Texas electric grid is reeling under power outages - what caused it? what can be done in future?

Take a second to imagine a day without power. For many of us, it is a complete shutdown of the daily life. For residences, there will be no light, no TV, no internet, no heated water, and no heat to keep us and our homes warm. The laptops and cellphones will also eventually run out of battery and shut down. The food in the refrigerator will be wasted after a few hours without power. People can’t shower with cold water. For people who live in a residential complex or high-rise buildings, they won’t be able to use the elevator because it will shut down. If you parked your car in a garage, garage doors will need to be manually opened and kept open until the power is back on. Lack of power will cause clean water shortages and extreme weather can cause frozen pipelines – this will also impact people's lives. If people can’t get out of home, and then there is lack of power, eventually businesses will shut down. All these scenarios explain how critical it is to have continued delivery of power in people's daily life on a 24/7 basis.

Over the past two days Texas has been in chaos after a winter storm hit the state, plunging temperatures below freezing. For those that don’t know, these are not typical temperatures for Texas, even in winter. The Texas electric grid could not hold up to the energy demand, the demand that had increased due to the extreme weather conditions. At its peak, approximately four million people were out of power in various parts of Texas, and the power outage continues as I write this. Fortunately, we expect the situation to improve over the next few days as the weather gets better and temperatures rise.

Currently in Texas, state and local governments have asked people to conserve energy, stay home, and seek shelter. Many small businesses, schools, and universities have closed. Additionally, transportation has been affected with many flights cancelled, rescheduled bus routes, and halted light rail services. Customers in some parts of Texas are still not sure when they will get the power back on. It is during times like these that we realize how much we take continued supply of power and energy for granted.

Some quick facts about energy production and consumption in Texas (based on EIA):

• Texas is the largest energy producing and consuming state in the US. Texas produces more electricity than any other state, generating almost twice as much as Florida, the second-highest electricity-producing state.
• Texas is the top U.S. producer of both crude oil and natural gas. In 2019, the state accounted for 41% of the nation's crude oil production and 25% of its marketed natural gas production.
• Texas leads the nation in wind-powered generation and produced about 28% of all the U.S. wind-powered electricity in 2019. Texas wind turbines have produced more electricity than both of the state's nuclear power plants since 2014. 
• As of January 2019, the 30 petroleum refineries in Texas were able to process about 5.8 million barrels of crude oil per day and accounted for 31% of the nation's refining capacity.

What really caused the current energy crisis in Texas, the energy powerhouse of United States?

Most of the residential heating in Texas is powered by electricity. So, the extreme weather and freezing temperature caused the energy demand to reach a winter peak of 69,150 MW between 6 PM and 7 PM on Sunday, February 02/14. Severe cold weather caused gas wells and pipes to freeze causing short supply of gas fuel for the power plants, ultimately causing many of the power plants to scale back or shut down. Wind generators limited their output due to frozen wind turbine equipment, 12 GW of wind power out of the 25GW of the installed capacity were not running; snow and ice cover on solar panels made the matter worse for solar power.

Around 1:25 Am on February 15, as energy reserves had dropped below the reserve margin, ERCOT, the reliability coordinator and the balancing authority of the state, issued a level three Energy Emergency Alert (EEA) order to the transmission companies to reduce demand on the grid by implementing ‘rotating outage’, which allowed the grid to maintain the system balance and not go into a cascading blackout. A 1.3 GW nuclear power plant, automatically shut down on Feb. 15 due to cold weather-related issues in the plant's feedwater system. By 10:30 AM that day, 34GW of load had to be shed to maintain system balance and stability. 

Local utilities typically use a controlled form of ‘rotating outages’ to reduce demand by shedding load or interrupting power. These are power interruptions that are typically limited to 10-45 minutes before being rotated to another customer. They are only implemented to reduce load demand and maintain grid reliability during emergency situations. Rotating outages, though used as a last resort by the utilities to preserve the reliability of the electric grid, can be inconvenient for the consumers. During this current situation, four million utility customers went out of power, many of whom have been without power for more than two days. Per ERCOT, approximately 45,000 MWs of power generation was offline on Tuesday, February 16th morning – which led to the continuation of rotating outages throughout Tuesday. At its peak, approximately 4 million utility customers went out of power, many of them stayed without power for multiple days.

