The Texas energy system is having a wintry moment of reckoning. 

The past 48 hours of record-cold temperatures have forced much of the state’s thermal generation fleet offline, requiring grid operator ERCOT to institute widespread blackouts to prevent the risk of a further grid collapse. 

About 4.3 million utility customers, approximately one-third of the state’s electric customers, were without power in Texas as of Tuesday morning, up from about 2.5 million on Monday morning, according to data from PowerOutage.US. What started as rotating blackouts meant to last no more than an hour at a time have expanded to outages of 24 hours or longer for some customers.  

Winter electricity demand hit record highs of more than 69 gigawatts on Sunday evening, spiking pressure on the grid. However, the root cause of the grid emergency is not excess demand but rather lack of supply. 

And while the state’s 22-gigawatt wind power fleet has faced problems stemming from icing of wind turbine blades and relatively low wind conditions that have reduced its ability to contribute to the grid, the primary failure is from the state’s natural-gas, coal and nuclear generator fleet, according to ERCOT data. 

“ERCOT has only been able to supply about 45 GW since the wheels came off yesterday,” Wade Schauer, Americas research director at Wood Mackenzie Power & Renewables, wrote in a Tuesday morning email. 

ERCOT’s emergency power outages, carried out by the state’s transmission and distribution utilities, were shedding roughly 20 GW of load through Tuesday morning. But if wholesale energy market prices hadn't spiked to record highs, consumer demand for electricity likely would have been even higher, prompting even larger load shed.

“So effectively we are seeing 30 GW-plus of load curtailment at times,” he wrote.    

Some coal and nuclear power plants have been forced offline, most likely due to freezing temperatures shutting down cooling systems or instrumentation required to keep them running safely. 

But it appears that most of the supply deficit was from the state’s natural-gas power plant fleet, which may have accounted for as much as 26 gigawatts of the 34 GW of lost capacity on Monday and had not seen much improvement as of Tuesday morning, according to WoodMac data.

Texas Gov. Greg Abbott placed blame for the crisis squarely on private power plant owners in a Monday evening call with Houston-area TV news station ABC13. 

"We need to calibrate for this type of weather to make sure that the companies that are contracted with to provide the power generation in the state of Texas are going to be capable of providing power generation in these ultra-cold temperatures,” Abbott said. 

A 2011 cold snap led ERCOT to impose new “winterization” regulations to forestall power plant failures, but those efforts seem to have been insufficient, Abbott said. The state legislature will likely examine the need for more stringent regulations, as well as backup systems for when those fail, he added. 

Why Texas generators failed 

ERCOT has yet to conduct an investigation into the rash of power plants going offline starting early Monday morning. But beyond facing the same internal system-failure risks from freezing temperatures as coal and nuclear plants, natural-gas power plants rely on an extensive network of production and storage sites and pipelines to supply them with fuel. 

Cold weather can cause “freeze-offs” that constrain supply from natural gas wells and distribution networks, Monika O’Shea, power market associate under Wood Mackenzie Power & Renewables, said in a Tuesday interview. 

To prepare for a potential shortage, the Texas Railroad Commission, the agency regulating pipelines in the state, issued emergency measures on Friday prioritizing supplies for homes, hospitals, schools, elder care facilities and other heating-related “human needs.” The TRC’s measure also prioritized power plants serving residential and community services over plants powering purely commercial and industrial customers.

Much of the state’s natural gas power plant fleet also relies on high energy market prices to justify the costs of running, said Riti Goel, analyst lead for WoodMac’s ERCOT team. February is typically a “shoulder season” when power plant operators take units offline for maintenance or choose to temporarily suspend operations at power plants that lack the economic incentive to join the stack of resources in the market.   

About 14 GW of natural-gas generation capacity was on maintenance outage before Monday, with even more offline economically, she said. While those power plants may have received calls from ERCOT to fire up to meet the grid emergency, it’s likely they would have faced a higher risk of equipment failure ramping from a “cold start” after months of sitting offline or without time to test after performing maintenance, she said. 

At the same time, natural gas prices spiked across Texas as temperatures fell, rising from more typical single-digit prices to above $100 per million Btu, O’Shea said. Power plants that had been shuttered for maintenance or economic reasons would lack the long-term supply contracts that would allow them to avoid buying the fuel they needed to run at these inflated prices, even if it was available on such short notice.  

Even so, O’Shea said that it’s likely that cold-related mechanical failures, rather than fuel shortages, account for the majority of the power plant outages in Texas. “We’ve lost multiple gigawatts of coal, we’ve had a nuclear power plant trip offline” — the 2.4-gigawatt South Texas Project reported that one of its two units went offline on Monday — “all because of the cold weather.” 

Possible technology and market fixes

Pressure is mounting for Texas regulators and market operators to find solutions to prevent this kind of emergency from happening again.

On Tuesday, the Federal Energy Regulatory Commission and the North American Electric Reliability Council announced a joint inquiry to “identify problems with the bulk power system and, where appropriate, solutions.” (FERC launched a similar inquiry after California’s far less extensive heat-wave-driven rolling blackouts in August, but voted against expanding into a broader investigation late last year.) 

One of the likely first steps will be to look at ways to improve power plants’ ability to operate in cold temperatures, O’Shea said. Beyond state-imposed weatherization efforts like those taken after the 2011 cold snap, there are valid economic reasons for power plant operators to invest in those efforts, if they anticipate future cold snaps leading to similar grid crises. 

That’s because peaker plants and other resources used to meet the state’s peak capacity needs rely on super-high prices in Texas’s energy-only markets — as much as $9,000 per megawatt-hour — to make it worth their while, she said. Those peaks have always happened in the summer before, but “the incentive here to winterize would be so that you can actually participate in these events” in future winter emergencies. 

Secondly, WoodMac’s Schauer said, ERCOT may be looking at market structures to encourage more preparation for cold snaps, as happened in the Northeast U.S. markets served by grid operators PJM, NYISO and ISO New England after the ‘polar vortex” of 2014. 

“To be winter-ready, PJM gas plants need firm gas supply or a backup secondary fuel” such as distillate oil tanks, he said. “Very few ERCOT plants have either of those capabilities. Most have an interruptible gas supply that is curtailed before home heating” and other end users with higher priorities during winter emergencies.   

As Texas continues to grow its supply of wind and solar power, and start to deploy large-scale battery storage as well, it’s likely that ERCOT and state policymakers will need to examine how those resources can serve to solve winter as well as summer grid needs, O’Shea added. 

That could include “cold weather packages” to heat and de-ice wind turbine blades and other components, which are a relatively common practice for wind farms in colder climes, but haven’t become standard in Texas, she said. It could also involve market structures that would reward energy storage, now being built to bolster the economics of wind and solar projects in ERCOT’s energy-only market, to be available for ancillary services capacity as well, she said. 

A similar question arises for demand response in Texas, which has largely been designed to reduce summer peaks, Goel said. 

Demand response provider CPower reported that it dispatched its entire active portfolio of about 265 MW of Emergency Response Service and 100 MW of Load Response over the past two days. 

“We expect that this event may trigger discussions about the viability of the tight reserve margin in the future and some of the challenges that have to be accounted for with renewables, like wind, in a real-time energy market facing a major weather event,” the company wrote in a prepared statement.