A Final Post-Mortem Following The Devastating Energy Crisis in Texas
By now, the story of what happened in Texas two weeks ago is familiar: an extraordinary cold snap simultaneously a) raised demand on the grid to well higher than worst-case winter projections, and b) knocked out more than 30 gigawatts worth of energy generators.
Supply and demand must be kept in perfect balance on a self-contained grid like Texas', so when demand spiked and supply plunged, something had to give -- thus the not-so-rolling blackouts.
Most of that lost generation was natural gas and coal. Freezing afflicted not only the water used in power plants but the mining, distribution, and storage of fossil fuels. And, yes, some wind turbines froze, though wind actually performed better than the modest expectations set by ERCOT, Texas' grid operator.
It was going to be bad in Texas regardless
One thing worth emphasizing upfront is that Texas just faced an extremely unusual event. It got much colder, much faster, and dumped more snow and ice for longer, and took out more energy infrastructure than even the grimmest forecasts predicted.
Yes, the state has had cold snaps before -- including in 2011 and 2014, producing a set of recommendations and guidelines that state regulators made voluntary and state utilities largely ignored -- but this winter's event was extreme even in context.
Seriously preparing the electricity system for long-tail, low-probability events -- the kind climate change is making more likely and frequent -- will be a new thing, not something already mastered by any current entity or regulatory body.
Small picture: Texas electricity and natural gas systems need to be weatherized
The Texas mess is being characterized as a grid crisis, but it was actually a generation crisis. Two-thirds of the state's power comes from natural gas and coal, and a) natural gas wells and pipelines froze (cutting normal production by about 20%), b) commercial and residential heating got priority access to natural gas, per state policy, and c) natural gas power plants froze.
Some coal plants and wind turbines also froze up, and one of the state's nuclear plants went offline for unrelated reasons, but the bulk of the 30+ gigawatts of energy generation that went offline was natural gas power plants (many of which were also down for scheduled winter maintenance).
As for power plants, after the 2011 rolling blackouts, weatherization recommendations were made voluntary and very few generators followed them. Texas should have required weatherization as it's perfectly possible for natural gas plants and wind turbines to operate in the cold -- there are wind farms in the Arctic.
Some have argued that this failure to prepare can be laid at the feet of Texas' energy-only market -- the only such market in the US. A more reliable structure such as PJM's (part of the Eastern grid), is one where energy markets operate alongside capacity markets, through which generators can get paid to maintain reserve capacity. The incentive lies in the fact energy prices are allowed to swing with supply and demand, so high-demand times can be incredibly lucrative and generators who have set aside some capacity can take advantage of that.
In Texas, there's no capacity market. For the past 10 years, the Texas grid has generally maintained lower reserves than say, PJM, but performed quite well despite persistent predictions to the contrary. Additionally, Texas ratepayers have also saved quite a bit of money with their lean system.
It's unclear whether Texas would have avoided what happened last week by having a capacity market. Frozen generators can't help, but capacity markets could impose regulations or mandates requiring generators to weatherize. But then, so could regulators in an energy-only market. It is within the power of the Texas Public Utility Commission (PUC) to require weatherization. It just didn't.
Any regulatory system is going to need conscientious regulators and good planning. The larger lesson of the cold snap is that Texas, like the rest of the country, needs to plan its grid around resilience.
WW0: Heather Zichal and Amanda Little WW0 Facebook Live conversation, February 2, 2021.
Big picture: the Texas grid needs resilience in three directions
Climate change means a less predictable, less stable set of futures. The basic climate forecast for Texas is that it's going to get warmer on average with a decent chance of more frequent and nastier cold snaps. That is a brutally wide range of conditions for which to plan and prepare. Texas needs to work toward resilience at three levels:
1. Improving the existing energy system
Assuming Texas eventually wants to, or is forced to decarbonize its grid, it will take a while to work free of natural gas. In the meantime, it needs to ensure the security of supply, including weatherproofing major wells and pipelines and bulking up reserves.
The Texas grid also needs to be better and more finely segmented, so power outages can be more targeted.
And ERCOT, like all transmission grid operators, should investigate the many ways of increasing capacity and performance of existing transmission lines.
