Why every state is vulnerable to a Texas-style power crisis

Power outages in Texas after Winter Storm Uri left millions in the dark. Such outages are a growing threat throughout the country. | Thomas Ryan Allison/Bloomberg via Getty Images

“The infrastructure we have built right now really isn’t ready.”

The blackouts that gripped parts of Texas for days as temperatures dipped to record lows last month were stunning for a state that prides itself on its diverse and abundant energy supplies. Texas is the country’s largest oil producer, largest lignite coal producer, largest natural gas producer, and largest wind energy producer.

Yet despite its bountiful resources, every electricity source — natural gas, coal, nuclear, wind, solar — fell short just as Texans needed to warm up the most.

Now that Texas has thawed out after an icy freeze left more than 4 million people in the cold and dark, heads are rolling.

This week, Texas Public Utility Commissioner Shelley Botkin resigned, leaving just one commissioner of the three-member group remaining. This follows a wave of resignations at the Electric Reliability Council of Texas (ERCOT), the group that oversees the state’s power grid.

It’s not yet clear how many Texans died amid the cold, but several people died after they lost power, including an 11-year-old boy. Others died from carbon monoxide poisoning as they burned fuel indoors or ran their cars in desperate attempts to stay warm. Millions lost drinking water for days.

The blackouts cost the state economy upward of $130 billion in damages and losses, and some people who did have power saw their bills spike by thousands of dollars. Grid operators say that the situation could actually have been a lot worse, with the system minutes away from a monthslong blackout.

Texas politicians have not earned much sympathy from the ordeal. Texas Sen. Ted Cruz derided California’s “failed energy policies” when the Golden State suffered blackouts last year. Gov. Greg Abbott went on television to erroneously link the power outages to the Green New Deal. Other Texas politicos blamed iced-up wind turbines for the electricity shortfall when the majority of the power losses were from natural gas.

But this was a disaster that Texas should have seen coming. The state’s power grid has been creaking for years with underinvestment, despite previous winter outages, including one in 1989 and one in 2011 under very similar circumstances. And since 2011, the Texas population has grown by more than 4 million people to nearly 30 million residents, further increasing energy demand.

“What we saw here with Texas is a very pointed head-in-the-sand approach,” said Ed Hirs, an energy fellow at the University of Houston.

Yet if it can happen in Texas, it can happen anywhere. “I don’t think anyone should be getting smug about this,” said Severin Borenstein, faculty director of the Energy Institute at the Haas School of Business at the University of California Berkeley. “This is going to be a challenge everywhere.”

As the weather warms up, the Texas power grid will face another stress test as the summer is poised to bring record demand. And as the climate crisis accelerates, the risks of extreme weather events and their ensuing chaos will become an even bigger threat to electricity as the power grid gets shoved out of its comfort zone. Without drastic changes to the power grid, more blackouts are in store for everyone.

Why the Texas power grid failed to live up to its promises

By now, the factors behind the Texas winter blackout are well-established: The coldest temperatures in 30 years triggered a sudden spike in wintertime energy demand, while the chilly weather led to coal piles freezing, a nuclear reactor tripping offline, and wind turbines icing up. Most importantly, the state’s largest source of electricity, natural gas, suffered shortfalls as wellheads froze, icy condensation blocked pipelines, and compressor stations shut down.

Much of the remaining gas was prioritized for heating rather than electricity. In total, about 34,000 megawatts of power generation shut down, more than 40 percent of peak winter demand.

Faced with such huge a mismatch between supply and demand, grid operators initiated blackouts to relieve the grid in the hope of staving off even more outages.

A blackout of this magnitude isn’t due to any single point of failure or any one decision but to multiple compounding failures. And the roots of the blackout stretch back decades.

Most of Texas is served by a power grid that’s fairly isolated from the rest of the country and managed by ERCOT, which doesn’t function as a regulator so much as a day-to-day administrator. “ERCOT is the air traffic controller for electrons,” Hirs said.

Since the Texas power grid has few points where electricity crosses state lines, it falls largely outside of federal regulation, including rules about preparing for extreme weather and maintaining a cushion of extra power capacity.

