This...but did Samsung quietly negotiate a "any further energy supply f*ck-ups are 100% on YOUR dime" deal with the State of Texas, or what? By several accounts, the TX grid got darn close to collapse last winter - at which point "ERCOT Op Center is next door, and we get top priority" would not get you a single erg.
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The going deal is, if there’s a power failure, we’ll let you recoup your costs from the taxpayers even as you profiteer. The governor can be bought for a very affordable $1 million. Certainly the incentives are aligned to solve this problem! https://www.texasobserver.org/after-kelcy-warrens-energy-tra...
If the costs do get passed to the taxpayer, let's hope the populace elects representatives who openly rip up the old contract and say "we're not paying". Flex the fickle power of democracy on the investors.
Also. Property tax in Texas is high relative to other states. So it makes sense to give Samsung a break on Ad Valorum taxes (not that a corporation with sufficient lawyers would pay them anyway.) They'll just make up the difference by stiffing it to the owners of all the new houses near the plant.
I can't imagine Samsung would put a plant in a 3rd world country like Texas unless they were getting significant tax deferrals from the state.
It remains to be seen if shifting the cost to taxpayers is harmful to the economy or not.
The ONLY reason to care about the "economy" is the secondary benefit it provides the "taxpayers". The health of economy and the people should never be weighed against each other.
Sure, lets analyze who benefits. The US benefits from national security by having a semiconductor plant in the US. The local economy benefits in Taylor Texas. Companies benefit from having a close semiconductor plant. People benefit from low cost chips. I think you may be advocating for more welfare analysis, which I completely agree with.
...but it will almost certainly hurt the taxpayers as a whole.
Not necessarily. Let's review our options: regulate companies to account for every disaster scenario, let the government plan and provide assistance during disaster scenarios, or do nothing and let people suffer and let companies go bankrupt. Passing costs to the taxpayers isn't the worst option.
Bad logic. If the governance e.g., TA is not manipulating market e.g. giving this sort of subsidies in case of failure then market could find the right place. Instead of behind the scene talks, a measurable study would be done and then fabs would be finding a suitable place to establish. I am not saying Samsung has not done studies on the location. Just pointing out the fallacy in the dangerous logic.
That's a lot of what-ifs with the assumption of corruption. There is no fundamental reason why companies and the government can't cooperate for mutual benefit.
There’s plenty of precedent for corruption with respect to tax incentives, see, e.g., what Foxconn did in Wisconsin:
https://www.theverge.com/21507966/foxconn-empty-factories-wi...
https://en.wikipedia.org/wiki/Foxconn_in_Wisconsin?wprov=sft...
even if it's corrupt, although it's rare, sometimes corruption does serve the public interest, even if by total accident of competence.
Letting companies go bankrupt is a good thing. Letting people suffer without power is not.
Crony capitalism, the best kind of capitalism eh?
Hacker news comment of the year
> erg
For anyone wondering, this is a unit of energy (100 nJ):
(For those wondering, it's a unit from the old cgs system, rather than the mks we typically use today.)
FWIW, the problem wasn't a generalized grid management problem. It was a failure to properly winterize gas plants for rare freezing events. The Texas grid itself is in reasonable shape as far as I know.
Also, as I understand it, there's another "grid" which failed, which is the network of natural gas wells and pipelines. Natural gas wasn't being pulled out of the ground and pumped to the electric generation plants.
Apparently natural gas isn't easy to store, so basically there's not a lot of buffer, and everything needs to stay online or there won't be any natural gas to burn at power plants even if they were winterized, which some of them were.
I think some power plants may have even just shut down because natural gas was available but too expensive, and they weren't under a legal obligation to keep producing electricity.
Point being, to solve the problem, winterization of plants is just part of the problem.
The natural gas load was nearly double it's average load, because the entire state of Texas was below freezing for a week solid and almost nobody has gas heat in Texas. Everyone was pulling on inefficient electric heaters to warm their house. And the Windmills, which power about 22% of the Texas grid, went almost entirely offline.
“Almost nobody has gas heat in Texas”
That’s incorrect. Approximately a third have gas heat per https://www.eia.gov/todayinenergy/detail.php?id=47116
Well, you must be a fun conversationalist. Nearly 2/3 of Texans use electricity for heat, and it no doubt becomes more electrically dependent in the southern latitudes of Texas (it being a very large and widespread state, climate varies quite a bit in various parts of the state).
By your own source that's 50% higher electricity dependence for heat than the U.S. average.
But no, I was not talking about the upper latitudes of Texas where freezing weather and snow is quite common and gas heaters are more prevalent.
You get plenty of people in Austin and more southern parts of Texas that also have gas heat. The older homes, typically — like from the 80s. Most newer homes are all electric.
Of course, if the fans are electric, then the gas heat doesn’t help.
In that case, you better hope you have a gas fireplace.
Natural gas plant outages were around 30,000mw, and there were issues with both coal and nuclear plants going offline also. Wind was only a few thousand MW below planned values.
Not close to being entirely a wind power issue. (Even though wind power could clearly have done better, as it did in Iowa, where it was significantly colder and the wind turbines stayed online.)
https://www.statesman.com/story/news/2021/02/14/historic-win...
Over half the turbines were completely frozen. Wind typically accounts for ~22% of Texas power supply. Meanwhile, there was a record high spike (nearly double normal loads) in demand for electricity. If not for natural gas, the blackouts would have been even worse, because at least they were able to be ramped up and provide some power via rolling blackouts.
