ICE VS FIRE, SAME DIFFERENCE
This week’s freezing weather has devastated power prices throughout the U.S., but Texas has definitely borne the brunt. Although other states have endured their own outages, the scale and severity of the blackouts in Texas have been especially bad. Real-time prices in the Lone Star State actually reached the $9,000/MWh price cap set by ERCOT.
The current grid troubles in Texas call to mind the rolling blackouts in California last summer, similarly compounded by a convergence of unfortunate circumstances. For example, the instigating weather events may have been at opposite ends of the spectrum but directly hampered the ability of both states’ utilities to deliver electricity to consumers, albeit for different reasons. Whereas Pacific Gas and Electric deliberately shut down power lines out of caution to avoid wild-fires (which notoriously happened anyway), ERCOT had apparently gambled on warmer weather and lost as generators of all types failed to produce at expected levels because of the extreme cold (despite the capability to winterize these facilities to operate under such conditions). Frozen gas pipe-lines suspended output from natural gas units, which had the greatest loss, but renewable generation also failed as the sun was blocked and wind turbines froze. No one source of energy is entirely to blame, but failure to prepare all generation assets for such contingencies is clearly a big problem. In addition, whereas part of CAISO’s issues stemmed from its reliance on imported power from neighboring states, which had to keep their electrons at home to deal with the scorching heat themselves, ERCOT’s isolation from the rest of the national grid is ironically what worsened its predicament, for it could not turn to nearby states to pick up its shortfall.
Texas Governor Greg Abbott has called for an investigation to “ensure Texans never again experience power outages on the scale they have seen over the past several days,” echoing a similar pledge from California Governor Gavin Newsom when CAISO was forced to expand rolling blackouts. The catalysts vary, but the mandate is the same in both states and throughout the country. Another irony is that, although an emphasis on minimizing costs contributed to both situations, new regulations that may emerge in response to these crises could raise them over the long term.