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Texas’ Power Grid Is Straining — And It’s Not Even August

Breaking: It’s hot in Texas. Actually, though, it is really hot in Texas:

Since May, the heat has been fairly persistent. On a cumulative basis, Texas’ “cooling degree days” — an index of how sweaty conditions are, essentially — are running almost a third higher than normal.

That is the context for this week’s two sweat-inducing notices from the Electric Reliability Council of Texas, or ERCOT, which operates the power grid in most of the state. It issued calls for Texans to voluntarily reduce demand on a couple of especially hot afternoons when it looked as if all those air conditioners might overwhelm generating capacity. As it turned out, the grid held up. But it’s worth looking at why Texas’ grid is struggling, especially as the even more intense crucible of August is just a few weeks away — and memories of the disastrous blackouts of February 2021 haven’t faded at all.

As with Winter Storm Uri, blame has been pointed at wind power. Rather than frozen blades, this week’s hot, listless air constrained Texas’ wind fleet, the largest in the country. In its conservation calls, ERCOT highlighted that wind power was running at just 9% to 12% of capacity during a couple of especially critical hours, versus the average assumption of 27% that’s used for summer grid planning. At one point on Monday, wind generation dropped to only about 750 megawatts — or just 2% of capacity — as ERCOT official Kristi Hobbs said at a hearing of the Public Utility Commission of Texas on Thursday.

That drop actually occurred just outside of the conservation periods, which ran from 2 pm to 8 pm on Monday and 2 pm to 9 pm on Wednesday. Wind power was especially low — below ERCOT’s “low wind” planning level — during the first hour of both those periods.

As during the big freeze, though, it would be wrong to blame all this on wind power. One of the lessons of Uri was that, as complex systems with multiple points of failure, energy grids can suffer multiple, compounding failures.

This was made clear in Hobbs’s comments at Thursday’s hearing, where she said that unexpectedly cloudy weather in west Texas constrained solar power on Wednesday and that about 7,000 megawatts of thermal generation was also offline that day. The latter, including gas, coal and nuclear plants, are expected to be available on demand, though ERCOT factors in about 4,000 megawatts of unplanned outages in its base-case scenario. The combination of temporary lulls in wind, cloud cover and unexpected shutoffs at thermal plants led ERCOT to issue Wednesday’s call to reduce demand.

To avoid such close calls, Texas requires an even wider perspective. Given the trauma of February 2021, there was naturally a defensive tone to Thursday’s commission hearing. Several officials were at pains to praise ERCOT for communicating its angst early — a big criticism after Uri — and also to point out that, despite eight broken records for power demand in the past month, the grid handled it.

Yet the relief is overwrought. At one point, a commissioner compared meeting those eight days of record demand to winning eight Super Bowls. Almost in the same breath, however, he thanked Air Products and Chemicals Inc. for temporarily turning off three plants to help when conditions were tight. Switching off factories to balance the grid doesn’t exactly seem like a touchdown.

Don’t get me wrong: Demand response is a powerful tool that is actually underutilized in Texas, especially with residential customers. ERCOT boasted that 500 megawatts of demand came off Monday after it issued its call for conservation. That’s useful, no doubt, but less than 1% of peak demand. A formalized system of payments for turning up those thermostats or cooling homes in the morning when more generation capacity is available would surely require a bigger effort. Linked with this is a broader failure in terms of encouraging efficiency, something on which Texas scores relatively poorly. While Governor Greg Abbott hails interruptible crypto-mining as a savior for Texas’ grid — a dubious proposition on its own — grants for heat pumps and insulation would do more to take pressure off the grid.

While wind power’s cycles up and down are well understood — hence ERCOT’s planning scenarios — this week has shown that sharp declines can, in conjunction with other problems, push the grid to the edge. Yet the timing of this week’s lulls suggests a ready solution in the form of more solar power, which peaks around lunchtime, and batteries, which can cover generation shortfalls for several hours.

As things stand in Texas, the penetration of renewable power, which tends to reduce electricity costs, means that even tight markets like this week’s, with their attendant price spikes, aren’t enough to encourage building a lot of new gas-fired peaker plants. The queue of proposed generation capacity in Texas consists overwhelmingly of solar and wind projects, as well as batteries. Texas could help make the most of these by building more transmission lines from sunny, windy, remote areas, as it has done already with the so-called CREZ lines linking wind turbines in the Panhandle and West Texas to cities. And it is well past time for Texas to connect its grid with neighboring ones to reap the full benefit of the insurance a bigger grid can provide.

The need for that insurance will keep growing. The specter hanging over this week’s near miss, as well as the catastrophe of Uri, is climate change. The great challenge of this age is to refashion our energy systems to be both sustainable and reliable in extreme weather. Scraping by during the dog days isn’t enough. We have to try to keep those dog days from getting worse. 

More from other writers at Bloomberg Opinion:

• When the Weather Is Hot Enough To Kill: Fickling & Pollard

• European Drought Delivers an Energy Gift to Putin: Javier Blas

• UK Energy Crisis Is an Opportunity for Batteries: Liam Denning

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Liam Denning is a Bloomberg Opinion columnist covering energy and commodities. A former investment banker, he was editor of the Wall Street Journal’s Heard on the Street column and a reporter for the Financial Times’s Lex column.

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