EnergyTexas Power Grid Enters Summer Heat with Waning Trust and Questions Abounding

Last week, Texans had déjà vu all over again when the Electric Reliability Council of Texas (ERCOT) issued a statewide electricity conservation request. Generators responsible for producing over 12,000 megawatts (MW) of electricity, most of which was thermal generation, tripped offline for various, mostly mechanical, reasons. 

One MW can power between 200 and 500 homes at once depending on the time of day.

This caused, on a very hot June afternoon, the margin between demand and available capacity to shrink below a 4,000 MW reserve margin as consumers cranked up their air conditioning units.

As of 2021 numbers from the Energy Information Administration (EIA), Texas’ roughly 107,000 MW grid capacity is made up of natural gas, wind, coal, nuclear, and solar generation in descending order. However, that capacity is not all producing at once and each source, especially renewables, varies based on time of day and momentary demand.

No emergency conditions were triggered, and a conservation alert was all the tight conditions amounted to. But it occurred less than a week after Texas Governor Greg Abbott declared “Everything that needed to be done, was done,” while signing the legislature’s two priority bills in response to the February blackouts.

Trust in the power grid or those running is not exactly bountiful. An April 30 poll by the University of Texas and the Texas Tribune found that half of respondents lacked confidence in the state’s ability to prevent another utility disruption.

Abbott and the legislature’s response consists of a weatherization directive, intended to protect generation infrastructure from extreme temperatures; creation of a statewide alert system; significant reforms to both ERCOT and its parent bureaucracy, the Public Utility Commission; and other changes.

But that left some on both sides wanting. Those on the political left decried the state’s reluctance to re-regulate the energy grid. Back in the late 1990s, Texas began the process of “deregulating” its energy grid. It moved the state away from a top-heavy system dominated by corporate, municipal, or cooperative conglomerates that could own every stage of the energy industry from wellhead to outlet.

Instead, similar to the “trust-busting” of old, those responsibilities were broken up creating a more complex web of generators, transmission companies, retail electric providers, and more all left to compete for business.

It was done with the intention of reducing the electricity prices consumers pay but also opened the door to higher profits for suppliers based on the scarcity pricing of electricity on the open market. This is the root of the exorbitant costs of wholesale electricity back in February.

The legislature decided to move toward an energy-only market, wherein generators are paid for how much electricity they supply rather than up front for a negotiated rate and amount of supply that is typical of a more capacity-type market.

ERCOT as it is currently constituted was reconfigured to operate like an air traffic controller, documenting and facilitating electricity transactions.

In general, those critics of this session’s legislation want the state to mandate weatherization of infrastructure with the help of government funding if necessary — to ensure that consumers aren’t stuck with the costs.

Others believe the state didn’t do enough to balance out the effect renewable energy’s propped up prominence has on the market. Stakeholders like Rep. Jared Patterson (R-Frisco) pushed this session, unsuccessfully, for the state to eliminate “price distortion” caused by the outsized subsidization for renewable generators.

Through the last decade, renewable generators in Texas pulled in $71.2 billion in federal subsidies — mostly from the Production Tax Credit that grants renewables 1.2 cents per kilowatt-hour produced. Patterson and others see this as an unfair advantage that allows renewable generators to break even on costs by selling electricity at negative prices.

Furthermore, they see this crowding out other thermal sources, considered “dispatchable” power. Data from the EIA further shows the net generation change by source based on retirements since 2015 and planned retirements through 2023.

Lost thermal capacity is not being replaced by its same type, but rather supplanted by renewable capacity, with solar leading the way.

Critics of renewable energy say the increased reliance on them leaves a chink in the armor of Texas’ grid because when the wind doesn’t blow — as happened during last week’s tight conditions — and the sun doesn’t shine, all that installed capacity means nothing if it can’t produce.

It is no small piece of the February blackouts’ puzzle that wind and solar energy produced at such low levels that they barely registered on the graph. Despite high numbers of cold-weather outages back in February, natural gas still produced nearly two-thirds of the electricity used that week — far surpassing its share of the installed capacity.

In addition to mechanical and weather-related issues that have handicapped all sources of generation, including traditional thermal types, the grid has suffered to various degrees and struggles moving electricity from the point of generation to consumers.

For example, much of Texas’ wind and solar generation is located out in West Texas — where the winds blow hardest and the sun shines brightest. But it’s at least hundreds of miles from the nearest population centers harboring the most electricity demand. It costs energy to push that electricity through transmission lines to consumers.

And that goes for thermal sources, too. During the winter freeze because of the cold temperatures, pipelines struggled to push natural gas to the power plants that needed it to generate electricity.

All of these things increase the difficulty of getting power from point A to point B, but are compounded during times of high demand, whether hot or cold. With such a high rate of population growth that Texas is staring down comes increased electricity demand — or other additions such as the 83,000-customer growth as Lubbock fulfills the switch to ERCOT’s grid from the Southwest Power Pool.

The state says it’s committed to adding more generation — and on balance, it’s set to add 37,000 MW from this year through 2023 — but zero new natural gas, coal, or nuclear plants are in the queue.

As Texas and its new whipping boy, ERCOT, looks to prevent further mechanical and weather-related problems, it must also keep an eye on not only the total amount of capacity installed throughout the state but its production when needed most.