The Texas Public Utility Commission did issue guidance for making the state’s power grid more resilient to extreme weather, including severe cold, but the guidelines were voluntary and largely ignored.

Another issue for Texas is that the state’s electricity system is deregulated and almost entirely market-driven, unlike other states that have more specific rules about how the system should be run. In Texas, retail utilities buy electricity from power providers — companies that operate power plants — at fluctuating prices based on supply and demand and then sell them to customers.

The idea was that this would allow the power system to self-regulate and self-optimize while providing lower energy prices than a more regulated market. Periods of high electricity prices would spur generators to put more electrons on the grid and vice versa.

In practice, what this system meant was that when wind and solar power were abundant, they could undercut other power generators in price since wind and solar have no fuel cost and very low operating costs. Coal, nuclear, and gas power plants were then pushed to recoup their operating costs during periods of higher energy demand while also competing with each other, narrowing the windows where they could operate profitably. That left little incentive to build up extra electricity production capacity to deal with unexpected demand spikes or supply shortfalls.

“In fact, the incentives direct you to remove capacity from the market,” Hirs said. “If I add capacity to the market, I’m ensuring lower prices.”

The system worked when energy supply and demand followed predictable patterns. But when it deviated, like it did during Winter Storm Uri, it led to outages. As for customers, they ended up paying more. According to an analysis by the Wall Street Journal, Texas residential electricity customers under deregulated utilities paid $28 billion more than they would have under electricity rates charged by conventional regulated utilities in the state.

So the promise of greater reliability and lower costs did not materialize for millions of Texans under the state’s free-for-all, go-it-alone energy system. “This is a collision of naïve idealism and the real world,” Hirs said.

There are vulnerabilities in electricity production throughout the US, and they’re growing

While the Texas grid is unique in many respects, the problem of underinvestment in energy infrastructure is all too common throughout the US. Much of the power grid was built decades ago. In addition to the wear and tear that comes with age, the power grid is stressed by a growing population and its rising energy demands.

Climate change is adding further pressure. Beyond extreme events worsened by climate change like hurricanes, wildfires, and heat waves, rising average temperatures themselves stress electricity infrastructure. Power plants become less efficient. Power lines carry less electricity. Transformers and inverters experience a higher failure rate. Water reservoirs that power plants need for cooling can get too hot.

Scientists are still trying to sort out if climate change will lead to more extreme cold events like the one that chilled Texas in February. But whether cold waves like the one that spawned Winter Storm Uri become more or less likely, the fact remains that the odds of another such event are not zero. It could easily happen again.

“Many weather-related threats to the electricity system are increasing in frequency and intensity and are also projected to worsen in the future due to climate change,” according to the 2017 installment of the US Department of Energy’s Quadrennial Energy Review, a comprehensive assessment of the country’s energy.

That means millions of Americans face the specter of prolonged power outages under the current power grid. “The infrastructure we have built right now really isn’t ready for this new normal,” said Kelly Sanders, an associate professor of civil and environmental engineering at the University of Southern California.

And millions have already experienced them.

In addition to California’s rolling blackouts last year as energy demand spiked due to a heat wave, the Golden State also saw blackouts in recent years after utilities deliberately shut off power to prevent wildfire ignitions. The CEO of Pacific Gas and Electric, California’s largest power utility, pleaded guilty to 84 counts of manslaughter in 2020 stemming from recent wildfires triggered by the company’s power lines.

Looking further back, Lower Manhattan was blacked out for days after the remnants of Hurricane Sandy struck in 2012. And Puerto Rico was shrouded in the largest blackout in US history after Hurricane Maria struck in 2017 and tore up the majority of the island’s utility poles.

Roy Rochlin/Getty Images

The remnants of Hurricane Sandy sent a storm surge into New York City, causing a massive swath of the Manhattan skyline to go dark for days.

These blackouts occurred in different regions, under different regulatory regimes, different energy mixes, and under different stressors. What ties them together is a failure to prepare for a world that’s changing and incentives that favor profits over preparation.

