Lessons from the Texas mess

Hello there, Voltron! It’s been an interesting week, hasn’t it? A guy writes a tediously long and wonky series on energy transmission and, next thing you know, transmission grids are dominating the news.

By now, the story of what happened in Texas last week is familiar: an extraordinary cold snap simultaneously a) raised demand on the grid to well higher than the grid operator’s worst-case winter projections, and b) knocked out more than 30 gigawatts worth of energy generators.

Supply and demand must be kept in perfect balance on a self-contained grid like Texas’, so when demand spiked and supply plunged, something had to give — thus the not-so-rolling blackouts.

Most of that lost generation was natural gas and coal. Freezing afflicted not only the water used in power plants but the mining, distribution, and storage of fossil fuels. And, yes, some wind turbines froze, though wind actually performed better than the modest expectations set by ERCOT, Texas’ grid operator.

I’m not going to go through the story in detail. I just want to talk a bit about what it means and what we can learn from it. To learn more about what happened, those affected, and the role Texas’s grid and regulations played in events, I recommend reading the following:

* The Houston Chronicle had a great story on the events as they unfolded and is, in general, all over it.

* In The New Republic, Kate Aronoff has a great overview, with crucial historical context for why the Texas grid is isolated and why it has an energy-only power market.

* In the Atlantic, Rob Meyer has great coverage of the Texas planning failures.

* The team at ProPublica has a piece on how Texas regulators “have repeatedly ignored, dismissed or watered down efforts to address weaknesses in the state’s sprawling electric grid.”

* In the Los Angeles Times, Sammy Roth has another great wrap-up, with a focus on grid vulnerability.

* In the New York Times, a team of journalists pulls together a great backgrounder on Texas’s unique power market structure and grid independence.

* In the New York Times, Princeton energy analyst Jesse Jenkins has a piece on the crucial failure of Texas utilities to future-proof their assets.

* In the Wall Street Journal, Katherine Blunt and Russell Gold have a story on the implications of the disaster for the energy-only market.

* In Utility Dive, Alex Gilbert and Morgan Bazilian write on what happened and what it means for Texas grid regulation.

* The New York Times’ Brad Plumer explains what climate impacts will mean for the nation’s power grids.

* At Gizmodo, Molly Taft reports on how much the oil and gas industry is paying Republicans to lie about what happened.

* And here’s the Wall Street Journal editorial board lying about what happened.

Any handful of those stories (save the last) will fill you in on what happened and why. Now let’s talk about what we can learn from it.

It was going to be bad in Texas regardless

One thing worth emphasizing up front is that Texas just faced an extremely unusual event. It got much colder, much faster, and dumped more snow and ice, for longer, and took out more energy infrastructure than even the grimmest forecasts predicted.

Yes, the state has had cold snaps before — including in 2011 and 2014, producing a set of recommendations and guidelines that state regulators made voluntary and state utilities largely ignored — but this was extreme even in context.

We’re going to touch on better planning, helpful technologies, and reformed regulatory structures, but the grim truth is that there is probably no alternative set of planners or regulations that would have adequately prepared for what took place last week. They certainly could have done better, but this event was fated to be rough.

If we’re going to start seriously preparing the electricity system for long-tail, low-probability events — the kind climate change is making more likely — it will be a new thing, not something that’s been mastered by any current entity or regulatory body.

Small picture: Texas electricity and natural gas systems need to be weatherized

The Texas mess is being characterized as a grid crisis, but it was actually a generation crisis. Two-thirds of the state’s power comes from natural gas, and a) natural gas wells and pipelines froze (cutting normal production by about 20 percent), b) commercial and residential heating got priority access to natural gas, per state policy, and c) natural gas power plants froze.

[Clarification: national natural gas production fell by 20 percent; Texas production fell by 50 percent.]

Some coal plants and wind turbines also froze up, and one of the state’s nuclear plants went offline for unrelated reasons, but the bulk of the 30+ gigawatts of energy generation that went offline was natural gas power plants (many were also down for scheduled winter maintenance).

Natural gas production and distribution falls under the purview of the Railroad Commission of Texas, so it is the RRC that will need to update regulations to make sure this doesn’t happen again on the production side. Given the RRC, that seems … unlikely.

As for power plants, after the 2011 rolling blackouts, Texas should have required all generators to weatherize. It’s perfectly possible for natural gas plants and wind turbines to operate in the cold — there are wind farms in the Arctic. But the weatherization recommendations released in the wake of the blackouts were made voluntary and very few generators followed them.

Some have argued that this failure to prepare can be laid at the feet of Texas’ energy-only market — the only such market in the US.

In other restructured areas (like PJM in the Mid-Atlantic), alongside energy markets there are capacity markets, through which generators can get paid to maintain generation capacity in reserve, in the name of reliability.

Texas has no capacity market. The incentive to maintain reserve capacity is supposed to come from the fact that the price of energy is allowed to swing with supply and demand. In times of high demand and/or constrained supply, prices rise, sometimes to many multiples of their normal level. Generating energy during those times can be incredibly lucrative. That’s supposed to induce generators to set aside (and weatherize) some capacity, to take advantage of those rare moments.

It’s not a “free” market — no electricity market is — but it is more lightly regulated than its regional neighbors.

For the past 10 years, the Texas grid has generally maintained lower reserves than, say, PJM, but it has performed quite well, despite persistent predictions to the contrary. During that time, Texas ratepayers saved quite a bit of money with their lean system.

It’s not clear that if Texas had a capacity market, it would have avoided what happened last week. If a generator is set aside as reserve but it freezes, it doesn’t help. Capacity markets could impose regulations or mandates requiring generators to weatherize, but then again, so could regulators in an energy-only market. It is perfectly within the power of the Texas Public Utility Commission (PUC) to require weatherization. It just didn’t.

Any regulatory system is going to need conscientious regulators and good planning. The larger lesson of the cold snap is that Texas, like the rest of the country, needs to plan its grid around resilience and redundancy rather than optimization, market or otherwise.

Big picture: the Texas grid needs resilience in three directions

The basic climate forecast for Texas is that it’s going to get warmer on average, but there’s a decent chance these freak cold snaps will get more frequent and nastier. (Like all climate science trying to pin down temporally and geographically narrow effects, this is provisional and there is disagreement within the science community.)

That is a brutally wide range of conditions for which to plan and prepare. And the same basic problem will face grids in every region of the country. Climate change means a less predictable, less stable set of futures.

Texas needs to work toward resilience at three levels.

Improving the existing energy system

Even assuming it eventually wants to, or is forced to, it will take Texas a while to decarbonize its grid, wo