What caused the widespread power failure in the state of Texas during last week’s cold-weather event.

Pundits and politicians are looking for someone to blame. I am not a pundit; I am not a politician; I am an engineer that has spent most of my career in the electric utility field. I spent my early career working for an engineering firm specializing in power plant design and loss prevention. My work history includes consulting with mid-Atlantic utilities from New Jersey, Pennsylvania, Delaware, Maryland, and Virginia. From 2006 to 2018, I enjoyed working for a large utility in Texas, including 10+years as a Director with responsibility for maintenance and reliability.

So, what caused the power grid to fail? The answer is not a simple one. A catastrophic event, such as the statewide power outage, rarely has a single root cause. Catastrophic failures are generally caused by perfect timing of a series of events. Let us use a systematic approach to understand why and what circumstances led to the power outage. The goal is to understand what happened and, more importantly, prevent these events from happening again.

There will be plenty of time for the blame game later.

First, a little background to understand why the Electric Reliability Council of Texas (ERCOT) shed load on the grid. Without intervention, if the electrical demand on the grid exceeds the power generators’ generating ability, the system will automatically attempt to meet that demand. beyond their capabilities. If you want to understand the technical reason why this is bad, please visit — https://letstalkscience.ca/educational-resources/backgrounders/understanding-electricity-supply-and-demand.

To prevent a situation where the power grid was compromised for several months (if power generating units were destroyed), ERCOT needed to manage supply and demand and protect the grid. Last week’s cold weather situation led to a surge of power demand as the need for heating exploded while, at the same time, power plants were tripping offline because of this same weather. Freezing weather can negatively affect power plants but we will talk more about that later. This “perfect storm” forced ERCOT to manage the demand (i.e., brownouts) to protect the grid’s integrity from the supply/demand imbalance.

To start a root cause analysis, we must first identify all possible causes for the grid failure and see if we can eliminate or cannot eliminate as possible causes.

Possible Causes

Electricity on the power grid.

I know this sounds rudimentary, but this is part of a systematic approach that will help clarify the situation. For example, the Titanic sank because it was in a body of water. That is a true statement. If the Titanic were never put in water, it would not sink. But by design, the Titanic was a ship, and its purpose was to transport passengers via water. Using that logic, we must accept that premise and design the Titanic with multiple defenses to keep it from sinking. Same with the power grid, it is designed to carry electricity and should be accepted as a possible cause.

The physical grid infrastructure (power lines & substations)

Oncor owns and maintains the physical Transmission and Delivery (T&D) equipment for the power grid. The state regulates T&D. Small areas of the grid may have experienced failures because of ice buildup on trees falling into power lines or taking out substations. These failures caused localized losses on the grid. These localized failures were limited in nature and not a significant cause of the brownouts that affected so many across Texas. Thus, we can eliminate T&D as a cause.

Extreme cold weather

I do not care which side of the climate change discussion you are on. For this analysis, it does not matter. The fact is Texas had a multi-day cold weather event. Is there anything that could have done to control the weather? For this discussion, the answer is no. Therefore, it is necessary to build defenses to protect the electrical delivery system against cold weather. We need to accept that cold weather is out of our control.

Deregulation of the electrical grid in Texas happened in the early 2000s. However, there are small pockets that are still regulated. Can we eliminate the possibility that deregulation played a role in grid failure? No, we cannot. We need to dig deeper into deregulation.

Renewable Energy: Wind and Solar.

Replacing coal-fired and older gas-fired power plants with renewables was a choice. We will need to investigate what effect renewables had on grid reliability. Renewables cannot be eliminated as a cause.

Transmission of natural gas during the cold weather

Did the natural gas supply keep up with the required demand? We need to investigate this further. Gas transmission cannot be eliminated as a possible cause.

Designed reserve capacity of the electrical grid

Was there enough reserve capacity for the grid? On paper, the answer is yes. However, ERCOT needed to brownout large portions of the state to prevent a total blackout tells me that there is not enough reliable reserve capacity to meet demand during extreme circumstances. Cannot be eliminated as a cause.

The detailed evaluation of the possible causes.

Electricity on the grid. The grid is designed to carry and deliver electricity. We must accept the risk and engineer it to be reliable.

Extreme cold weather. Without the severe cold weather, we would never have tripped the grid. Can power plants operate in frigid weather? Yes, power plants in the northern US and Canada run all winter long in subzero weather. Why did Texas’s power plants fail during the weather event? Texas power plants are not designed to operate in extended cold weather. Why not? Money. To insulate power plants against the extreme cold on the rare chance we will get five days of sub-freezing weather once every 10 to 20 years is costly. Plants are not incentivized to make these investments — from both a regulatory and shareholder perspective.