2. Improving local resilience
The state is way behind on "demand response," meaning that during times of grid stress, large groups of customers can be coordinated to reduce demand. The recent crisis highlighted the desperate need for demand-side resources on the Texas grid, measures previously resisted by utilities and the PUC.
Weatherizing and insulating homes and buildings would help alleviate energy needs for heating and cooling in the event of a power outage.
Solar panels won't do much good in a snowstorm, but other distributed energy resources like batteries and EVs can provide emergency power. At the local level, other storage installations (e.g., fuel cells or flow batteries) could help run community resilience centers, where at least people could congregate to stay warm.
Microgrids that could island off from the larger grid and run on stored emergency power in the event of a blackout would have helped many Texans through the worst of the cold.
3. Improving interconnection
As mentioned, Texas runs its own grid, making it an island between the Western and Eastern Interconnections. Texas would benefit from building HVDC lines to the other interconnections. Among other things, it could import power when 30 gigawatts of generation goes offline. Building a few HVDC connections would probably be cheaper in the long run than trying to up-armor the state's entire natural gas infrastructure and all its wind turbines against once-a-decade cold conditions.
There's a long history behind why Texas runs its own grid (read Kate Aronoff's piece and also this), but the gist is that by not transporting power across state lines, the Texas electricity system escapes federal jurisdiction in the form of the FERC. Texas has long been, and remains, ornery about federal authority.
However, when in need, Texas could import power from nearby Southeast states where conditions may be somewhat better. Last week, its only option was to cut power. Notably, El Paso -- which for quirky historical reasons isn't on the island/ERCOT grid, but rather on the larger Western Interconnection -- survived the storm just fine, importing power from neighboring states.
It's difficult to envision Texas allowing this island arrangement to change. A transmission developer would have to propose an interstate line and ERCOT would have to approve it, at which point FERC could reasonably assert authority. In the past, Texas has fought off such attempts and shown little appetite, even in the face of crisis. A few years back, a project called Tres Amigas proposed to connect the three US interconnections (ERCOT, WECC, and Eastern) with HVDC lines. Even though it argued that the connection wouldn't trigger federal jurisdiction over Texas, the project died.
The beauty of a national transmission grid is that no region has to prepare for every conceivable weather pattern. When extreme or unusual conditions strike, any region can draw power from elsewhere in the country. All things being equal, interconnection boosts resilience and reduces prices. Perhaps ERCOT and FERC could work out some sort of deal whereby the feds promise not to impose a capacity market or other dramatic market changes on Texas as long as it meets basic reliability standards and takes steps to interconnect with the rest of the country. Everybody would win.
Resilience costs money
All the above recommendations for Texas apply equally to every state and regional grid. States and grids need to quit planning based on past conditions and plan for a future of wider variation, less predictability, and more frequent extremes.
A call for resilience means improving the performance of existing infrastructure; improving local resilience through efficiency, weatherization, and distributed energy resources; and improving interconnection with neighbors through HVDC lines.
All of that costs money.
For a decade, Texas has been demonstrating that it's possible to operate with slimmer reserves and save quite a bit of money for ratepayers. It works pretty well most of the time, except when it doesn't and it catastrophically fails.
In the wake of failure, with the human costs evident, it's easy to blame regulators and demand more resilience. But imagine if, five years ago, Texas legislators and regulators proposed to substantially raise electricity rates in order to weatherproof its electricity system against once-a-decade conditions. It would not have been popular.
It's difficult to spend money wisely with an eye on long-term resilience. Short-term incentives align against it -- not just market incentives, but the political incentives. The regulatory incentive structure within which US power utilities operate means they make money by investing in capital projects. They don't want to do more with less; they make money by doing more with more.
The US utility regime is designed for expansion -- for building out electricity infrastructure to a country without it. That regime no longer serves an already built-out system with new needs of being ruggedized, fine-tuned, and for local distribution systems to establish greater autonomy and intelligence.
Getting to resilience and national interconnection by fighting through 50 public utility commissions is going to take forever. What's needed are some federal performance standards and a large-scale program of public investment into electricity infrastructure. Congress needs to step up with the understanding that climate change is a national emergency.
Texas may lose some of its treasured autonomy in the process, but it will gain a more effective and resilient electricity system.