To Secure Texas’s Future, The ERCOT Grid Will Need More Of Everything

In their third inaugural addresses on Wednesday, Texas Governor Greg Abbott and Lt. Governor Dan Patrick both pledged to resolve remaining issues contributing to ongoing concerns about the reliability of the Texas electric grid.

“We all know that increased demand is going to be placed on the grid as Texas continues to grow,” Abbott said. “So this session, we will build a grid that powers our state — not for the next four years, but for the next 40 years.” For his own part, Patrick told inauguration attendees who gathered on the state capitol grounds that ensuring reliability in the grid is “the most important thing we can do” in this year’s legislative session.

Despite the progress made by state officials and grid managers at the Electric Reliability Council of Texas (ERCOT) since February, 2021, when more than 200 Texans died during days-long power blackouts caused by deadly Winter Storm Uri, keeping those promises remains a challenge.

In his speech, Abbott referred back to reforms enacted immediately following the storm, noting that he had “signed 14 bipartisan laws that fixed the flaw in our power grid…Since our bipartisan reforms, no Texan has lost power because of our grid.”

That’s all true, and it is something to be proud of. Yet, a general consensus still exists that more needs to be done, with a particular focus on implementing policies that will incentivize the building of more dispatchable thermal capacity – in Texas, most likely natural gas generation – designed to enhance reliability while serving as a critical backup supply during severe weather events.

To that end, Gov. Abbott last week endorsed an overhaul of the system market design that would include implementation of a Performance Credit Mechanism (PCM). In response to that concept, various generators operating in Texas committed to building as much as 4 gigawatts of new thermal capacity. But 4 gigawatts is far from adequate to truly address the issue. More will be needed, and a legislature armed with a record $32.7 billion budget surplus will have little excuse to fail to address the need.

Overall, a substantial amount of new capacity has been added to the grid over the 23 months since the Big Freeze event, but most of it consists of intermittent and hard-to-predict wind and solar. While no Texans lost power during this past December’s freeze event due to blackouts, it remains obvious that ERCOT officials still have a very hard time accurately forecasting demand and available generating capacity on days when the state is experiencing severe weather conditions. During one very cold December day, the grid managers’ modeling underestimated statewide demand by 10 gigawatts, causing ERCOT to narrowly avoid rolling blackout conditions.

Gov. Abbott boasted about the state’s continued economic strength, which has been maintained throughout their terms dating back to 2014 despite the state’s rapid population growth. Noting that the Texas population recently surpassed 30 million, Abbott said “Our $2 trillion economy is now the ninth-largest in the world. Texas is number one in America in producing the food, the fiber, and the fuel that we use every day…Made in Texas is the mightiest brand in America, and we use it to build the number one economy in the United States.”

But continuing concerns over the adequacy of the grid and its ability to satisfy rapid economic growth into the future has begun to impact the state’s ability to attract companies and major new projects to locate within its borders, a condition long experienced in California. Manufacturers and other companies whose projects include big power demands prioritize certainty of supply when choosing their locations.

Governor Abbott was careful to avoid portraying further grid reforms as any sort of competition between the various generating sources in the state. This is a wise example that should be taken to heart by every member of the Texas legislature.

The truth is that Texas is going to need more of everything if it is to be able to sustain its growing population and economy in the coming decades. While that means the need for additional thermal capacity must be satisfied, it also means renewables – wind and solar – need to keep growing, too, and the traditional political warfare between legislators who favor one source over another should be avoided.

To keep growing in the prosperous and sustainable way it has enjoyed in recent years, Texas will need it all.