So the Texas outages were not just a consequence of its hands-off approach to electricity. “I think that this could happen in a heavily regulated market too,” Borenstein said. For instance, Puerto Rico’s power infrastructure that failed in 2017 was managed by a public utility.

The broader problem is that every power system struggles to make the case to spend money on things that may never be used. The costs are upfront but the benefits are far away and theoretical. And that case doesn’t just have to be made to regulators, but to consumers.

“There’s a lot of different market structures that could effectively incentivize investment in these things, but this is a question we all need to be asking ourselves, which is how much money are we willing to put behind investments in reliability?” said Melissa Lott, research director at the Columbia University Center on Global Energy Policy. “We are constantly trying to find that middle ground where we say, ‘Okay, here are the risks we’re facing. To what degree are we going to mitigate the potential impact of those risks?’”

That means part of the drive for greater reliability and resilience in the power grid has to come from power users, who must pressure lawmakers and regulators to act. Consumers must also be willing to shoulder some of the burden.

Preventing future blackouts requires careful planning, and it’s going to be expensive

Just like a blackout isn’t the result of any single point of failure, protecting the grid against them demands more than any single solution.

Faced with the prospect of more outages, there are a number of technical fixes: More energy storage, distributed power generation, interconnections across the major power grids, greater redundancy, microgrids, demand response, increasing energy efficiency, and hardening infrastructure.

But these things all cost money or eat into the margins of existing utilities. Trying to completely avoid all types of blackouts and grid disruptions stands to be prohibitively expensive, so part of the solution will also be managing failures and learning to bounce back after an outage.

“We’re not going to be able to concrete our way out of climate disruption,” said Costa Samaras, an associate professor of civil and environmental engineering at Carnegie Mellon University. “Managed failure sounds bad — nobody wants managed — but you want to have a system that’s flexible enough that the rest of the system can respond.”

At the same time, there is an ongoing push to incorporate more clean energy into the grid and decarbonize power production. President Biden has set a target of 100 percent carbon-free electricity by 2035, less than 15 years from now. A lot of that will come from renewable sources like wind and solar, which can vary considerably throughout the day and over the course of the year.

Are more resilience and more clean energy opposing goals? “No, these goals are not at odds,” said Jill Tietjen, a senior member of the Institute of Electrical and Electronics Engineers (IEEE), in an email. “Most utilities around the country understand the public’s desire for moving away from fossil fuels to renewable energy and doing so in a sustainable manner and are figuring out ways to do so while providing a reliable electricity supply.”

Hirs agreed. “As an engineering problem, as a physics problem, we can do it,” he said. “There’s nothing that money can’t address. ... It’s going to require spending money, and a lot of it.”

On the other hand, the US is poised to spend a lot of money on the power grid regardless. A team of researchers at Princeton earlier this year estimated that the US will spend $9.4 trillion over the next decade on energy. Shifting the energy system toward net-zero greenhouse gas emissions would add a 3 percent premium to that total, according to their calculations. Some of these costs will trickle down to customers, and if a carbon price is added to the mix, it will raise prices further. That raises concerns about equity and creates the need for a mechanism to ensure that low-income people don’t face undue burdens.

Part of the push for decarbonization throughout the whole economy — not just electricity production — means greater electrification: electric cars, electric stoves, electric heating, and so on. That will only raise the stakes of reliability and resilience in the power grid.

“If we are going to increasingly rely on electricity, the impacts when electricity fails are a lot larger,” Lott said.

And in the meantime, the power grid will face more stressors. This year is poised to be one of the warmest years on record, so energy demand will likely see another spike throughout the US this summer as air conditioners switch on. Much of the western US is currently under drought conditions, which can increase the likelihood of igniting certain types of wildfires. Power transmission lines have been implicated in sparking major fires in recent years, and the fires in turn have disrupted energy transmission.

The Lone Star State, meanwhile, is still reckoning with the recent outage. State officials are weighing changes that would impose winterization requirements, minimum capacity levels, and long-term planning. The era of the freewheeling free market for electricity may be drawing to a close in Texas. And it would behoove the rest of the country to pay close attention: No one can take reliable electricity for granted.