Post Blackout: Rethinking Texas

March 14, 2021

More from my terrific conversation with Michael Webber at the University of Texas.
Michael is well known for having thought deeply about how the grid works and where it’s going. I’m pairing his insights with a long analysis from E&E News, which I excerpt here, but by all means go to the link and give it a scan.

E&E News:

Nearly a month after an arctic blast crippled Texas’ main power grid, questions continue to fly about how to prevent a similar disaster from occurring again.

Gov. Greg Abbott (R) has directed lawmakers to address the electricity crisis during their current session. He and others are also calling for power pricing errors to be corrected and for an overhaul of the grid operator.

Coordinate Gas and Electric Power:

Experts across the energy sector say natural gas and electricity interests simply must work better together. That means more coordination among the PUC, the RRC and energy companies.

They could, for example, improve lists of critical energy facilities and make sure one sector doesn’t derail the other’s ability to deliver energy.

“The gas industry feeds into a critical piece of power infrastructure,” said Pat Wood III, a former Texas and federal energy regulator who is CEO of the Hunt Energy Network. “And so you cannot look at one without looking at the other.”

Gas is an important source of home heating in Texas, and close to half of the energy provided on the ERCOT power grid in 2020 came from gas-fueled generation.

But gas wasn’t always available at the pressures needed for power plants during last month’s crisis. The fuel had the most capacity offline in terms of power generation in the ERCOT region during the winter event.

Cold-weather failures on the gas side and a lack of electricity to power elements of the gas system are among the reasons cited so far. Gas prices skyrocketed amid supply shortages.

Joshua Rhodes, a research associate with the Webber Energy Group at the University of Texas, Austin, also suggested a look at moving power plants further up in line for natural gas during grid emergencies.

That could have reduced heating for homes during the recent crisis, he said, but it likely would have kept power flowing in more places. It’s also true that many modern gas furnaces can’t run without electricity.

Weatherize Energy Assets:

Having power plants unprepared for cold weather was a major reason the ERCOT grid came close to a catastrophic blackout in February.

While some assets had winter preparations, Abbott is calling for change. The governor has made winterizing and stabilizing power infrastructure a legislative priority to mandate and fund. The price tag for that could be substantial, though all plants may not require the same level of treatment.

“It’s a big state,” said Suzanne Bertin, managing director of the Texas Advanced Energy Business Alliance. “There could be a variety of solutions that need to be put in place to address the weatherization of generation in a way that makes sense.”

Weatherizing could involve everything from insulation to applying a heat source to pipes, lines and other equipment, according to a 2011 report from staffs at the Federal Energy Regulatory Commission and the North American Electric Reliability Corp. Some plants also could look at having a secondary backup fuel in place.

Daniel Cohan, an associate professor at Rice University, argued in an opinion piece in the Houston Chronicle that preparation needs to happen for a range of extreme events.

“We shouldn’t focus only on freeze failures,” he wrote. “We have to anticipate future disasters. We must weatherize, not winterize.”

Rhodes said gas infrastructure also comes into play with weatherization. That may involve wellheads and gathering lines as well as compressor stations, including making sure they have power.

“All of our [gas] plants could have been winterized [but] if you couldn’t get gas to them, then they’re … no good,” Rhodes said.

In a statement, the RRC said it does not mandate weatherization.

“We will work with the Legislature and operators to assess the next steps to further solidify infrastructure and communications to help strengthen emergency responses,” the commission said.

Fix the 9000 Dollar per Megawatt hour

Companies and observers have said there are ways to modify Texas’ competitive power market without starting over, though some critics want drastic changes. Sustained wholesale prices of $9,000 per megawatt-hour have created financial havoc in the market in the wake of last month’s cold snap.

Legislators are expected to discuss issues with the ERCOT market at hearings again today.

Still, it’s not clear that state lawmakers have the appetite this session to engineer something like ending electric deregulation or instituting a capacity market to pay plants to be available. Arthur D’Andrea, the current chair of the PUC, has suggested a capacity market may not have been a big help in the recent crisis.

But there are efforts to rework how and when elevated pricing kicks in during times of scarcity.

For example, prices could start to go up sooner and have a lower cap than the $9,000 per MWh that caused financial stress when applied for days, and led to electric bills in the thousands of dollars for some customers. Some people have discussed the potential for a revised circuit breaker, or market mechanism, that could help prevent prices from staying too high for too long.

Concern about prices was evident this week as Abbott added an emergency item for lawmakers to consider — correcting billing issues related to ERCOT. His office said that “includes any inaccurate excessive charges and any issues regarding ancillary service prices.”

The PUC previously declined to revise wholesale electricity prices related to a market monitor’s report of $16 billion of overcharges. Further pricing discussions may occur, including around ancillary services that involve power reserves contracted in advance.

Vistra CEO Curt Morgan told lawmakers he thinks “we’re going to have to come a little bit further on reliability and move the needle a bit here on the market design to make sure that it works and it’s reliable.” Right now, it’s a feast-or-famine market in terms of prices, he said.

“I think it’s probably going to end up being something that sort of works within the existing structure but strengthens it,” Colin Leyden, director of regulatory and legislative affairs for energy at the Environmental Defense Fund in Texas, said of possible market design changes. He said he’d work to stop efforts to give fossil fuel fleets an advantage over renewables.

There’s also the question of high natural gas prices. Rhodes suggested that an entity might need to step in if gas prices get too high, meaning a circuit breaker for power prices could also trip a circuit breaker for gas prices.

It’s a tricky situation because gas prices don’t fall under a price cap like electricity does in the ERCOT region.

Plan for Climate Extremes

Climate change can be a complicated subject in Texas, where oil and gas companies have long held enormous influence.

