Responding to the Texas blackouts: SB 3 is just the first step on a long road toward reform

With the tragic events of Winter Storm Uri fading into history and the expected success of the main electric grid reform legislation, SB 3, later this week, it is a good time to take stock of what we have learned from the event and what changes we can expect for the Texas electricity market in the coming years.

Late last month, the Electric Reliability Council of Texas (ERCOT) released more conclusive data about the causes of the power plant outages during the storm. During the peak of the storm on February 15 and 16, the gas, coal, and nuclear generation fleets were producing 30 GW less than their maximum capacity.

Of that 30 GW, about 25% (7.5 GW) was due to long-term maintenance, 25% (7.5 GW) weather-related problems with gas power plants, 20% (6 GW) shortages of natural gas, 15% (4.5 GW) other equipment outages, and 15% (4.5 GW) various issues with coal and nuclear plants.

The media narrative surrounding the event has focused on the 12 GW of power plant outages related to the weather and the 6 GW caused by gas shortages. Following that narrative, the vast majority of SB 3 is focused on weatherization, gas supply, and coordination of our energy systems. These steps are all necessary, but they are all geared toward rare winter storms, not toward the summers, when demand will reach or exceed the levels seen during Uri every year from here on out.

The public debate around SB 3 almost completely overlooked the real systemic problem these blackouts brought to light: Even if all the weather-related problems had not occurred, the ERCOT grid would have still been short of electricity, at one point up to 10 GW short, for more than 24 hours during the storm. Even with average summertime levels of power plant outages, a comparably low instead of the 14 GW going into Uri, outages still would have been likely Monday night into Tuesday morning.

The bottom line is that Texas’ electricity demand is growing, but the supply of reliable thermal generation is not growing. ERCOT’s planning documents are showing an increasing reliance on wind and solar to meet peak demand growth over the next few years. We are replacing resources that consistently produce nearly all of their capacity with resources that vary up to 40 percent and not doing anything about this increasing unreliability. This situation is not sustainable.

SB 3 does contain some provisions that will give the Public Utility Commission of Texas (PUC) latitude to start addressing this problem. Sections 13 and 17 require the commission to  consider establishing more clear reliability standards and adjusting prices to incentivize more dispatchable generation. While these sections leave far too much to the discretion of the PUC, they do offer a clear directive for market reform, the only parts of SB 3 that do so.

Wind and solar advocates consistently claim that demand response and energy storage can manage the variability of those resources and that we do not need dispatchable generation. This is a fantasy borne of statistical models and academic studies, not real-world experience. Even most assessments in the academic literature have some disclaimer to the effect of “Batteries and demand flexibility do not substitute for firm resources.”

Demand response is an excellent tool on the margins, as industrial facilities can turn off quickly to adjust to sudden drops in electric supply, and residential and commercial consumers can adjust their thermostats to some degree. But there is an upper limit to the ability of consumers to shoulder the burden of unreliable electricity supply. Most consumers are not willing to turn off their air conditioning in 100-degree heat to match 20 or 30 percent swings in wind and solar output.

Energy storage can also help in small ways, shifting a small amount of energy from midday or late-night wind to morning or early evening when demand is highest. However, it is not the saving grace that it is often claimed to be. The scale needed for batteries to compete with baseload power plants is breathtaking and not something that can be solved by technology alone.

For Texas to rely on 100% wind and solar, the state would need at least a day worth of energy storage for the entire grid, and Winter Storm Uri would have required 3 to 4 days of storage. Just to reach a day of storage capacity would require building a battery the size of a small power plant (100 MW/400 MWh) every day between now and 2035, at a cost of nearly $100 billion per year. Building 10 to 20 of those systems annually, the expected rate over the next few years, won’t get Texas anywhere close.

The Texas Legislature and the PUC need to understand these physical realities and start dealing with them now. SB 3 is a start, but it is far from sufficient. The PUC needs to take strong action to manage the variability of wind and solar and to make those resources improve their reliability, rather than continuing to place the cost of that unreliability on consumers and putting the Texas grid at risk of more blackouts in the future.