Extreme Weather Tests Grid Resilience across Much of the United States

An Arctic snap has hit the United States, bringing cold weather to the whole country but hitting the Midwest and Texas particularly hard. The weather has strained the energy systems across several states, leading to rolling blackouts, market disruptions, and calls for energy conservation in chilling conditions. The turmoil that this event has caused shines a light on the need to harden grid infrastructure as climate change makes extreme weather more likely.

Q1: What is going on with the power system in Texas and the Midwest?

A1: Extremely low temperatures across large areas for an extended period of time have squeezed the energy systems in large swaths of the country, driving up demand for heating and power at the same time that the weather is constraining supply. In Texas, about half of all homes are heated primarily with electricity and a little less than the other half mainly use natural gas. In the Midwest, over 70 percent rely on natural gas and only about 20 percent rely on electric heating. The extreme cold is driving up demand for heating. At the same time, a significant amount of natural gas goes to generating electricity, too—40 percent of electricity on the Texas grid, for example. Therefore, gas supplies are particularly constrained by increases in demand for two different uses. On top of this, supply has been constrained as some natural gas wells have frozen over. Some coal and nuclear generators have been sidelined by the freezing temperatures as well. Some wind turbines have been taken offline, but because wind generation is usually low in Texas during the winter, they accounted for only a small portion of the 34,000 megawatts (MW) of capacity that were forced offline by Monday, February 15.

Although this event is particularly impactful, the Midwest is no stranger to cold weather. In Texas, the situation is extremely unusual. The state is used to peak power demand occurring in the summer, driven by air conditioning. In November 2020, the Electric Reliability Council of Texas (ERCOT) assessed that it would have almost 83,000 MW of capacity to meet an expected approximately 58,000 MW winter peak. On February 14, the grid set a new record winter peak of 69,150 MW and over 30,000 MW of generation capacity were offline.

Q2: What does this mean for residents and businesses?

A2: On Tuesday, February 16, over 4 million households in Texas were without power. The U.S. Department of Energy declared an emergency in Texas to allow ERCOT to deploy coal and gas resources that would otherwise be limited by environmental controls. The Midcontinent Independent System Operator (MISO) and the Southwest Power Pool (SPP), which operate the grids across the Midwest and parts of the Southwest, have declared emergencies. To avoid catastrophic failure of the grid, utilities across the Midwest and in Texas are utilizing rolling blackouts. ERCOT, MISO, and SPP, as well as utilities across the region are all asking customers to conserve energy as much as they can—turn down the thermostat, wear a sweater, and avoid using power-hungry or gas appliances. The Texas Railroad Commission has told natural gas utilities that the first priority is to supply to residences, churches, hospitals, and schools for heat and the second is to supply to gas-fired power plants that serve these customers. In some cases, retailers are offering to pay their customers to switch providers to shift demand off their systems.

Q3: What does this mean for the electric power system?

A3: Major events like this often trigger big discussions about the electricity system. In Texas, there has long been a conversation in the energy world about whether the state needs a capacity market like many of the other major grid operators in the country. This event will likely be no exception. Capacity markets hold reverse auctions to procure a predetermined amount of capacity a few years in advance to guarantee supply in emergencies. Texas requires reserve margins and boosts prices when those margins are drawn down but does not have a capacity market. In the summer of 2019, Texas set a record for peak demand, seeing wholesale prices reach $9,000/megawatt-hour. This ignited questions about the appropriateness of the market setup, although experts often highlight that these price spikes are intended to provide a clear, long-term price signal to build new generation to increase reserves.

This may also renew interest in whether Texas would benefit from better interconnection with other grids. The Texas grid exists separately from the other two major grids in the United States. Of course, Texas can and does trade power with the other two grids, but the interconnections are relatively limited compared to what a fully integrated grid would have. Proponents of a countrywide grid frequently highlight the potential benefits of connecting markets with diverse generation and demand profiles. It is possible that greater interconnection with other regions of the country could make up for the supply crunch in the affected areas. However, with many other states experiencing similar demand spikes, it is not clear whether they could have helped Texas make up the major shortfall.

Q4: What does this mean for the energy transition?

A4: Much like after the polar vortex in 2014, this event is sparking conversations about the resilience of different power generation sources. While the weather has frozen wind turbines in Texas and taken some wind power offline, the impacts on natural gas and coal supplies have been significant as well. In fact, this crisis has already produced some responses that electrification of heating would make us particularly vulnerable in these situations. While this is not a settled argument, it is worth pointing out that natural gas distribution for heating has been disrupted as well, so it is not as simple as blaming the electric grid. Climate change will cause more frequent, unpredictable extreme weather events like this, and they affect the entire grid. This situation puts the focus squarely on resilience and adaptation. Grid operators will need to figure out how to better harden their infrastructure against disruption due to climate-driven extreme weather. The Federal Energy Regulatory Commission (FERC) asked grid operators in 2018 to help develop a common definition of resilience and disclose how they are assessing the resilience of their respective grids. The commission, however, has not taken any action on the docket since then, although it is on the agenda for the next public meeting on February 18. FERC also announced on February 16 that it would open an investigation into the event, so we can expect a renewed attention from the commission on the topic and how to avoid it in the future.

Stephen Naimoli is an associate fellow with the Energy Security and Climate Change Program at the Center for Strategic and International Studies in Washington, D.C.

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