> If not for natural gas, the blackouts would have been even worse, because at least they were able to be ramped up
Natural Gas, Coal, and Nuclear accounted for over 80% of the lost generation. Most of that was gas.
See page 16 here: https://www.ercot.com/files/docs/2021/04/28/ERCOT_Winter_Sto...
Same thing happened in both 2011 and 1989… NatGas was not there when the state needed it most.
The wind turbines need to be winterized, too.
They didn’t do as well as they should have, but they did a lot better than expected.
I recently heard a podcast with the CEO of MidAmerican (based in Iowa). They had materially colder temperatures than TX and operated 91% of their wind capacity. There's nothing inherent in wind that keeps it from operating in cold weather.
(MidAmerican did pay extra for winterization, so you can maybe make the argument that it wasn't worth it for TX to have done the same, given the risk profile.)
> And the Windmills, which power about 22% of the Texas grid, went almost entirely offline.
Which was also a problem of not winterizing.
The picture of the entire event is that the government of Texas flagrantly ignored what it was told was the problem from the previous blackout, and then naturally the exact same problem caused the next one.
This week-long freezing event had never happened before in the state of Texas. The entire state was blanketed and plunged to temperatures colder than Anchorage, Alaska. We had single digit temps in Austin. Austin, has the same latitude as Jacksonville, Florida. This isn't some "flagrant ignorance" this never happened in modern meteorological history in Texas.
https://www.texastribune.org/2014/01/06/ercot-rolling-blacko...
2014. After the event the government was advised that winterizing the powerplants needed to be done to prevent similar events in the future.
Instead, Texas did nothing for another 7 years, and then the same thing happened again.
This was wholly predictable: Texas running an independent grid doesn't have enough power import capacity to manage long-tail events, but also chose to manage them by ignoring them and damn the consequences - those consequences being Texan citizens froze to death in their homes (https://www.texastribune.org/2021/02/19/texas-power-outage-w...).
You might also want to read the analysis here around power sources during the outage: https://www.texastribune.org/2021/04/28/texas-power-outage-w...
No, the windmills actually produced more power during that cold period than was projected that they would be capable of. They didn’t go offline. A standard Republican refrain is to blame alternative sources of power generation for the faults that actually exist primarily in the old systems that bought off said Republicans. It’s like the pot calling the kettle black, but the pot actually is black and the kettle isn’t.
No, it was the gas-fired power plants that didn’t have enough gas to burn, caused by the fact that many of the gas producers had not winterized their systems, and in fact some of the gas producers got their own power turned off in the rolling blackouts — they hadn’t been marked as mission critical.
Try reading the report.
Sadly, very little has changed since February. The producers and the gas power plants have paid a trivial fee that allows them to choose not to winterize (because that would be too expensive), and so far as I know they still haven’t even bothered to mark those systems as mission critical, so when the rolling blackouts happen again, they’ll get their power cut off again.
For anyone interested, FERC basically just said this as well in their report on the outage.
https://www.ferc.gov/media/february-2021-cold-weather-outage...
Of course they said a bunch of things and made a bunch of recommendations the last time ERCOT fucked up, and they didn't listen to nearly any of them, so I would expect the same this time.
"The grid" tends to refer to more than just the transmission wires.
That seems unnecessarily sarcastic. I wasn't saying just the "wires". I was trying to shed more light on what the actual problem was.
Tbf, lots of people conflate transmission wires with "the grid". Even on a fairly tech-savvy forum like HN, I've read where people insinuate things like if all ICE vehicles were suddenly replaced with EV, all "the grid" would need is more wires running to charging stations.
Maybe people consider the grid distinct from all the supporting infrastructure.
“The grid” never refers to just the transmission wires.
I was surprised the power outage affected Samsung because in DFW the outage only affected residential areas. I didn't see a single commercial/industrial space without power including fully lit empty parking lots.
What finance guy will ever approve this? I doubt that the service agreement would ever be approved with that clause.
LOL, the current political heads for the state of Texas (and county of Taylor) will happily trade future liability of their constituents for investment now (and kickbacks later). Honestly, I think Samsung's management is more comfortable in this sort of "political" environment than many others.
If you watch local news reporting, it's hilarious that they (politicians) have no idea what the "factory" does. I'm personally highly doubtful that a fab which hasn't broken ground will be producing viable 5nm at the 2H of 2024 as claimed (or cyber trucks for that matter).
> the current political heads for the state of Texas (and county of Taylor) will happily trade future liability of their constituents for investment now (and kickbacks later)
Do you have some examples of this?
ERCOT, the massive statewide blackouts, and bailing out massive price gouging of the electric utilities that basically makes the reliability of the grid an issue in the first place?
https://www.texastribune.org/2021/05/25/electricity-market-f...
Or, in general: https://www.texastribune.org/2017/08/09/are-business-ties-be...
Billion dollar "public/private" investments turn in to boondoggles except for those who retire as lobbyists or foreign firms who pick up the pieces of the bankruptcy.
You might want to do some research into the people in charge. You're kind of implying that those people would listen to bean counters over their pollsters. This is where the flaw in your logic is located. Also, you're using logic in the first place ;-)
Surely there's an insurance company that would take on that risk, and the government could pay for it. These government incentives are rife with excessive spending on a per-job/total economic impact basis. I see no reason why this detail would derail things.