Bloomberg recently published a piece describing a revolution in energy production in Texas, a state known for both its free market culture and its wiliness to try new approaches. Between cheap Natural Gas and the proliferation of wind turbines, the cost of producing electricity has plummeted, with Texas homeowners and businesses benefiting. Now a company based in California named Griddy Energy has started a business in Texas that sells electricity to customers at wholesale prices for a fixed fee. The spread between retail and wholesale prices are so great that typical Texas utility customer can cut his or her electric bill by about one-third.
Texas entrepreneurs have found a way to make wind power work by building wind farms in the relatively breezy parts of the state in the west and north, with power lines connecting them to the big cities in center and eastern part of Texas. Texas has just recently started to get into solar, both utility sized plants and the rooftop variety. But the Lone Star State has avoided many of the problems suffered by other parts of the world that have gone into renewables by building efficient natural gas power plants. The Texas electricity industry is diverse enough to ensure customers get plenty of power at low prices.
Griddy’s approach means that other utility providers are going to have to follow suit, lowering energy prices for Texans even more.
The company also provides its customers with a phone app that tracks their Energy Consumption and provides helpful hints on how to save money, such as optimal times to do the laundry or vacuum the house.
The approach being followed in Texas by companies like Griddy is the polar opposite of the energy policy adopted by former President Barack Obama.
Under the Obama administration, energy prices were kept artificially high to encourage consumers to switch from fossil fuels to renewables. The fracking boom, as well as scandals such as Solyndra, undermined this policy. The free market approach by the Trump administration, removing regulations and taxes that have inhibited drilling and use of fossil fuels, has spurred a drop in energy prices and, especially in Texas, a free market for electricity utilities.
Cheap energy can have a profound effect on economic growth and job creation. The less one spends on keeping the lights on, the more that can be devoted to other things. From a homeowner who can get a new car or appliance to a business owner who can invest in plant and equipment, the economic stimulus effect is apparent.
