How the Texas grid handled record-breaking demand

Alex Crees
By Alex Crees August 6th, 2018
For business

As summer approached, experts feared the worst in Texas: the closure of three major power plants coupled with the anticipation of extreme temperatures was expected to cause price surges and potential brownouts as demand skyrocketed.

They were right about the heat: temperatures in mid-July soared above 100 degrees amidst a lingering heat wave. Demand, correspondingly, broke records – multiple times in one week.

On July 18, Texas peak power demand exceeded 72,000 megawatts for the first time, surpassing the previous all-time high of 71,110 megawatts set in August 2016. A day later, the record was broken again when Texas peak power demand topped out at 73,259 megawatts.

But, as Bloomberg reported, prices in what was supposed to be the country’s most-exciting power market this summer weren’t quite as volatile as predicted. “It was all a bit hyped up,” Will Nelson, an analyst at Bloomberg New Energy Finance, told the publication.

And, as the Houston Chronicle reported, despite predictions that the power grid wouldn’t be able to support the state’s electricity needs, “the lights stayed on.”

Here’s how the grid handled the record-breaking demand – and why expectations were so dire to begin with.

Gearing up for a perfect storm

As early as February, the Electricity Reliability Council of Texas, which oversees 90 percent of the state’s power grid, was issuing power price warnings for the upcoming summer.

“We are going into a summer where people are going to be paying a lot, potentially paying a lot more,” Brandy Marty Marquez, a member of the state’s Public Utility Commission, told the Chronicle. “We are not really sure what we are going to see.”

Scheduled coal plant retirements were major drivers behind those concerns.

ERCOT said it was expecting the state power grid to lose more than 7,000 megawatts of power capacity during the summer, 4,000 of which would come from the loss of three of the state’s largest coal plants. For reference, 1 MW is enough to power 200 homes on a summer day.

The retirements reduced ERCOT’s summer power reserves below the state’s recommended levels, which dictate that the grid’s generating capacity should exceed demand by at least 13.75 percent.

Instead, ERCOT’s forecasts for the summer indicated the reserve margin – the difference between generating capacity and demand – would fall to 9.3 percent at the time of year when demand was guaranteed to be at its highest.

Responding to the warnings

Hour-by-hour power surges in July may have led to as-of-yet undisclosed behind the scenes drama, but overall the Texas grid held up to demand – without issuing pleas asking homes and businesses to conserve power.

Compare the situation with California: The heat there triggered power outages that impacted tens of thousands of customers in the state and prompted grid operators to issue statewide Flex alerts.

ERCOT credits careful planning for handling conditions that tested the grid’s reliability.

Anticipating extreme temperatures, the grid operator “took steps to ensure it had enough supply by restricting planned transmission outages during the summer months and conferred with pipeline companies to ensure that natural gas needed to generate electricity made it to power plants,” according to the Chronicle.

Clean energy also provided an assist, according to Bloomberg: though ERCOT estimated wind power would average 4.1 gigawatts a day over the cooling season, it exceeded expectations, averaging 6.6 gigawatts in July.

In the clear?

While the outlook has remained sunny so far, it may be a little too early to celebrate a successful summer for the state power grid.

Like July, August is also expected to see hotter-than-normal days in the state, and it’s also a month when wind power typically slows.  Last year, wind power production fell 26 percent in August compared with the month prior.

A combination of extreme heat, timely plant outages, and low wind could result in the season’s first shortage-induced power prices, according to Bloomberg.  ERCOT has tripled the system-wide offer cap (a price limit during scarcity conditions) to $9,000 a megawatt-hour from $3,000 in 2011.

“August is a low-wind month and just a few days of extreme heat can blow the stack off the grid,” Dan Grunwald, a power markets analyst at Morningstar, told Bloomberg. “I wouldn’t expect to see $9,000 in the day-ahead market but maybe $4,000 is possible .”

ERCOT says it’s prepared: “We anticipate continued reliability,” DeAnn Walker, chairman of the Public Utility Commission, said in a released statement.

Alex Crees is a writer covering issues related to energy, the environment and politics.  Her work has appeared in Fox News and Prevention. Alex earned a bachelor’s degree in journalism from New York University.