Why Everyone Is Talking About The Texas Electric Grid

Everyone, it seems, is talking about the electric grid in Texas these days. It seems a bit odd since, unlike February 2021, Texans have not had to suffer through days on end without power during a major weather emergency this summer. Throughout all the heat so far and the pleas grid manager ERCOT (the Electric Reliability Council of Texas) has issued asking customers to conserve power, the grid has held up.

But it is just July, with the historically even-hotter period of August through mid-September still to come, and everyone from the New York Times to the Wall Street Journal to Bloomberg to writers here at Forbes to various Texas media outlets are expressing concerns about the grid’s ability to hold up until the heat relents. There are good and valid reasons for those concerns. After all, the state has thus far seen eight new daily records for power demand on the grid this summer, and more seem likely to be set across the 8 to 9 weeks to come.

In an interview with the Houston Chronicle last week, Interim ERCOT CEO Brad Jones noted that the temperatures this summer have been hotter than his models had projected. That’s certainly reasonable, but it is also fair to note that there is nothing unprecedented about the heat in Texas this summer, and if the grid has not been built out to handle this kind of summer heat, then that is a failure of imagination and planning.

In its May, 2022 Summer Assessment of Resource Adequacy (SARA), ERCOT said it anticipated it would have plenty of available capacity to meet its anticipated peak daily demand of 77,317 MW. But on July 11, when it issued a request to customers to conserve energy, ERCOT forecast that demand would likely exceed 79 MW during peak hours. ERCOT’s models also forecast more record demand on July 13, necessitating a second conservation request in 3 days. With the state mired in its ongoing heat wave, more records could be set this coming week.

Making the situation even tighter, that SARA report listed ERCOT’s anticipated unplanned offline outages from dispatchable thermal capacity at just over 4,000 MW at any given time. But more than 12,000 MW was down on July 11, as older natural gas and coal plants began to struggle from being run constantly during the summer heat. Some of those plants are now well past scheduled maintenance dates as they are being run full-out to meet demand. Combined with wind power’s projected delivery of just 8% of its nameplate capacity during the heat of the day, Jones admitted the situation was pretty dicey.

Ed Hirs, University of Houston Energy Fellow, said the shortage of dispatchable power is the central problem. “We have less dispatchable power on the grid than we did last summer,” Hirs said. “We have about 63,000 plus megawatts available. That’s about a thousand megawatts less than we had last summer. Demand is growing.”

Texas Senator Charles Schwertner agrees. “We have certainly found out that electricity is just as vital as water and air,” Schwertner told ABC13 in Austin. “We need to continue to look at ways to enhance our dispatchable generation. A generation that Texans can depend on when we are having high demand periods like we are seeing today.”

Two companies, Warren Buffett’s Berkshire HathawayBRK.B
and Connecticut-based Starwood Energy, submitted plans to the legislature in 2021 that envisioned the state create incentives that would finance the building of a fleet of new, dispatchable natural gas reserve capacity that ERCOT would be able to tap during times of extreme weather. Senate bill 3, for which Sen. Schwertner was the chief sponsor, included language to create a program roughly along the lines suggested by those two companies. But that language was stripped out of the bill by the House State Affairs committee late in the session.

The consequence of that decision is more delay in addressing the real problem on the grid. An expedited permitting process could have enabled concrete being poured and steel for the new plants going into the ground as soon as 2023. With the de-regulated Texas market still failing to create the market signals needed to encourage new dispatchable thermal capacity and the legislature not meeting again until next January, ERCOT officials will have to continue to scramble to avoid blackouts during times of severe summer and winter weather for several more years to come.

That reality explains why seemingly everyone is talking about the Texas electricity grid today, even though Texans’ lights have stayed on.