The ERCOT grid in Texas has been back in the news lately. At first, there was a lot of speculation that the current heat wave would bring about another debacle like the Valentine’s Day 2021 disturbance, in which - in the early morning hours of Monday, February 15 – the ERCOT grid (which covers most of Texas, other than El Paso and parts of eastern Texas and the Panhandle) came within 4 minutes and 37 seconds of what T&D (Transmission & Distribution) World described as “total collapse”.
Had that happened, the huge turbines
that power much of the grid (especially in Texas) would possibly have been
damaged, meaning it might have been more than a few days before the whole system was up and
running again – if that. Some people might literally have been in the dark for
months. The official death count from this incident is 246, but estimates
go as high as 700. This compares with six deaths in the great Northeast
Blackout of 2003, which covered a much larger area as well as 55 million affected
people (vs. 4.3 million affected in ERCOT).
Fortunately, nothing like that
happened this time – at least not yet. The worst that has happened so far is
that ERCOT had to warn people about conserving power and held out the possibility
of rolling blackouts. However, here’s the point: The last time I checked, this is
the third decade of the 21st century (I believe that’s true in Texas
as well as Illinois). Why should Texas’ grid be continually skirting the edge
of disaster (and the 2021 outage wasn’t the first serious winter outage), when the
rest of the country doesn’t have this problem – although smaller outages occur
everywhere from time to time?
The answer is simple: Everywhere
else in North America except for Texas and Quebec, the state/province has AC
ties to the larger grid (in other words, every non-Texas, non-Quebec city is part of either the
Eastern Interconnect or the Western Interconnect – although I believe that, in
the northern parts of Canada, the notion of “connected” becomes pretty tenuous.
I think that area is more of an archipelago than an interconnected grid). But neither ERCOT nor Quebec is connected by AC to any larger grid. They both have DC
connections to the outside world, but not AC.
Why is there a difference between
AC and DC connections? AC connections are governed by the laws of physics and
nothing more. If a disturbance occurs on one side of the connection, its
effects will immediately be felt on the other side (a serious disturbance in southern
Florida in the early 2000s was detected in less than a second in Alberta), and
power will flow in one direction or the other to equalize any difference
(although this may lead to wild oscillations for a brief period of time, in which
power flows in one direction, then the other. In the 2003 event, for a
minute or so, there were massive power flows going in one direction then the
other, across the northern shores of the Great Lakes, between the East Coast
and Michigan. They reversed direction every second or two).
However, DC connections won't adjust to compensate for a disturbance on one side, like a drop in frequency, since DC doesn't travel in waves like AC does. In addition, the amount of power flowing through any single line, AC or DC, isn't going to make any real difference if there's an ERCOT-wide disturbance. Thus, even though Texas has DC connections to the
Eastern and Western Interconnects (and to Mexico), they couldn’t have prevented the
2021 event (although ERCOT did draw on them to help in recovery from the event).
Sure, the cold weather was affecting neighboring states as well, but had Texas
had AC connections to them, the neighboring states would have almost instantaneously drawn power from their
neighbors, so there would have been at least some help for ERCOT when it was
needed. After all, the same cold was experienced by nearby states like
Louisiana, with nothing like the consequences in Texas.
Why isn’t Texas part of the larger
grids? It’s the result of deliberate decisions, meant to avoid the "problem" that they would be subject to federal regulations that only
apply when there are AC connections crossing state lines.[i] I used to think that Texas
had deliberately cut their connections with the rest of the country, but in
fact, they never
had them in the first place. The Federal Power Commission (the predecessor
of FERC) was founded in 1920, as utilities in different cities – which had previously
been electrical islands - started connecting to each other and needed some
common rules. In 1935, President Roosevelt signed the Federal Power Act, which
gave the FPC the authority to regulate interstate power sales; that has
continued under FERC. By avoiding interstate sales, ERCOT is thus generally not
subject to FERC’s jurisdiction.
Developing AC ties with the other grids
would not only bring much-needed stability to the ERCOT grid, but it would open
up a much wider market to Texas’ huge – and growing – wind power industry. Those
wide-open spaces in Texas (typical Texas directions: “Drive straight for 8
hours. Turn left at the Dairy Queen”) are perfect playgrounds for wind. In fact,
with 33,133 megawatts – i.e., 33 terawatts – of wind power capacity installed,
Texas has three times as much capacity as the number two state, Iowa (with 11 terawatts).
