Texas Blackout Hearings Highlight Intertwined Risks of Natural Gas, Power Grid and Deregulated Market

At-a-Glance:

The catastrophic breakdown of Texas’ natural gas and electric system the week of February 15 lacks a single villain to blame for it all. Instead, the widespread constraints in natural-gas supply and the shutdown of core power plant capacity that left millions without power can be chalked up to cascading failures between two interdependent systems – and any solutions will need to take these interdependencies into account to avert a similar crisis in the future. To learn more, read Texas Blackout Hearings Highlight Intertwined Risks of Natural Gas, Power Grid and Deregulated Market.”

Key Takeaways:

  • In a hearing held on February 25, power company executives pointed to natural-gas shortages for forcing more than half of the state’s winter peaking generation fleet to shut down. That loss of generation capacity forced state grid operator ERCOT to institute rolling blackouts to prevent a broader grid collapse.
  • The hearing saw disputes over whether failure to winterize the state’s natural-gas infrastructure was primarily to blame for the shortages, as opposed to a surge in demand for the fuel for both power generation and heating.
  • Underlying these technical failures are questions about the role of the state’s deregulated energy market structure.
    • ERCOT is the only major grid that operates outside the federal regulatory authority that sets maximum market prices.
    • For two decades, Texas’ energy markets have lacked the capacity and resource-adequacy constructs that other states and grid operators use to secure resources to cover rare but potentially disastrous imbalances between electricity supply and demand.
    • Instead, Texas relies on scarcity pricing of up to $9,000 per megawatt-hour during times of peak grid stress to incentive power plant owners to invest in resources to cover those emergencies.

Path to 100% Perspective:

In both Texas and California, the widespread blackouts reveal the need for updated policy, improved planning as well as technological and chronological power system expansion along with adequate modeling. Updated policy means including these renewable fuels and the plants that use them to count towards clean energy goals. As many believe climate change will make extreme weather events more common and even more unpredictable, state policymakers and regulators need to act now to decarbonize the electricity sector.

 

Photo by Mitchell Kmetz on Unsplash

3 graphs that shed light on the ERCOT power crisis

At-a-Glance:

As work continued to restore electric power across the Electric Reliability Council of Texas (ERCOT) region, data firm Lium released a series of graphs that offer early insight into the state’s grid performance in the days before the blackouts and immediately after. To learn more, read 3 graphs that shed light on the ERCOT power crisis.”

Key Takeaways:

  • Wind generation progressively slowed and ended up down around 8 GW compared with the prior week.
  • Natural gas generation was suffering shortfalls as well, with a “big crash” in early hours of Monday February 15.
  • Lium concluded that the ERCOT shortfall could have been met had natural gas, coal, and nuclear all been operating at peak summer levels (+9 GW) and if wind were operating at its typical February rate (+ 8 GW).

Path to 100% Perspective:

The recent Texas blackouts demonstrate the importance of having reliable sources of power in the event of extreme weather and natural disasters. Liquid fuels can be stored in large quantities at power plant sites for occasions when gas pressure is too low. In the future, these back-up fuels can be carbon-neutral methanol or ammonia, offering long-term, carbon-free, on-site energy storage. Excess electricity from periods of oversupply of solar and wind energy can be used to produce such renewable fuels locally in Texas.

 

Photo by Charles Fair on Unsplash

Missing Pieces of Decarbonization Puzzle Realized

Jussi Heikkinen, Director of Growth & Development, Americas
Wärtsilä Energy Business

These are exciting times as the renewable energy future is a focus for so many organizations and governments around the world, as indicated by attendance of the Wärtsilä sponsored webcast hosted by GreenBiz on November 19, 2020, Missing Pieces of Decarbonization Puzzle Realized. Emerging technologies are moving closer to reality, which makes ambitious energy goals more realistic and the path to 100 percent renewable energy is now within reach.

A place where the transition to renewables has progressed quite far already is California. The lessons learned along the way have been plentiful, but powerful nonetheless. The record-breaking heat wave that swept across the western part of the country and caused a series of blackouts in the Golden State, offered additional modelling opportunities to demonstrate the most effective mix of energy to accommodate any extreme weather situation during the transition, and to meet clean power mandates.

The big challenge facing California and the rest of the world is how to integrate renewables into the grid while building security of supply and a sustainable power system with an affordable plan for everyone involved.

That’s why Wärtsilä launched its Path to 100% initiative. We believe a 100% renewable energy future is possible, practical and financially viable so we assembled a community of experts to produce solutions based on science and engineering. This fall, we published a white paper that describes the Optimal Path to decarbonization for California using new hourly load data provided by this summer’s extreme heatwave.

In the whitepaper, Path to 100% Renewables for California, we modelled an approach for  California to reach its climate and clean power goals faster, at a lower cost to ratepayers, all while maintaining system reliability.

The “Optimal Path“ includes renewable carbon neutral fuels – hydrogen and synthetic methane. Curtailed renewable electricity is used in the process with water to produce hydrogen, and carbon is captured from air to produce synthetic methane with hydrogen. These fuels are used in power plants to provide a long term energy storage for seasonal and weather management needs. In the Optimal Path scenario, Renewable Portfolio Standard (RPS) commitments would actually be reached by 2040, five years ahead of schedule.

Generation costs in the “Optimal Path” scenarios are between 50 and 54 dollars per megawatt hour in 2045, while these costs would be almost 3 times higher if California opted to use only solar, wind and storage to build the power system. This cost difference is excessive and not beneficial for industries or households to pay. Additionally, carbon emissions are at net zero in 2045 in both scenarios.

How can California get on the Optimal Path to a renewable energy future? One recommendation is to recognize carbon neutral fuels – as presented above – to be counted as renewable for RPS purposes. This would enable the utilities to start looking for ways to invest and use such fuels to the benefit of California.

Another state aggressively pursuing renewable energy goals is Texas. Co-presenter and Electric Reliability Council of Texas (ERCOT) Principal of Market Design and Development, Kenneth Ragsdale shared the Lone Star State’s progress on integrating renewables into the power system.

Climate Imperative’s Executive Director, Bruce Nilles offered a big picture perspective on electricity generation capacity and the commitments needed to accelerate decarbonization.

To watch the recorded presentations from Wärtsilä, ERCOT as well as Climate Imperative and download presentation materials, register today for the Missing Pieces of Decarbonization Puzzle Realized webcast.