Nortex Times

Two renewable energy firms have filed suit against Citigroup over issues relating to the February winter storms, Reuters reported.

The storm froze the wind turbines of Shannon Wind and Flat Top Wind, subsidiaries of Innergex Renewable Energy Inc., Reuters reported. Citi Energy, a unit of Citigroup Inc., billed the companies for more than $100 million to replace the power, Reuters reported. 

The weather in Texas earlier this year knocked out almost half of the state's energy, causing 4.5 million people to lose heat or light for days, the story said.

The companies filed suit in Houston, arguing that Citigroup rejected their declaration of “force majeure,” which would release both parties to the contract from their obligations in the event of circumstances beyond their control, the story said.

The wind firms are partly owned by Starwood Energy Group Global and a fund run by BlackRock Inc.

In a statement, Citi Energy said the issue should be resolved in New York courts.

"We are unaware of any legitimate basis for these cases to be filed in Texas," the company said in a statement, Reuters reported.

Citi Energy invoiced Shannon Wind for $39.5 million for four days of electricity, and Flat Top Wind for $79.3 million for seven days of electricity, the story said. 

That’s more than the wind companies bring in during a full year, the story said. The plaintiffs allege Citigroup is preparing to foreclose on the projects.

Another renewable energy firm, Mariah Del Norte, owned by BlackRock, has also been billed $100 million by Citigroup for the cost of buying electricity elsewhere during the Texas storms, Bloomberg News reported. Citigroup could obtain ownership of the farm if Mariah Del Norte doesn't pay, the story said.

Another Texas company, Stephens Ranch Wind Energy LLC, sued Citigroup in New York, seeking an injunction to stop the company from taking over its wind farm over a $113 million bill for replacement power, the Wall Street Journal reported. A judge refused to grant the injunction, the story said.

When the wind farms did not deliver, Citi Energy had to purchase electricity from other sources at significantly higher prices because commissioners the Public Utility Commission of Texas intervened in the market to artificially raise prices to $9,000 per megawatt, far higher than the $22 average for last year, the Wall Street Journal reports.

Renewable energy sources such as wind and solar are unreliable and shouldn’t be subsidized, Energy Alliance Policy Director Bill Peacock told the Austin News.

“The fact that wind keeps coming up short at critical times is not something that should be ignored,” he said. “The best path forward for Texans is to eliminate subsidies for wind – and solar – like Chapters 312 and 313 property tax abatements and to make renewable generators pay for the costs they impose on the grid on days when they don't show up.”

It's hard to have a reliable power supply if you are dependent on the weather, Peacock said.

“Weather is hard to predict,” he added. “Even in the short term – even a day ahead – weather is unpredictable. That is why Texas needs reliable generation from thermal sources such as nuclear, coal and natural gas." 

ERCOT data shows that on Feb. 17, during the midst of the winter storm, 28,291 megawatts of wind was missing at 9 p.m., when demand was at its highest. In other words, almost 89% of wind’s total capacity was offline, and it was providing only 7.2% of the total load. Most of the remaining 93% was being supplied by nuclear, natural gas and coal.

There is legislation moving through the Texas Legislature that would make wind farms pay for the cost of unreliability instead of taxpayers. Sen. Kelly Hancock (R-North Richland Hills) announced a package in March that would address the failure of the state's electricity supply chain, including Senate Bill 1278, which would promote ancillary services' back-up generation.