Texas Power Grid Resiliency
In February, a massive winter storm led to a power outage in Texas that left more than 4.3 million households, around one third of the state’s electricity customers, without power for several days amid freezing weather. Over 46 gigawatts of power capacity went offline under the extreme cold weather event, resulting in broad-based failure of the power grid. The energy outages also affected the state’s water services, either making tap water unsuitable for drinking or stopping the supply altogether.
Fortunately, neighboring regions in the Southwest and Midwest saw encouraging signs of resiliency during the spike in demand. Grid operators were able to pull electricity from neighboring parts of the country that were not hit by the polar vortex, as well as from different parts of their own geographically diverse regions. As weather warms up and the threat of cold weather storms abates for the time being, Texas has a prime opportunity to learn from surrounding regions in order to develop a more resilient grid before Winter comes again.
Lessons Learned
As extreme weather events become more prevalent, utilities will need to heed warning signs and adopt new planning disciplines to ensure that they are prepared to make cost-effective investments before these high-risk situations threaten long-term growth goals. The Texas energy crisis offers several key insights.
Diversification of Energy Sources
The Texas power grid is based on centralized thermal power generation which relies on gas, coal and nuclear for 80 percent of its power during the winter. Although the installation of wind turbines has become more common in recent years, due to the seasonal nature of wind generation, it has historically contributed less to the Texas power mix during winter.
Correctly Recognizing the Risks of Extreme Weather Events
Even reliable baseload power can fail under strain caused by extreme weather events. Many system failures in Texas were attributed to the utility and grid operators not correctly considering the impacts of extreme weather risks in their system. Weather-related risks from storms, floods and fires need to be analyzed in the context of disruption to critical transportation routes and transmission and distribution network outages, all of which have interconnected impacts on one another.
Winterization
The Texas grid was built to withstand the intense summer heat the state regularly faces, but extreme cold-weather events are becoming more prevalent as well. Retrofitting existing equipment is expensive in the short-term but cost-effective when compared with February’s outage. Wind turbines can be winterized with water-resistant coatings or heating elements to prevent freeze ups. Likewise, natural gas infrastructure can be insulated to prevent the conditions that led to the shortage in supply.
Grid Interconnection
The most glaring risk that faces the Texas power system is its isolation from neighboring regional grids. Unlike the Southwest and Midwest regions where investment in interconnection and power trading are well established, the isolation of the Texas grid has limited the options available to stabilize its system through interconnection.
Advanced Storage Technology
Utility-scale storage technology is poised to transform the power industry. Falling battery prices and technological advancements have enhanced storage capabilities, making storage a more viable grid solution. Integrating battery storage into the grid is especially imperative for renewable resources to reach their full potential, as utility-scale batteries store excess power when solar panels and wind farms are over-producing and feed it back to the grid when they are not.
Updates to Energy Pricing Models
In the wake of the crisis, energy consumers that rely on a wholesale power plan (rather than a fixed-rate plan) were hit with immense energy bills. During normal weather conditions, wholesale prices tend to be lower than fixed-rates. However, because wholesale buyers pay a variable energy rate that reflects the wholesale price per kilowatt-hour for electricity at the point of purchase, the increased demand during the storm caused prices to spike to around $9,000 per megawatt-hour. For context, the average price for all of 2019 was $38 per MWh. Clearly, pricing models like these leave customers open to incredible risk.
Lucasys Is Building Better Software for an Evolving Utility Industry
The current transmission system in the US is in need of an upgrade and policy makers are beginning to recognize it. As these systems evolve, Lucasys is here to provide consulting expertise for an increasingly complex industry, as well as delivering a suite of software solutions that keep abreast of the latest regulations. Our knowledgeable team of consultants has the experience to restructure and standardize tax and accounting systems to adapt to the growing needs of the enterprise. For organizations looking for insight on standardizing their software portfolio with the latest tools available to the industry, Lucasys has the solutions. To learn more about how Lucasys can help, please visit https://www.lucasys.com/solutions.