In Texas, A Green Grid is a Reliable Grid

Earlier this month, a severe winter storm brought an arctic blast of freezing temperatures, ice, and snow that blanketed most of the continental United States. In Texas, the extreme conditions led to ERCOT setting and re-setting multiple unofficial records for peak winter demand* culminating in a peak of more than 78 GW early in the morning on Tuesday, January 16th.

The last time that ERCOT experienced such extreme winter storm conditions was during Winter Storm Uri in February 2021, and the failures of the ERCOT grid during that storm are well documented. Driven in large part by forced outages of the nuclear, coal, and natural gas generation fleet that peaked at more than 30 GW February 16, 2021, ERCOT was forced to shed load leaving a large number of customers without power for multiple days. Those that did have power paid exorbitant prices: the average hourly day ahead LMP across Houston, North, South, and West hubs from February 13-19 was $5,837.03 (greater than the current $5,000 ORDC cap) with a low of $434.28/MWh, and each hub was within $100 of the then $9,000 ORDC price cap between 16 and 19 times. To put that into additional context, from 2018-2023 the highest hourly LMP at any of those 4 hubs was $5,011.16 at the Houston Hub on September 5, 2019, and the maximum winter** price was $2,559.84 at the West Hub on December 24, 2022; during Winter Storm Uri each of those 4 hubs experienced 130 hours in which the price was greater than $2,559.84, and at least 108 hours greater than the prior record high price of $5,011.16***.

During the 2024 winter storm, while the thermal generation fleet was not as severely impacted as during Uri, ERCOT still experienced more than 11.5 GW of unplanned thermal generation outages each day from January 14th through January 17th. However, this time, ERCOT was able to meet demand from all of its customers without shedding load; and while day ahead LMPs were certainly higher than ERCOT normally experiences during winter conditions, they never approached the levels seen during Uri. So why was ERCOT so much more prepared for severe winter conditions in 2024 than just three years earlier? While it is possible that recent market reforms may be somewhat responsible for reductions in thermal outages due to improvements in the weatherization of the thermal generation fleet and natural gas pipeline infrastructure, the significant growth in renewable penetration deserves the bulk of the credit for ERCOT’s improved reliability.

Between February 2021 and January 2024 ERCOT added nearly 9.5 GW of wind capacity and more than 17 GW of solar capacity, as well as more than 5 GW of battery storage capacity to support its integration.

ERCOT Total Installed Renewable Capacity

The increases in wind and solar capacity alone combine to more than double the thermal capacity that was forced offline, while the significant increase in battery storage capacity has helped make those intermittent resources more reliable; on both January 15th and January 16th energy storage resources were called upon to discharge at a peak of more than 1 GW, more than three times the total battery storage capacity in February of 2021.

ERCOT has been in a near-constant state of flux for the past three years, with a slew of new or updated market rules, enacted or proposed, intended to increase reliability without significantly impacting energy costs for end-use customers. However, the most impactful improvements to ERCOT’s reliability haven’t come as a direct result of changes to market rules or regulations, but rather from the continued and increased investment in renewable and storage energy resources. While further market changes are still needed to further incentivize the reliability of the thermal generation fleet across Texas, ERCOT has proven that a greener grid and a more reliable grid are far from mutually exclusive.

* Demand was likely even higher during winter storm Uri in 2021; however, ERCOT was not able to measure the actual level of demand then due to generator outages driving the need to shed load

** Winter defined as December - February

*** All historical prices pulled from Hitachi’s Energy’s Velocity Suite Online database

****https://www.ercot.com/gridinfo/resource