Energy Mix in ERCOT Market

While it is true that the wind power contributes to 23% of total generation in Texas, the situation across fossil power plants, which together delivered around 58% of the power in the ERCOT market, was worse. The facts show that the issues with power plants were across all types of generation mix. The cold weather was unprecedented. Power plants across Texas were not designed and deployed for this extreme dip (approx. 40 degrees) in temperature.

The severe cold weather caused gas wells and pipes to freeze causing short supply of gas fuel for the power plants, ultimately causing many of the power plants to scale back or shut down. Another reason that contributed to the short supply of natural gas for the power plants was its prioritized delivery to the residential users. Equipment and instruments in many nuclear and coal power plants succumbed to the cold temperature and shut down. Power plants are not winterized across Texas, which caused the turbines to underperform or shutdown.

Why couldn’t Texas import power from other states?

Due to various historical reasons, Texas operates as an independent interconnect (ERCOT Interconnection), it operates independent of the FERC jurisdiction. That independence has been closely guarded by the industries and the policy makers within ERCOT. Though ERCOT’s interconnection is isolated from the rest of the US grid from a policy and regulation point of view, physically it is connected to the Eastern Interconnection through two tie-points, it also has three ties to the Mexican grid. Through these ties ERCOT can import/export power during emergency situations (it has done so in 1976, the event is known as the ‘midnight connection’). However, these limited interconnections are not sufficient to support energy demand during the current energy crisis. According to Bill Magness, ERCOT couldn’t get any power from the Eastern Interconnection as the eastern states were also experiencing severe weather conditions, and Mexico could only provide 450MWs of power through their ties. ERCOT is not connected to the Western Interconnection, which if it had, could have provided some additional energy support.

How has this winter storm affected the wholesale price in the energy market?

The energy market is used by power companies and utilities to buy and sell energy so that they can deliver it to the end customers like residences, industries, and businesses. Wholesale energy prices typically trade between $20 to $40 per MWH, however, on Tuesday, February 16, they were trading at $9000 per MWH, 300 times the average price! 

It is commendable that throughout this crisis of energy shortages, public scrutiny and comments blaming renewable portfolio to be the reason behind the energy crisis, the ERCOT team remained calm, and made sure that the Texas grid was still operating by balancing whatever energy supply was available with the controlled demand (the demand was managed to a controllable demand through rotating outages). This process made sure there was no complete blackout across the Texas electric grid.

Right now the first priority for the city and the state government has been to help and rescue the people in distress due to the extreme weather conditions, and the people who are facing power outages. The first responders and the emergency workers have been overwhelmed, but they are doing their best to respond to the calls as fast as possible. Once the cities, the state and the people get back to normalcy, there will be thorough investigations for better preparation and response to events like this in the future.

Here are few initial thoughts on making the Texas grid robust, and these options are not mutually expensive. All of them can provide multiple pathways to help the Texas grid be more robust and resilient even in the face of natural calamity.

How can a situation like this be avoided in future?

To give you some context, temperatures in Minnesota (where I live) were subzero or, in the single digits over the past weeks. This didn’t impact most Minnesotans, life went on as normal, specifically, the weather didn’t have any impact on the energy supply and delivery. This is because energy production and delivery assets in Minnesota (and for that matter most of the Midwestern and Northeastern states) normally face extreme cold weathers, expect the winter peaks, and have their assets and processes ready to deal with such weather. The current snowstorm and low temperatures were quite unique to the normal Texas weather. Residences and commercial complexes built in Texas are not ruggedized for winter. It is recommended that the power plants in Texas acquire the necessary funds to go through a winterization process. This was already recommended after the rotating outages in the years 1989 and 2011, however majority of the plant operators didn’t go through such a process as no action was mandated. The winterization process will incur a cost and energy price might go up, however it can be rightfully justified when compared with the lives, property and productivity lost during the current winter storm.

