Why the Texas Power Grid Is Still Facing Challenges

The electric power grid in Texas, which collapsed dramatically in a 2021 winter storm, is being tested once again as the state endures an Arctic blast. Demand for electricity has broken wintertime records as the state’s population continues to grow amid a rapid change in its energy mix, with wind and solar displacing fossil fuels. That’s been stoking a debate about the dependability of the power system for the second most-populous US state.

1. Why is the Texas grid under threat again?

Texas is already the biggest power user in the nation, and electricity use there has soared this winter as residents crank up their electric-powered heaters. The jump in demand comes as the state becomes more dependent on intermittent wind and solar power, raising concerns among some critics that this makes the grid more vulnerable to disruption. During the latest winter freeze, officials have urged residents to conserve power in the morning hours because of seasonally low solar production and unusually low wind generation. Another source of vulnerability is that Texas is virtually self-reliant when it comes to electricity and cannot depend on neighboring states during extreme conditions. The Electric Reliability Council of Texas (Ercot), the main grid operator, provides about 90% of the state’s electricity needs and has very few high-voltage transmission lines connecting to nearby grids. It’s a deliberate design meant to avoid federal oversight of the power market.

2. How green is the Texas electricity supply?

Green sources made up nearly 40% of the power capacity in Texas last year, according to Ercot. Favorable regulations are driving a wind and solar boom in the state, which thanks to vast oil- and natural gas-producing fields is the energy capital of the US. Texas already ranks first in the nation in wind power and is poised to become the nationwide leader in solar energy.

3. How has the grid held up since the 2021 collapse?

While the state was able to keep the lights on during record summer demand, it came perilously close to rolling blackouts in September. Last year, state officials said demand had grown to levels that could no longer be met by traditional power plants alone, such as those running on coal, natural gas or nuclear energy. Over the summer, solar power made a major contribution to meeting record demand in the afternoon. Sunset is one of the trickiest periods for the grid because the sharp drop off in solar generation has to be quickly replaced by other supplies. Wind generation typically tends to ramp up when the sun is setting, but sometimes it’s off by a few hours, adding to the stress.

4. Why didn’t the grid’s problems get fixed?

There is no easy fix. The Texas system allows the price of electricity to swing to match supply and demand. That means high prices — and high profits — drive the development of new power plants. At times spot power prices can drop to negative levels when there is more solar or wind than the grid needs and then toward the $5,000 price cap during periods of stress. The limitation of this pricing structure was laid bare by the 2021 winter blackouts. Since then, state lawmakers have passed reforms that require weatherization of critical infrastructure and changed rules to put more money in the pockets of the owners of power generation.

5. What’s the big challenge?

There’s a real clash going on over what the grid of the future should look like in Texas and across the country. The challenge is to make sure nuclear and fossil fuel plants that are needed right now don’t retire too early and still allow newer, cleaner technologies to flourish. Some conservative Republicans have blamed renewable energy for destabilizing the grid and have pushed for more fossil-fuel powered generators.

6. Why do improvements take so long?

Figuring out how to keep the lights on without overburdening consumers is becoming a greater challenge amid more extreme weather fueled by climate change. Changing the rules is often a hotly contested process pitting utilities, generators, manufacturers, electricity retailers and other groups against one another. The process became more politicized after the storm in 2021 with Republican Governor Greg Abbott and lawmakers ordering Ercot to make changes. Building more transmission lines and connecting to other states can help, but such projects are typically tied up for years in red tape.

7. What’s being done?

The price cap for electricity was cut from $9,000/MWh to $5,000 to help avoid the punitive costs seen in the 2021 storm, though prices are allowed to spike more easily. Ercot is also contracting for more reserves to be online to help avoid supply shortfalls. The measures are proving to be expensive with the state’s power market monitor saying new rules imposed in 2023 increased wholesale power costs by $12 billion. In November, Texans voted in favor of creating a new state energy fund to provide low interest loans and grants to developers of gas plants. Many power experts recommend paying people to reduce their energy consumption during times of grid stress through so-called demand response programs. Factories, Bitcoin miners and other large users are already compensated to conserve during tight grid conditions.

8. What does this portend for other states?

Many industry watchers are looking at Texas as a testing ground. The challenges will only intensify amid the push to decarbonize the grid while electrifying as much of the economy as possible, especially in transportation. The rise of electric vehicles poses a massive problem – and potential boon – because power demand is poised to grow even more rapidly and this demand is mobile. The power industry, along with technology giants and venture capitalists, have also talked about using machine learning and artificial intelligence to help better forecast demand and add supply when the grid is stressed.