the RTO structure.
We defend ourselves
We defend ourselves from the fear that harm can come to us by describing all the ways that we are different from the people (or states) to whom harm has come. This is very human, but not always very useful.
To protect ourselves from future harm, we would be better off looking at how we are similar to people (or states) to whom harm has come, and trying to understand what brought the harm, whether it was a similarity or a difference with our own way of doing things.
Texas didn’t have blackouts because it was unique. It had blackouts because its grid was built on the RTO system. The sooner people understand that fact, the sooner we can do something about the growing fragility of our grids.
Meredith Angwin has invested much of the past ten years developing expertise in grid oversight and governance. For four years, she served on the Coordinating Committee for the Consumer Liaison Group associated with ISO-NE, her local grid operator. She teaches courses and presents workshops on the electric grid.
She is the author of Shorting the Grid: The Hidden Fragility of Our Electric Grid.
Fermi Energia is an Estonian company whose mission is to provide its home country with an independent, clean, safe and affordable electricity production system by 2035. That system will be anchored by base supply from small modular nuclear reactors.
It is a lofty mission for a small company in a country whose land mass and population is roughly the size of the state of Maine and whose current electricity supply system is dependent on oil oil shale burning power plants with a small, rapidly varying portion of energy from wind turbines.
On the web page where Fermi Energia explains why it believes Estonia needs nuclear, there is a graph of its wind power generation as measured each hour during 2018 and an explanation for the mismatch between this pattern and electricity consumption.
Kalev Kallemets, born and raised in the Estonian countryside during its days as a Soviet satellite, has a keen understanding of his country’s history and its people. He has significant experience as a political leader and broad education in engineering and business.
He joined me for lively, informative and entertaining Atomic Show.
Kallemets has gathered a compact group of like-minded people; there are about a dozen members of the team. They working with numerous partners to create an fertile environment for new nuclear plant development, including a regulatory system and strong public interest and acceptance of nuclear energy.
They are leading with the benefits, but also helping people to understand the responsibilities that come with becoming a country whose power comes from atomic fission.
Fermi Energia is led by people who have a keen understanding of the value of nuclear energy and a realization that there are a wide range of technological capabilities under development. The four currently leading the evaluation process are GE-Hitachi’s BWRX-300, NuScale’s NuScale Power Module, Terrestrial Energy’s IMSR, and a high temperature gas reactor being developed by Ultra Safe Nuclear Corporation (USNC).
The company knows that no matter which technological choice is made, the key to success will be the planning and development effort that must be invested to create effective projects with the kind of social license needed to support superior cost and schedule performance.
One measure of Fermi Energia’s early success is its recent social media-enabled fund raising round to provide the seed capital needed for the important planning stage. Kalev describes how the early goal for its Funderbeam campaign was doubled to €1 million after they obtained an early indication of interest in their development effort.
When that campaign was officially opened, it was completely subscribed in less than an hour. That indication of real, committed interest led the company to double its goal again before closing the finance round with what it considers to be an adequately strong balance sheet.
The successful financial raise has not changed the company’s frugal spending habits; the founders have a keen sense of corporate responsibility and personal ownership. They know they still have a long way to go before they are producing revenue from the products of the nuclear power systems they are planning to build.
During Atomic Show 291, Kalev talks about the Estonian energy supply situation, its relationships with its Baltic neighbors, the importance of Lithuanian and Poland, the still fresh memory of Soviet occupation, and the vision of a clean, safe, affordable, secure, and reliable power system anchored by modern atomic power stations.
As always, I encourage you to comment, ask questions, and engage in productive discussion. I think you will enjoy hearing Kalev talk about his company’s exciting efforts to produce a bright future for his country.
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