06 November 2023
Weathering The Storm: How does the Texas grid stand up following the 2021 blackouts?
In February 2021, during severe winter storms, multiple natural gas and coal power plants experienced equipment failures across Texas and were forced offline. Wind speeds fell, and the few turbines still producing power froze. Power generation couldn’t meet demand, and the Electric Reliability Council of Texas (Ercot) cut the power to millions of customers to maintain grid stability. This process unintentionally disrupted electricity to many natural gas production and processing facilities, already struggling in the cold temperatures.
Grid resilience is a complex and politically fraught issue – one that is a matter of life and death. The failure of Texas’ energy infrastructure led to water, food and heat shortages. More than 4.5 million homes were left without power, and at least 246 people were killed, directly or indirectly.
The power outage led to more than 500,000 insurance claims, and it was estimated insurers would pay more than USD10 billion in damages. More than 100 insurance companies filed a lawsuit against Ercot, alleging the operator had failed to prepare for the 2020-2021 storm season. In June this year, the Texas Supreme Court narrowly held in a 5-4 opinion that Ercot had sovereign immunity against allegations of overpricing during Storm Uri and related fraud claims. This ruling could shield Ercot from any further lawsuits unless lawyers find a way to challenge it.
Why did Texas experience this power crisis?
Texas is the second most populous state and uses the most power in the US. Texas is unique as Ercot serves around 90% of the state's needs, and very few high-voltage transmission lines are connected to other grids. This is a conscious decision taken to avoid federal oversight and means that Texas is predominately self-reliant and not able to depend on its neighbouring states if its grid fails. In 2021, the grid had less than 500 megawatt hours (MWh) of energy storage capacity, with 2,000 MWh in the pipeline.
On February 16, North Texas experienced record-freezing temperatures, the coldest for 72 years. Texan homes, unfamiliar with such extreme cold weather, were not necessarily well insulated, resulting in extremely high electricity demand. Power grids run at a certain frequency, which must be maintained or risk serious damage to the generating plants. As one plant tripped off, the frequency dropped, causing other plants to automatically switch off to protect themselves, making the grid less stable. Ercot instigated rolling blackouts to rebalance supply and demand and prevent an uncontrolled shutdown.
The blackouts exposed the lack of winterisation measures in the Texas power infrastructure. Equipment and infrastructure were not adequately prepared for freezing temperatures, resulting in failures and outages.
Is the Texas grid still vulnerable today?
As well as the challenging climate, Texas has experienced changes in human movement with the state’s population increasing by 800,000 between 2020 and 2022. Extra demand on the grid combined with variable weather has highlighted inherent weaknesses that policy makers are all too aware of.
The heatwave this summer serves as another reminder of the grid’s vulnerability. On June 20 this year, the state urged residents to conserve power due to low supplies. With intermittent energy sources becoming a larger part of the energy mix, traditional power’s reliability is pivotal to grid resilience. In late July 2023, the grid was managed due to renewable energy with solar offsetting periods when wind speed was lower.
In September 2023, the Texas grid hit a net load peak of 20.7 GW which led Ercot to announce a level 2 emergency.5 Net load is the demand on the grid after subtracting the output of wind and solar generation. Solar power dropping off at sunset is a predictable part of the power cycle and should not cause such a dramatic dip. Further demonstrating the fragility of the system in place, there were also an unusually large number of outages at traditional power plants as they struggled to cope with the extended heatwave.
What action has been taken by the state?
The power crisis led to Republican Governor Greg Abbott, among others, demanding new regulations, weatherisation standards and operational standards. Governor Abbott and media outlets such as Fox News initially blamed renewable power for the crisis. However, independent reports have found that traditional power plants were more responsible for the grid failure.
In May 2021, weatherisation standards for energy facilities were approved. The Texas Public Utility Commission wrote and implemented requirements for power plants, while state oil and gas regulator, The Texas Railroad Commission, developed requirements for natural gas facilities.
State authorities and industry collaborated to ensure critical natural gas facilities would continue to receive power if rolling blackouts were ordered. Ercot now has more thermal power generation reserved if power plants go offline or demand outstrips supply. The price cap for electricity has been cut from USD9,000 MWh to USD5,000 MWh to help control price volatility at times of stress on the grid.
Yet conflicts between generators, utilities, manufacturers, retailers, politicians, and the public often arise with legal changes to the grid; building more transmission lines and connecting to other states are projects that remain tied up in red tape.
This summer, the state legislature passed a measure offering cheap financing for new gas-fired plants to act as a grid backup. Texans will vote on this bill in November; if approved, it will create the Texas Energy Fund under the control of the Public Utilities Commission. The fund will include USD7.2 billion dedicated to 3% interest loans to companies to build new power-generating facilities. However, doubts have been raised over whether low-cost loans and grants are enough to persuade energy companies to build power plants that may only run for a few hours daily in a market where renewable energy and batteries are suppressing prices.
In March, Ercot had integrated about 3,014 MW of battery resources, but capacity could stand at roughly 7.8 GW by the end of this year and increase to 12 GW by the end of 2024. Subsidies from the Inflation Reduction Act have boosted the pipeline of new projects. More recently, in July, the US Department of Energy announced that the Texas Division of Emergency Management will receive USD60.6 million to help utilities strengthen grid infrastructure to withstand extreme weather events.
Wider considerations for the future
There is a clash over the grid’s future in Texas, which resonates more widely. How can nuclear, coal and gas plants be effectively utilised alongside newer, cleaner technology? The world can’t retire traditional energy resources too early, but there is a need to allow renewable energy sources to thrive.
While there were no blackouts in Texas in December 2022, the same cannot be said for the rest of the US. Operators, the Tennessee Valley Authority and Duke Energy used rolling blackouts, and the National Grid experienced some blackouts and asked consumers to reduce gas usage.10 There was enough gas across the US to meet demand, but its infrastructure was too vulnerable to extreme weather.
Recent extreme weather has highlighted the unreliability of traditional power plants, indicating a need for increased investment in infrastructure, energy storage, distributed power generation, grid interconnectivity, and demand response.
Cities across the world are facing the risk of increasing weather shocks such as flooding, hurricanes and fires, all posing a high level of risk to energy infrastructure. Electricity grids, which distribute power, are especially at risk, driving the need for new technologies. Once such technology is distributed energy systems; small-scale systems located near where electricity is most needed, or microgrids that can improve system resiliency.
An example of a microgrid being used today can be found in Adjuntas, a small town in Puerto Rico. After hurricane Maria in 2017, the residents of Adjuntas were left without power for almost a year. The residence build a mini-grid that connects a battery storage system and rooftop solar to a number of businesses in the town. As well as meeting the demand for the population, the micro-grid reduced the price of electricity for residence.
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