Unveiling the Current Status of the Texas Power Grid: Challenges, Solutions, and Future Prospects

May 31, 2023

The Texas power grid has been in recovery ever since Winter Storm Uri in February 2021. This is when the unprecedented weather conditions in Texas exposed systemic weaknesses in the grid’s value chain. To fully understand the current state of the grid, it’s important to understand how the grid is set up, how it operates, why it failed and more importantly what the state is doing to improve grid reliability for homeowners and businesses.

The Texas grid is a complex system of power generation, transmission, and distribution, which is uniquely set up in ways that make it unlike any other grid in the country. Texas is the only grid that does not connect to a neighboring grid across state lines. It produces 100% of its own power, and it was the only state able to do this because it covers two different time zones, giving it the unique ability to stagger the peak use periods. Texas has also been operating a deregulated electricity market since January of 2002, which is a market-based system that creates competition and more affordable electricity for consumers. All things being considered, many critics argue that a self-contained grid that is not interconnected with a neighboring grid, can create great challenges in the event of an emergency like Winter Storm Uri.

The Electric Reliability Council of Texas (ERCOT) is the organization responsible for grid operations and maintaining a ‘balanced’ grid. That means it must schedule, transmit, and distribute the same amount of power being consumed at any given time. When the grid gets out of balance it can fail if measures are not immediately taken to either add more power (capacity) or reduce demand (load shed). Basically put, managing supply and demand are the only two inputs ERCOT has available to maintain balance. During Winter Storm Uri, the entire state was running electric heaters during this extreme freeze event. Power demand quickly exceeded the power supply and the reserves needed to keep the grid in balance, and ERCOT had to quickly reduce demand with ‘rolling’ black outs. In many areas the power was out for nearly 3 days. It was later determined, the grid was just minutes away from a complete blackout, which has never happened before and could have taken months to repair.

The causes of this crisis were numerous. There were failures from natural gas operations that supplied fuel to power plants. There was a lack of weatherization for power plants, natural gas production and pipeline facilities that shut down operations. There were claims of mismanagement in forecasting demand at ERCOT and an inadequate amount of capacity in reserve for such an event. Another underlying factor was the decommissioning of dispatchable thermal and nuclear power generation over the recent years. These plants had been replaced by an influx of wind and solar generation that unfortunately cannot be turned on and off on command.

Soon after the freeze in 2021, the 87th Texas Legislative Session passed bills that set out to ensure Reliability for the Texas Grid. Senate Bill 2 and Senate Bill 3 mandated better preparation of facilities for extreme weather events and authorized the Public Utility Commission (PUCT) to make changes to the electricity market and issued directives for the PUCT and ERCOT to institute new plans.

On July 2021 ERCOT released the “Roadmap to Improving Grid Reliability”. This document lists (60) sixty different initiatives to improve Reliability of the power grid. As of January 26, 2023, ERCOT has completed fifty-six of the sixty initiatives listed and only four remain ‘On Track’ and are in progress.

*The following are some of the open issues in process:

  • Work with PUCT to implement new laws passed in the 87th legislative session. Laws that will reform the governance of ERCOT and reorganize how the grid is managed.
  • Eliminate barriers to distributed generation, energy storage, and demand response and allow more resources to participate in the ERCOT market while maintaining adequate reliability.
  • Review the reliability of current and projected resource mix and evaluate market changes to incentivize sufficient dispatchable resources.

The fifty-six initiatives listed as ‘Complete’, addressed the following:  reporting standards, weatherization efforts, improved communications, integration of battery storage and distributed generation resources, evaluate the adequacy of ancillary service product (reserve capacity), a more aggressive approach to operating the grid, improve load forecasting in emergency conditions, increase transmission internal and external to ERCOT and increase coordination with other power regions, and market incentives to improve fuel security.

The goal with these initiatives is to create a resilient, versatile, and reliable grid that can withstand our state’s growth, extreme weather events and sharp peaks in demand. To accomplish this, the grid needs to leverage quick response generation, that can be dispatched when called on, and closer to where the electricity is being consumed. When the grid gets stressed, these generators can export power into the grid for frequency support, or be used for load shedding, that reduces overall load demand during peak periods. These concepts, if enabled, will provide ERCOT with much greater control over supply and demand as well as the tools to maintain a reliable and resilient grid.

There are differing opinions and strategies coming from political circles. One faction believes we need more natural gas plants and will offer low interest loans and bonus money to get it done. The other is looking for a more innovative approach by introducing a variety of technologies and incentivizing investment in grid participation from the consumers. One such proposed plan is called the Performance Credit Mechanism (PCM) that would financially incentivize more quick response power generation to be available when called on during very high peak demand periods. One of the main concerns is the length of time to fully implement this program before we see the benefits and we need results before the next season of extreme weather events occur.

Many of the initiatives listed on ERCOTs roadmap have mitigated the contributing factors surrounding the freeze. And the grid has proven its ability to perform well in stressful situations since the freeze, but we are not out of the woods yet. Load side management programs and dispatchable, quick response, distributed energy resources, will give ERCOT the control needed to maintain a balanced grid, but we need to ensure we have the energy resources needed to meet our increasing energy demands.