Texas Power Generation and Regulation

Texas Power Generation

The capacity of the power generation system in the state of Texas is broken down by natural gas and wind sources, which account for 51% and 24.8% of the state’s power generation capacity, respectively.

Breakdown of the Power Generation Capacity

  • According to the Electric Reliability Council of Texas (ERCOT), Texas’ power generation capacity for the year 2021 is 51% natural gas and 24.8% wind. This is followed by coal (13.4%), nuclear energy (4.9%), solar (3.8%), other power sources (1.9%), and storage capacity (0.2%).
  • The total projected power generation capacity for summer 2021 in the state of Texas, as forecasted by ERCOT, is more than 86,000 megawatts. The generating capacity for Texas in the winter is 67,000 megawatts at its peak.

Impact of Renewables on the Power Failure Incident

  • Despite the insistence of state government officials and others that renewable energy plants failed to provide power during the recent power failure incident, ERCOT claims that facilities of all types were impacted by outages brought on by the storm. Of the 46,000 megawatts of generation that were offline on February 17, 2021, 18,000 megawatts originated from wind and solar power sources compared to the remaining 28,000 megawatts that came from nuclear, gas, and coal sources.
  • While thermal energy generators, nuclear plants, and coal plants largely contributed to failures in the state’s energy generation units as they began to go offline, shutdowns of frozen wind turbines only accounted for under 13% of the outages statewide.
  • The senior director of system operations at ERCOT, Dan Woodfin, stated that a significant portion of the state’s generation that went offline was mostly caused by “issues on the natural gas system.” He went on to remark that thermal sources in Texas accounted for almost double the amount of gigawatts that were offline when compared to renewable sources.

Impact of Weather on Renewable Energy

  • Many of the forms of renewable energy, including solar and wind power, are heavily dependent on the weather for production. According to the National Oceanic and Atmospheric Administration, this “introduces unique challenges to those who must maintain the constant balance between energy supply and demand required for a stable electric power grid.”
  • The power supply from renewable energy is rather vulnerable to shifting weather conditions. There is a limited volume of wind power being generated if wind is not blowing. Hydropower generation, on the other hand, is greatly dependent on precipitation providing water to hydropower reservoirs and rivers, meaning production can be harmed by climate extremes (e.g., floods, droughts).
  • Wind output can also be negatively impacted by extreme cold or heat. Meanwhile, sunlight is needed for the generation of solar energy. For instance, a blackout occurred in Hawaii in the year 2019 in which a cloud cover halted solar recovery after a generator went offline.
  • More extreme weather is projected to occur around the world in the future, including severe precipitation, heatwaves, and droughts. This could lead to catastrophic economic implications for producers of renewable power, as the grapple with considerable variability to the supply and demand for electricity.

Impact of Weather on Fossil-Fuel-Based Energy

  • Natural gas producers rely on pipelines to supply energy and, as indicated by the situation in Texas, production can be disrupted if these pipelines are frozen by due to extreme cold. Frozen pipelines can prevent them from siphoning gas from the ground and transporting it to the pipeline system.
  • Likewise, coal generators can also freeze due to extreme cold, disrupting the flow of energy production. Additionally, coal plants can be affected by excessive flooding that can unsettle their cooling ponds, particularly during hurricanes.
  • Meanwhile, blistering heat can force natural gas and coal plants to either temporarily shut down operations or limit power due to the cooling water that they require enduring warmer-than-usual temperatures. According to a research paper published in 2017, if the temperature of the air rises too high, fuel efficiency can be impacted “due to a lower oxygen concentration in the air and thus shows a 0.1% reduction in gas and fuel powered plants for each increase of 1 [degree] C in the temperature.”

Texas Power Generation Regulation

Texas’s aggressive deregulation of its energy sector prevented the state from requiring winterization of its power infrastructure despite recommendations from experts, including a report by the Federal Energy Regulatory Commission and the North American Electric Reliability Corporation following a similar crisis in 2011. About 40% of the state’s power-generation capacity was out at the peak of the power outages. In contrast, winterized wind turbines in other US states and regions such as Siberia, which usually have extremely-cold winters, continued to function. Neighboring states like Oklahoma and New Mexico that are more prepared for extreme winter conditions have fared far better than Texas.

More Regulation Could Have Mitigated the Energy Crisis in Texas

  • According to officials of the Electric Reliability Council of Texas (ERCOT), which operates most of the state’s energy grid, the state’s power system comprising nuclear units, gas units, wind turbines, and solar, was no match for the extreme cold weather and snow that impacted every type of generator.
  • The winter crisis overwhelmed the power system due to the state’s decision not to mandate equipment upgrades that are better suited for extreme winter temperatures, as well as the choice to be mostly isolated from other US grids.
  • Texas faced a similar energy crisis in 2011 with frozen natural gas wells, coal plants, and wind turbines, with resultant power outages. Following that crisis, a report by the Federal Energy Regulatory Commission and the North American Electric Reliability Corporation warned the state’s politicians and regulators that it was necessary to seek more “winterizing” of power infrastructure. The report noted that “more thorough preparation for cold weather could have prevented the outages.”
  • Natural gas power plants, natural gas production, wind turbines, and other energy infrastructure can be winterized through practices like insulating pipelines.
  • Several experts recommended mandatory “winterizing of power-generating equipment and fuel-delivery infrastructure such as gas pipelines” and making provision for reserve generating capacity to handle surges in demand or situations where some providers went offline. These recommendations would impose higher costs for power companies with resultant marginally higher electric rates in the state.
  • States with regularly cold weather avoid such major power outages because of such upgrades. Neighboring states like Oklahoma and New Mexico that are more prepared for extreme winter conditions have fared far better than Texas due to its thirst for cheaper energy and higher profits for its energy industry.
  • Instead of regulatory action and in favor of freer markets, the state’s regulators issued unenforceable guidelines, which most power companies ignored. While there are financial incentives to stay online, there is currently no regulation. However, mandatory standards for winterizing energy infrastructure are being developed by the North American Electric Reliability Corporation, which has some authority to regulate power generators in the US.

Scale by which the Impact of Weather Could Have Been Mitigated

  • At the height of the power outages, about 46 gigawatts, comprising about 40% of Texas’s power-generation capacity was out. 61% of the loss was from thermal generation consisting mostly of gas, coal, and nuclear, while 39% was from wind and solar. This loss resulted in part from the freezing and shutdown of half of the state’s wind turbines but mostly from the fossil fuel plants, particularly those powered by natural gas due to failure to insulate pipes and winterize equipment.
  • In contrast, winterized wind turbines in other US states and regions such as Siberia continued to function.
  • To reiterate the recommendations of the report by the Federal Energy Regulatory Commission and the North American Electric Reliability Corporation, “more thorough preparation for cold weather could have prevented the outages.”
Glenn is the Lead Operations Research Analyst at The Digital Momentum with experience in research, statistical data analysis and interview techniques. A holder of degree in Economics. A true specialist in quantitative and qualitative research.

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