Why Did Texas's Energy Grid Fail?

Lizzie Horvitz, Founder & CEO
Texas Power Grid

Between February 10th and 20th, 2021, an unexpectedly frigid cold front led to a massive electricity generation failure in Texas, which caused a shortage of food, heat and water for more than 4.5 million homes and businesses. At least 82 people died, spot rates (aka the cost of electricity) went up to $9,000 per megawatt hour (MWh), and the demand for energy hit a whopping 69,150 MW record. Oh, and Ted Cruz fled to Mexico because #privilege. Like everything else, this became political and lots of fingers were pointed around who was to blame. Some falsely suggested that unreliable renewable energy was responsible for the widespread power outage -- in a state where natural gas supplies 51% of electricity production and, in the winter months, wind produces only 10% of the total, renewables are simply not a realistic culprit in the blame game. This left us wondering: How did one of the most reliable energy grids fail to provide consistent electricity when it was needed most? 

Let’s rewind the clock: In the late 1880s, Thomas Edison and Nikola Tesla (no, not that Tesla) fell into a deep battle called the War of the Currents. Edison was on team ‘direct current’ (aka current that runs in a single direction, like in a battery), but direct currents weren’t easily converted into higher and lower voltages. Tesla believed that the solution to this problem was alternating currents because, as the name suggests, the energy current could reverse direction a certain number of times per second and easily be converted to different voltages using a transformer. And so, the battle of Edison vs. Tesla was waged. Edison clearly didn’t like the competition (and was worried he would lose the royalties associated with his direct current patents), so he started a #fakenews movement to try to discredit alternating currents by spreading significant misinformation. In the end, General Electric saw through the hogwash and jumped on the alternating current bandwagon -- the war was settled in Tesla’s favor. Sorry, Edison. Ever since, electricity has been a crucial part of America’s story and gained so much traction after GE took sides that, in 1935, electric utilities became a publicly regulated business via PUHCA

Today, the energy infrastructure in this country is massive: The United States power grid is made up of over 7,000 power plants and nearly 160,000 miles of high-voltage power lines. That’s roughly equivalent to traveling 55 times the distance between New York and San Francisco...that’s one long road trip. The U.S. uses about 305 million British Thermal Units (BTUs -- which is another way of quantifying the amount of energy, similar in concept to therms, kilowatt hours, and more) per person, equaling 17% of the entire world’s energy consumption. The U.S. is only 4.25% of the global population, but what else would you expect from the land that created Man Vs. Food? 

Whether it’s because of the scale of it or other (ahem, political) reasons, the entire power grid is divided into three sections: Eastern Interconnect, Western Interconnect, and Texas. Yes, Texas is standing all by itself like a Lone Star. How convenient...

In 1935, FDR signed the Federal Power Act and the Federal Power Commission, now the Federal Energy Regulatory Commission (or FERC to industry insiders), was named as the licensing authority to regulate interstate electricity sales. But when electricity was becoming a public utility, Texas chose to avoid federal regulatory oversight and to remain “islanded.” Texas made an agreement that prevented anyone from extending power outside of Texas, which eschewed transmission across state lines and retained Texas’s #freedom. 

Energy has always been surprisingly political: We all remember the Republican campaign slogan in 2008: “Drill, Baby, Drill.” What that ends up meaning is that each of the different regions (East, West, and Texas) and even each different state, has different energy sources, like coal, natural gas, nuclear, solar, or some combination of them.  Not to mention, a lot of the standards for which source of energy is used in the grid is decided at the state level, depending on what’s available in that specific location and the political landscape of the state. 

For example, Pennsylvania saw cheap natural gas (because of fracking) rapidly displace coal over the past four years; Wind power surged in Iowa, producing more than coal;  Nevada’s solar power is growing exponentially; and California set aggressive renewable targets, increasing the amount of solar capacity on its grid to more than ⅓ of the nation’s solar output. For the country at large, the majority of electricity is derived from natural gas, oil, coal and nuclear, yet the fastest growing sources of electricity are from renewables, like wind and solar. 

The unfortunate reality is that the energy that powers our homes is like a big poker game with people placing bets and setting different market driven prices on various forms of energy. It’s all a giant game of economics. Both Texas and California have devoted huge dollar amounts to their power networks throughout the 2000s -- California towards wind and solar, and Texas towards one built mostly on gas, coal, wind, and nuclear. 

The recent energy crisis in Texas also stems partly from its open market rules that differ from markets in other regions around the country. For example, several power plants were offline for maintenance during the cold snap, whereas in other states, power producers would have committed to keeping their plants running every day. Offline plants during a period where everyone is demanding more electricity from the grid cause online plants to charge more to ramp up their generation, so the price of electricity goes up (there’s classic supply and demand price fluctuation going on here). That’s why there was such a hullabaloo about the cost of electricity going up to $9,000 per MWh. And just to be clear, one MWh is equal to 1,000 kWhs, meaning that the cost for one kWh was $9.00, compared to the average price paid by a residential customer which is closer to $0.13 per kWh.

Oh, and yes, despite the fact that the public utility in Texas was responsible for the failure, a lot of these costs are passed on to the end-consumer, aka the people that were literally freezing to death, because utilities like to make money. As a state, there’s still plenty Texas could do to have more reasonable electricity bills. NRDC’s Mohit Chhabra calculated that Texas could cut wintertime demand by up to 3,000 MW for every million residential households if it upgraded to high-efficiency standards for insulation, windows, and electric heaters.

Let’s be fair, Texas isn’t the only state with these massive problems. In January 2019, California-based utility PG&E declared bankruptcy when lawsuits emerged against the company for wildfires ignited by sparks from their power lines. As the frequency of climate-related events rises, all states will need to build a more resilient infrastructure that can handle wildfires, arctic air blasts, and everything in between. Over the next decade, the U.S. needs to increase overall electrical transmission capacity in order to better distribute high-quality and low-cost wind and solar. Many fossil fuel plants will reach the end of their typical lifespan by 2035, and we are certain that climate-related events will continue to occur at an accelerated rate. 

As climate change accelerates, so does our access to new innovations and technologies to fix these issues in our country’s power infrastructure. One key development underway is the roll out of industrial-scale batteries that can store power generated by renewable energy during sunny and windy days, save it, and dispatch it when it’s needed on non-sunny or non-windy days. As Mark Dyson of the Rocky Mountain Institute put it, “It’s well past time to recognize a fundamental vulnerability of the power system and take advantage of where we are now with digital technologies, more distributed technology, storage and flexibility and deal with the root cause and not play whack a mole with these large scale systems.” As the clean energy transition puts increasing emphasis on connecting various small-scale wind and solar with variable operating characteristics, the reliability and economic benefits of regional grids will continue to grow. 

Biden has an opportunity over the next few years to draw support from lawmakers and states on his proposals to harden the nation’s energy infrastructure to withstand climate change. Two months in, the administration has shown little signs of pushing the agenda forward, but his goal of reaching net-zero emissions by 2050 is a solid start. 

While as individuals it can feel like we have little control over the energy grid, take time to understand where your energy is coming from in your local area, look for a community solar program if it’s offered in your state, and make sure whatever you call home is as insulated and energy efficient as it possibly can be.