Why Everyone Should Care About the Texas Electricity Situation

Posted on October 22nd, 2012 by

The continental United States is roughly split into three electric grids.  One provides electricity to the eastern half of the country and one serves the West.  In the middle there’s Texas who, befitting its size and culture of independence, has its own grid separate from the other two North American grids. Texas is also a “power to choose” state which means consumers can select their electricity providers.

The electric grid in Texas is experiencing some real challenges. You may think that if you live in Eugene, Oregon or Charleston, South Carolina the problems of the Texas grid are no concern of yours.   But the same factors that are putting a strain on the Texas grid are likely to impact the rest of the world’s electricity infrastructure at an increasing rate in the coming years.

Despite critics of deregulation, the problems Texas is facing are not purely the result electricity deregulation or policy.  Rather, Texas is coping with the impact economic pressures, weather volatility, and new environmental rules that many call necessary while others call overdone.  None of these challenges are unique to Texas.  Energy policymakers in all jurisdictions will find themselves grappling with these issues soon if they aren’t already.

Problem: Weather Volatility

Weather is a problem for the electricity grid not just because higher temperatures mean more air conditioning and thus more electricity.  Planning is critical to any electricity grid.  Planners manage capacity and infrastructure based on historical usage patterns and projected needs.  Unpredictable weather leads to difficulty in predicting peak demand.  In the case of severe weather like hurricanes or the unprecedented ice storms that hit North Texas in 2011 damage to power infrastructure can quickly compound a demand emergency.  Such was the case when Texas grid operators were forced to implement rolling blackouts in February 2011 after a combination of ice related equipment failure and spiking demand pushed the grid beyond capacity.

Solutions: Energy storage, smart grid, energy efficiency

Of these possible solutions energy storage is one that gets the least public attention.  Yet development of cheap and efficient electricity storage technology that could be deployed widely could allow electricity grids to support more demand with no need for additional power generation capacity.  This would be done by storing electricity generated during off peak times and using it when demand surges.  In today’s grids that excess capacity is, for lack of a better term, “wasted” during off peak demand times.  Better storage capacity means better fault tolerance when power plants fail.

Source: NOAA – http://www.ncdc.noaa.gov/img/reports/billion/timeseries2011.pdf

Problem: Capacity

The Texas grid is dealing with capacity concerns over the next several years.  A major part of the reason for this is lack of private investment in new power generation as a result of low wholesale electricity prices. Electricity rates in Texas at the retail level are at their lowest point in years. Natural gas prices have remained extremely low for a number of years now and are expected to stay that way for the foreseeable future.  However, this creates a situation where there is very little economic incentive for producers to build new power plans.

Solutions: Demand Response, energy efficiency, policy, higher electricity rates

One way of dealing with a capacity problem is by reducing the demand.  Energy efficiency is one obvious way to accomplish this but it requires the commitment of policy makers in setting higher efficiency standards as well as a change in consumer habits.  Both of these take time.

A more tactical way of reducing demand in crisis situations is by use of Demand Response programs.  DR programs are essentially voluntary rationing of electricity during times of peak electricity demand.  Electricity users, typically, large industrial users of electricity agree to curtail usage on short notice during times when the grid is running low on power. As part of such an agreement the electricity user would receive rate breaks or actual payments to stop using electricity in times of high demand.  Texas, in particular has a huge untapped potential in Demand Response.

Source: U.S. Federal Energy Regulatory Commission

Problem: Environment Regulations

The sense of urgency one feels around implementation of environmental rules depends on where one falls one the spectrum of concern over climate change. Even those who strongly argue for smaller government generally admit to the need for environmental regulations.   There is a wide range of opinions on how draconian such rules should be, how aggressive their enforcement timeframes should be, and at what level of government the authority to set such rules should be vested.

Texas is in the midst of an ongoing court battle with the Environmental Protection Agency. While there are several issues specifically in dispute, at the core of the fight is a belief in Texas that the EPA is overstepping its authority and in its zeal to implement aggressive rules on an aggressive timeframe they have threatened to derail the Texas economy and jeopardize the reliability of the Texas grid.

Solution: Pragmatism

The lesson to other jurisdictions is that overly aggressive attempts to create and enforce environmental regulations can backfire, cause unintended collateral damage, and counterintuitively could slow down progress on environmental issues. New rules forced to take long winding detours through the backroads of the court system will take longer to arrive at their destination.

Going forward

The Texas electric grid is not yet at a crisis point.  But it is at a pivotal moment in its history.  How its leadership deals with the myriad challenges at hand should prove to be an interesting case study in how to transform an electricity infrastructure conceived in a 20th century world into one capable of meeting the challenges of the 21st century.

See Also: Texas Officials Warn Texans to Cut Back on Electricity Usage

See Also: San Antonio may soon become the solar energy capital of Texas

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