The other question that this emergency brings up - Will Texas be open to interconnections and ties to the rest of the US so that it has access to a robust and reliable energy supply to better balance its power grid, especially during emergencies? Maybe! Though the tie-lines with MISO, SPP and Mexico didn’t have much to offer during the current crisis, as they were going thought their own system capacity challenges, the stakeholders can consider opening up a 3rd front through a tie-line to the Southwestern interconnection. During times of emergency the tie-point can provide additional support and relief. During the current energy shortage, 4-6 GW of energy could have been imported through that tie-line; rolling blackout would still have happened, albeit to a lesser degree.

Increase baseload capability: The picture shows that generation output, across all generation mix, suffered during this crisis; however, the variations in the natural gas-based generation was the larger. One option can be to increase base load capability with ruggedized and emission free nuclear power plants that can support the energy system when fossil fuel-based power plants wind down and the intermittent renewables take over in the future. This will provide more options and access to a robust and reliable energy supply to better balance the grid, especially during emergencies.

Scenario planning that represents changing climate conditions: Utilities and Independent System Operators (ISOs) typically perform scenario analyses for resource adequacy while taking various contingencies into account to ensure that system will continue to perform during various contingencies such as losing a transmission line or, losing the biggest generator from the grid. Planners should also assess the effect of weather conditions, varying generation mixes, and corresponding demand scenarios on the grid and plan for the contingency mitigation. In addition to the extreme weather, system planners should also look into other random events like cyber attack, that can hamper grid operation in a big way, to come up with mitigation plans.

Establish a capacity market - ERCOT could look into establishing a capacity market like PJM where generators are contracted to deliver power 3 years in the future. One reason the price per MW spiked to $9000 this week is because of the scarcity driven ‘Energy only’ pricing model ERCOT follows in the real time energy market. Power plants get paid heavily to come online when energy supply is low, and demand is high. Availability of a capacity market will create incentives for power companies to be available to deliver and receive a payment in return, even if not actively participating in the real time energy market. Compare capacity market with home insurance. Paying for home insurance is costly and you don’t use it most of the time. But when you need it in times like a hailstorm or flooding of basement, it saves you money which otherwise would have been very expensive.

Maintain higher reserve margins: Increasing the current real time reserve margins from 10% to 20%, and maintaining it, will ensure that system has additional generation capacity to tap into during emergencies. Texas regulators can also look into making natural gas available for power plants in a priority order, at least during emergencies, Currently residential customers have the first priority for receiving natural gas.

Energy Efficiency: Adopting energy efficiency measures such as voluntary load shed (demand response) that compensates the customer for their responsible behavior, more so during a crisis, can be another option. The energy efficiency program can be adjusted and sweetened dynamically based on the needs of the hour so that people can switch off the load that is not needed and keep the ones that are absolutely needed. Energy price touched the ceiling of $9 per kWH during the current crisis – this will create a hefty bill for the customers who were on a wholesale rate. Had these customers conserved energy, they would not have had to pay a hefty bill for February. Utilities can look into running emergency marketing campaigns through call/text or via TV advertisements – this will push consumers to voluntarily conserve energy or conserve for a small fee.

Can the grid operators and the utilities be better prepared to respond to these type of crisis? It is clear that grid operators in Texas were not ready to anticipate the load demand or the potential generation shortage; hence they had to resort to the rotating outage to better balance the supply and demand. Given the short winters in Texas, the utility field crew members didn't have the necessary training or the tools to respond and maintain the grid infrastructure during extreme winter conditions. Moreover, the extreme weather conditions made it tough for the first responders and field crew members to respond in a timely manner.

Last but not least, all these measures would not have completely eliminated the effect of this unprecedented winter storm, however, together they could have reduced the effect of the catastrophe. There is a flurry of investigation that are either taking place or about to take place - Texas Public utility commission, US House Energy and Commerce Committee, Texas Attorney General just to name a few. I hope the utilities, the commissions, ERCOT and all the other stakeholders will perform a thorough investigation that will help not only mitigate grid issues during impending calamities, but also shape Texas’s energy future. I am sure once the power is fully restored and Texans take a breather, there will be discussions and investigations to put together policies and processes that will prevent this kind of crisis from happening in future.

I’m looking forward to these discussions, and be a part of the solution.