EnergyStatewide NewsRising Texas Temperatures May Put the Power Grid to the Test

As another hot Texas summer begins, the state's power grid and those who run it hope to regain the public's trust after February's disaster.
July 27, 2021
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Where the rubber meets the road, friction escalates and heat surges — and no better metaphor exists for the coming weeks in Texas as the summer heat begins to swelter and pressure on the state’s anguished power grid intensifies.

In a clear effort to assuage fears of grid failure, state officials from the Electric Reliability Council of Texas (ERCOT) and the Public Utility Commission (PUC) stated and restated last week that enough generation would be available to meet peak electricity demand as temperatures rise up near triple digits.

If the need arose, ERCOT said it could provide up to 80,000 megawatts (MW) per hour. The all-time summer high is 74,800 MW. According to ERCOT, 1 MW can power about 200 homes during peak usage periods — usually the late afternoon and early evening as Texans return home after work and crank up their air conditioning.

According to the 2020 Census results, Texas has 29.1 million people, growing rapidly since the previous count a decade ago and with each new resident comes that much more load on the power grid.

In response, state officials said they have buttressed the typical reserve capacity with additional ancillary service generation — a kind of emergency generation held on standby for when it’s needed.

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Overall entering August, ERCOT has secured 58 percent more reserve capacity than the same month last year. But after a mid-June energy conservation alert spurred on by mechanical failures at generation plants and the West Texas wind vanishing, the alarm bells went off again.

Last week, state officials estimated a potential new demand record, but an ERCOT official told The Texan Tuesday that projection has since tempered.

The anxiety stems from February’s winter storm-caused blackouts during which the State of Texas limped through a week of frigid darkness.

While cold temperatures, due to their rarity in Texas, pose a more serious threat to grid reliability, sweltering heat can still cause issues — and has before.

In 2019, Texas entered emergency conditions due to the summer heat which caused a then-record demand of 74,820 MW on August 12.

The following summer, ERCOT projected another record demand marker and prepared by adding more reserve capacity. In both instances, Texas avoided the heat-laden complications that its West Coast-rival California did not during its summer plagued by rolling blackouts.

While Texas has not jumped headlong into the “green-ification” of its power grid — California set a 2030 goal for 60 percent of its grid to be powered by renewable energy — it has increasingly built more renewable generation while thermal sources mothball.

From 2015 through planned projects into 2023, over 20,000 MW in coal and natural gas generation has been or will be shuttered due to old age and none have been replaced. Meanwhile, that same period is set to feature nearly 35,000 MW in new solar and wind generation.

Being intermittent resources, wind and solar cannot be employed on-demand. The former has a tendency to disappear during the day’s peak hours but then pick back up overnight when usage decreases.

Those who argue against increased reliance on renewable energy, specifically wind, say that it is more likely to not be available when it’s most needed. Renewable-produced electricity can often break even at negative prices because of how much subsidization is afforded those generators — most notably through the federal Production Tax Credit.

Renewable generators in Texas pulled in 33 percent more subsidies than oil and gas, coal, and nuclear combined during the last decade.

Due to Texas’ market-based grid — wherein generators are paid for electricity they provide after the fact rather than negotiated beforehand as in a capacity market — this subsidization affects the prices other generators must require for their service. In other words, it’s a market heavily weighed one way.

However, some in Texas believe the entire system must be uprooted and replaced with a capacity market due largely to the scarcity pricing that comes along with a fluctuating market.

During the winter freeze, electricity prices on the ERCOT marketplace rocketed to its scarcity price in the thousands of dollars per megawatt-hour (MWh). Wholesale electricity usually trades at well below $100 per MWh.

And after a PUC directive, the price was then elevated to its $9,000 MWh cap — at which it remained for much of the week even after emergency conditions ceased. Natural gas pricing also experienced a similar gust as prices that normally trade below $4 per thousand cubic feet surged into the hundreds of dollars.

Such a volatile fluctuation would not occur in a capacity market as prices would be negotiated in advance. But without the ERCOT market design — intended to prioritize affordability over most other factors — some of that cost would be distributed across those negotiated contracts.

The trade-off for a negotiated supply up front is a higher cost to compensate for generation produced but not consumed. And the trade-off for the ERCOT market is the scarcity that can cause prices to rise to startling levels.

And when a rare winter storm that drops temperatures to zero degrees for an extended period of time hits, knocking out power sources across the board, the market design is at most an afterthought.

State officials said last week that the current ERCOT market will be redesigned with a specific focus on “reliability over affordability.” No details on what that redesign entails were provided but officials further said they expect its completion by the end of this year, at the latest.

The legislature ordered reforms back in June and Governor Greg Abbott issued his own directives earlier this month. But this summer will provide a test run for the power grid’s new management.

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Brad Johnson

Brad Johnson is an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.