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One Year Later: The Storm That Knocked Texas Out Cold

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This article is more than 2 years old.

It’s been a year since the energy capital of the world ran out of energy. In that time we have made some progress, but we still have a lot more work to do to keep it from happening again.

Texas is an energy state. It is the nation’s biggest producer and consumer of oil, natural gas and electricity, generating almost twice as much of the latter as second-place Florida. Texas is the #3 natural gas producer in the world behind the USA and Russia and #5 globally for installed wind generating capacity. The Texas electricity grid is bigger than England’s, a country with nearly twice the population. However, despite that energy abundance, Texas made international headlines last year by failing to deliver electricity to millions of Texans for multiple days during one of the longest and deepest winter storms in the state’s history. 

What happened?

On a high level, the winter storm that hit Texas a year ago began as a bad winter storm that snowballed into an energy, financial, water, health, and housing crisis. While the storm itself was not fully unprecedented, it was the first recorded time that all 254 counties of the state were under a winter storm watch at the same time. The “at the same time” part is important because if it is cold everywhere at the same time, everyone demands energy at the same time to keep them warm. Because electricity has to be supplied in real-time, the record-setting spike in demand meant we needed to also generate a record supply, but we failed to do so.

Early in the morning on February 15 of 2021, rapidly deteriorating conditions left the Texas grid operator, ERCOT, with no choice but to order electric utilities across the Lone Star State to implement firm load shed–a polite euphemism for cutting off power to customers—in a last-ditch attempt to keep the grid from spiraling into a catastrophic collapse that could have taken weeks to recover from. While the blackouts were first promised to be “rolling,” which means operators rotate the outages from place to place, the cuts required were so deep that ten million people or more endured multiple days without power, and thus, no heat while outdoor temperatures stayed below freezing.

What went wrong?

There are many reasons why the power failed so badly. In the end, no major source of electricity performed as well as we’d have liked, but some did worse than others. Both coal and natural gas performed below their worse-case (extreme) scenarios while the power was out, nuclear performed at its worst-case for most of the time, and wind and solar fluctuated mostly between their forecast and worst-case output expectations. Hydroelectric generation over-performed, but is such a small part of the overall mix that its reliability could not stave off the disaster.

However, a conversation about electricity in Texas is incomplete if it doesn’t include natural gas. In Texas, about half of the power plant fleet burns natural gas, so a shortage in gas supply can also lead to a shortage in electricity.

As the winter storm arrived, some natural gas suppliers claimed force majeure and stopped delivering gas, even to some customers that had purchased supposedly firm contracts. ERCOT was notified of gas supply reductions the week before (February 10) and some natural gas power plants began losing fuel on February 12, three days before the power went out. In the first days of the blackouts, natural gas processing in West Texas declined by about 85% and interstate natural gas storage was almost exhausted by the end of the storm (as per the data made available to the authors of the UT-Austin report).

A post storm analysis showed that natural gas power plants were responsible for the largest share of power plant outages from what the grid operator was expecting to be online during a winter peak event.

Weather related outages, equipment issues, and existing (maintenance) outages were responsible for most of the natural gas power plant outages during the event, but fuel supply issues were responsible for a significant percentage of natural gas power plant outages as well.

Officially, the number of natural gas power plants that had their gas supplies cut was smaller than for other “weather-related” reasons. But, the gas system was not able to get gas to all of the power plants that were still operational. Thus, if more power plants had been operational, it is not obvious that they would have received any fuel.

Beyond energy

Initial confusion about how the electricity market should operate during such an extreme event led the Public Utility Commission of Texas to issue a pair of emergency orders that essentially suspended the market rules and administratively set the price at the market maximum ($9,000/MWh) for most of the week, about 300 times higher than recent annual average prices in ERCOT. This sustained level of extremely high electricity prices meant that the week of the storm alone led to tens of billions of dollars in wholesale power costs — much more than a typical tally for a normal year. As a consequence, multiple retailers and utilities declared bankruptcy. 

The lost electricity, coupled with high demand for water to preventively drip faucets crashed water systems around the state and cut off clean water supplies for about 14 million Texans. Millions were told to boil their water, if they still had supply, some for weeks, even though many of them lacked the energy to do so.

Official state estimates put the death toll from the winter storm at 246, but investigate reporting of the increase in deaths around the time of the storm indicate that the number of deaths could be about three times higher.

The freezing temperatures also burst water pipes across the state, which damaged many buildings and other facilities. Water damaged buildings displaced hundreds from their homes, and resulted in an additional $10-$20 billion in insurance claims.

What happened after?

After temperatures warmed and energy was restored, the Texas legislature penned a series of bills aimed at dealing with the physical and financial impacts of the storm. Texas Senate Bill 3 went the furthest in mandating that power plants and, to a lesser extent, some parts of the natural gas system, be better prepared for cold weather.

But, the winterization rules for natural gas will not be implemented – if at all—until winter 2023, leaving the Texas grid vulnerable. No legislation passed to spur more energy efficiency or demand response, which could lower energy use overall and keep more lights on.

What is happening now?

Power plants were required to winterize before this winter, but the natural gas system hasn’t yet mapped out its own network to determine what parts are necessary to winterize. The electricity and gas sectors are regulated by two different entities, the Public Utility Commission for electricity and the Railroad Commission for natural gas. These groups have historically had little interaction with each other but are now required to work more closely given how critical natural gas is to making electricity in Texas.

The Texas electricity market structure was mostly left intact except that the the market price cap was reduced from $9,000/MWh to $5,000/MWh and a few other obscure pricing rules were reformed in an attempt to reign in future costs.

Other, more substantial market changes are being considered, such as a set of power plants set aside in “reserve” for times of grid stress or setting up a requirement that utilities directly serving loads buy capacity in some kind of forward market.

What other things should we consider?

Some have suggested that the influx of cheap renewables has lowered the willingness of firms to build traditionally firm resources, which makes some grid participants nervous. But a big lesson of last year’s storm is that firm capacity isn’t firm if it breaks or can’t get fuel. One option would be to compensate power plants that provide dispatchable power or reliability services, such as rotational inertia used for grid stability. However, care should be taken to allow all forms of generation, such as energy storage, to compete to provide these types of products so that the electricity consumer doesn’t overpay for them.

Other pathways to consider would be to better connect the Texas grid to other states. Texas is essentially an island of electricity and has very little ability to import power when needed. Better connections to other grids could also allow Texas to sell power to states when our prices are lower, which is most of the time. Interestingly, electricity is the only form of energy that Texas doesn’t sell to others.

The fact that we are still talking about the Texas grid a full after the storm indicates just how much of an impact the blackouts had on so many. It changed our awareness of things we once took for granted and has taken center stage in our politics. But, while we have made some progress, to say the grid is fixed would be premature, we are not yet done.


Caitlin Smith, Senior Director, Regulatory, External Affairs & ESG at Jupiter Power, contributed ERCOT market knowledge and insight and collaborated on content.

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