Texas wind producers would be able to share their blessings with other states,
rather than being confined to Texas customers. This would be a win for the
other states, as well as Texas.
However, there is one advantage of
not being connected with AC to the rest of the country: serious disturbances in
other states don’t automatically propagate into ERCOT. I don’t know of any case
where Texas avoided a serious blackout due to being isolated, but I do know
that, in the 2003 Northeast Blackout, Quebec was untouched by the devastation. Meanwhile,
almost the entire province of Ontario, their next-door neighbor, was blacked
out - in some parts for days.
However, Quebec felt the
disadvantages of isolation in 1989, when a solar storm, which didn’t affect
their neighbors much, left the entire province blacked out. In general, there’s
a lot to be said for being connected to the neighboring grid, and much less to
be said for being disconnected from it.
However, the biggest reasons for
being interconnected are financial: In the 2021 incident, wholesale market-based
power prices in Texas spiked from in the $20-30 per megawatt/hour range to
$9,000. Spiking is bad, of course (they spiked to the current limit of $1,200
for a brief period last week), but this was made catastrophically worse by the
Public Utility Commission of Texas. In a six-minute meeting on Monday morning
at the depths of the crisis, they removed the normal $1,200 cap on prices and
set it at $9,000, so that supply could match demand.
That was perhaps necessary at that
time, but the PUC left the cap at $9,000 for four days, by which time
the market price had dopped back to around $20. And ERCOT contributed to the stupidity
by telling the generators (all privately owned) that they could set their
prices at $9,000 for all four days. What was the final bill that consumers and
some utilities[ii]
face for all of this? $29
billion.
Could this have been avoided, had
ERCOT been connected to the rest of the world? Absolutely. Let’s assume ERCOT
had been connected to the Eastern Interconnect in 2021. When the PUC and ERCOT
artificially pushed the price to $9,000 and left it there for four days, every
other generator on the Interconnect would have been doing everything they could
to ship power to Texas. The price would have come down very quickly, although
it would probably have been well above $20 for at least a couple of days. However,
the shortfall would have been well short of $29 billion.
So, Texas is penalizing itself
severely by insisting on remaining separate from the rest of the US power grid.
Part of that penalty is the people who died in 2021. Another is the $29 billion
that Texans will pay (the details aren’t worked out yet, and the generators who
realized the windfall will undoubtedly be forced to take a haircut) for that
event.
But there’s an even bigger price
that Texas will have to pay, if it wants to have a stable grid but wants
to stay disconnected. There have to be a lot of investments in winterization,
of course. But there needs to be more baseload generation (and probably fossil),
so that ERCOT will finally have the reserve margin it needs to weather whatever
the changing climate throws its way. They can’t really expect to remain hanging
by a thread, hoping the next blow isn’t the fatal one.
In other states, the reserve
margin consists mostly of generators in other parts of their Interconnection. In the Eastern Interconnect, it’s guaranteed that a winter storm in the Northeast won’t at the same
time be matched with winter storms everywhere east of the Mississippi (the
approximate boundary between the two Interconnects). And a hurricane in the
Southeast won’t be matched simultaneously by hurricanes in say Chicago and
Detroit (it's been quite a while since we had a hurricane in Chicago - like never). But Texas can’t count on anyone but itself. Because of that, they need to build new
generation capacity as if the rest of the US were a vast wasteland, with no power
to send to it in an emergency. That's another huge - and unnecessary - financial cost to add to the $29 billion from last year.
This is a purely self-inflicted
burden, but Texas seems to want it that way.
Any opinions expressed in this blog post are strictly mine and are not necessarily shared by any of the clients of Tom Alrich LLC. If you would like to comment on what you have read here, I would love to hear from you. Please email me at tom@tomalrich.com.
[i] Even though the NERC Reliability Standards, including the CIP cybersecurity standards, are federal regulations and technically not mandatory for them, ERCOT voluntarily complies with them. But there are other regulations, usually enforced by FERC, that ERCOT doesn’t follow.
[ii] Actually,
a lot of generators were victims of this as well. They had obligations to
provide power during the outages, even if they were shut down by the cold
weather. So they had to pay whatever was demanded for power, in order to
fulfill their contracts.
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