But discussing new climate realities isn’t always a partisan issue. Leaders in industry as well as government have said that Texas has seen storms that overwhelm traditional planning, whether in the form of hurricanes, floods or winter storms.

One lesson of 2021 is that it’s wrong to assume another extreme event won’t surpass expectations.

ERCOT undershot what it thought peak demand might be this winter. A higher forecast may not have prevented disaster, but it would have given the market more awareness.

Experts largely agree that Texas has plenty of power on typical days. In the meantime, ERCOT, the industry and its regulators can research extreme possibilities to see what areas may be stressed in the future.

As Rhodes put it: “Throw a bunch of different types of scenarios at it and see how many of them keep the lights on and how many of them don’t.”

ERCOT appears to be taking steps to change. It recently announced the delay of its latest spring and summer assessments until March 25.

“The release date change is intended to accommodate new system stress scenarios and related report design changes being implemented, as well as ongoing support for various winter storm response and preparedness investigations,” ERCOT said in a market notice.

Harness the Cheapest Energy

Better protection against the elements shouldn’t be limited to energy infrastructure, according to energy efficiency advocates.

Taking actions to lower people’s power consumption at home can help when extreme temperatures send demand surging.

“If we’re going to talk about weatherization, we need to make sure we also talk about weatherizing homes,” Leyden said. “We know that folks in low-income neighborhoods really kind of suffered a lot under this crisis.”

He said the “cheapest energy we can get if we have to shed load is, you know, the energy that you don’t use.”

Leyden called for boosting efficiency efforts through electric distribution companies to help improve homes, update air conditioners and take other actions.

There also could be more demand response for everyday consumers in addition to large industrial customers, he said. That could mean paying customers to shed load at crucial times.

Bertin of the Texas Advanced Energy Business Alliance said there are potential upgrades to make in distributed energy resources broadly — such as through energy efficiency, demand response, on-site solar, energy storage and electric vehicles.

“I think it’s very clear that the state needs to do more on what I would characterize as community resilience,” she said.

Link to Other Regions

The crisis last month spurred debate about whether Texas’ largely isolated grid contributed to power outages, with analysts disagreeing about whether integration with other states would have prevented the disaster (Energywire, Feb. 19).

Texas’ main power region may be able to add limited connections to other regions without triggering new federal oversight or becoming completely tied to other areas.

ERCOT only has a small number of connections to bring in electricity from outside its region at this point. That has helped it remain under the PUC for primary regulation and not the Federal Energy Regulatory Commission. Texas has long enjoyed a level of independence in how it approaches electricity policy, a position that some supporters say decreases costs. Others disagree.

“It’s been a political hot potato,” Leyden said. He said some extra power from the West may have helped during the Texas crisis last month.

Some observers point to the Southern Cross Transmission project as a vision of what’s possible. It remains to be seen exactly when that might become a reality as it works through various requirements. Construction could start in 2022 and be finished in 2025.

That project could feature a high-voltage, direct-current line that helps connect the main Texas grid and its wind energy with markets in the U.S. Southeast. The line could send power in both directions, potentially helping Texas during tight conditions.

In a statement, Pattern Energy Group LP said it’s moving forward with developing Southern Cross with a plan that would not affect ERCOT’s independent status. The company said it would be a 2,000-MW interconnection to the east of Texas.

“Building out transmission that links geographically diverse generation is essential to enhancing reliability of transmission systems, and their ability to withstand extreme weather events, whether extreme cold, extreme heat waves, wildfires, hurricanes and such,” Pattern said in a statement. “Studies have shown this time and time again. Planning processes must take these inter-regional benefits into account.”

3 Responses to “Post Blackout: Rethinking Texas”

  1. doldrom Says:

    Grid interconnection would seem a no-brainer:
    1. You need it as a backup plan for unforeseen circumstances
    2. Fluctuations in power demand/supply and weather (including renewables) can be be met with interconnects that connect to regions with different weather/demand and supply. The wind always blows somewhere, and there is always likely to be capacity in a region far away.

    The larger question is one of costs and incentives.
    The cost was borne by consumers, who saw their lives interrupted and had enormous damages, certainly the people with burst pipes and wrecked homes and absurd electrical bills. The power plants that could not produce simply lost an opportunity to sell power. The total costs are much greater than to have more resiliency in advance, which will arise by themselves with the right incentives.

    It is the same principle that established fire departments. The costs of preparing are far smaller than having a complete house go up in flames, or even an entire neighbourhood with some bad luck. But incentives have to be structured in advance.

  2. doldrom Says:

    In terms of solutions as advanced here (battery for hot water, battery for furnace, electrical heating, but gas connection for backup heat, power wall), it strikes me that the path to the future would be local storage (and solar panels) plus heat pump exchanging heat with ground (water).

    Heat pumps save a lot of heating/cooling electrical consumption, and can be deployed more efficiently at neighbourhood scale. A gas connection is pretty expensive as a backup, when you are essentially not consuming any amount of gas.

    Of course, relying on a heat pump when the grid is down still requires you to conserve your electricity and heat (warm water), but that is a lot more palatable than having things quit. The critical decisions revolve around capital costs and scale of deployment. Scale of deployment can interact with tiered deployment at various scales, combining resilience and economies of scale.

  3. rhymeswithgoalie Says:

    I’m surprised he thought a gas furnace would work during a power outage. Besides the electrical connections to the thermostat, the blower (if he has the most common forced-hot-air system) runs off electricity.

    I got off very easy despite the 4+ days without electricity due to the gas burners running in my kitchen. I ended up with a broken pipe in my sprinkler system, but I can wait for the plumbers to fix that outdoor leak until their hair is no longer on fire.

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