The last extreme weather event in Texas was ten years ago (2011). I was a Director with Luminant during that event. Along with other power generators, Luminant had multiple fossil units trip offline because of inadequate freeze protection. The COO of Luminant at the time called all the Directors to Dallas (Luminant’s headquarters). During that meeting, he made it clear that if we did not make our power plants reliable during the next cold-weather event that we would all be looking elsewhere for work. He told us our job is to put power on the grid (no matter the weather), and we need to be good at that. He was 100% right.

Luminant did an exhaustive root cause, built best practices, and developed a tactical plan to winterize our power plants. I must assume that other power generators did the same thing.

The next extreme cold weather event was last week, ten years later, and the same thing happened, multiple power plants tripped offline. What happened to the winterizing plans? Were they used? Were they adequate? I do not know, but evidence suggests freeze protection was again inadequate. It appears that at some point in the last ten years, it was decided that winterizing was not worth investment.

Deregulation

We need to understand how the electrical market in Texas works. Power prices on the grid are continually changing. For the past ten years, power prices have been relatively low because of the abundant supply of natural gas on which power prices are based.

When I worked for Luminant, the annual average cost for electricity was around $12 per MW, but there were times that the power price on the grid was $0 per MW. Luminant’s base costs were anywhere between $20 to $40 per MW to produce power.

At first glance, this business makes no sense. To understand, we need to know how fluctuating power prices work. Luminant would lose money ~10 months of the year (prices below $20/MW) and would break even for the summer months of July and August (prices between $20-$40/MW). Luminant would count on a total of ~24 hours of high prices to make a profit. There are usually 6 to 12 events per year that typically last less than 90 minutes each. During these events with extremely high demand, power prices can reach exorbitant levels (during last week’s event, the power prices were $9000/MW). To summarize, electrical generators lose money ten months of the year, break even two months of the year, and count on those ~24 total hours when power prices spike to create profitability for the year hopefully.

At Luminant, there were many times when the power price on the grid was $0 per MW during the fall and spring. Low wholesale power prices are a significant windfall for retail companies such as TXU, etc., as they can continue to charge retail customers at a rate significantly above the wholesale price. On the other hand, the power generators are cutting costs to keep their head above water.

• As I am writing this paragraph, the power price on the grid today, February 23, 2021, (noon), is zero per MW in ERCOT’s North and West zones. It is a whopping $0.01 per MW in ERCOT’s South and Houston’s zones.

A regulated utility’s goal is to be reliable all the time, especially during extreme weather events. Regulated power generators are guaranteed an annual profit margin (set by the regulating body), and all costs are monitored and approved by the regulator and then passed to the customer. In the deregulated world, the utility’s goal is to be profitable and provide shareholder value and grow the company through mergers and acquisitions. With a business model where a utility is losing money ten months of the year, breaking even two months of the year, and only making a profit during those super high demand times, plants are not incentivized to annually winterize a power plant, especially when frigid weather is rare.

It is my opinion that deregulation was a major cause of the power outage on the grid.

Renewables

Renewable energy is replacing fossil fuels. Since 2018, Luminant retired seven coal-fired power plants and a multitude of older gas-fired power plants. The estimated generating capacity retired is somewhere around 5000 megawatts. This capacity was replaced by renewable energy such as wind and solar power. Renewable power sources, in general, are unreliable during frigid weather and were contributing factors to grid failure. However, it appears that multiple fossil-fired power plants were also unreliable and tripped offline.

Transmission of natural gas

Natural gas is an exceptionally clean fossil fuel. Natural gas is not easy to store in its natural state (gaseous) because of the large volume required to store it. You can convert natural gas to Liquid Natural Gas (LNG); it is expensive, and the safety concerns of storing LNG far outweigh the benefits.

The extreme demand for natural gas and the ability to deliver that natural gas (in its gaseous form during severely cold weather) where and when needed last week may have contributed to the grid failure.

Designed reserve capacity for the grid

The current mix of ERCOT’s generating capacity mix is:

Coal 13.6 MW

Gas 56.1 MW

Nuclear 5.2 MW

Other including renewables 10.3 MW

Reserve capacity estimates according to ERCOT are currently 15.5%. ERCOT intends to increase the reserve capacity to 25% by 2025. With all the power plant failures during the cold weather, ERCOT either needs a much larger reserve margin or needs to improve its current generating reliability drastically.

Conclusion:

Extreme Weather

Cold weather played a pivotal role in the power grid failure. Weather caused increased demand on the grid (using electricity for heat) while at the same time power generating units were tripping offline because they were freezing up. It was a perfect storm — demand was skyrocketing while supply was not able to keep up. Without action, the grid would have been severely damaged for many months as this supply/demand imbalance would have ended up destroying power generators. The only thing ERCOT could do was to keep the demand below the supply by browning out large portions of the state by shedding load on the grid.

Deregulation

Organizations are perfectly aligned to get the results they get. Deregulation drives counterproductive behaviors of power generators. They are faced with choosing between losing money (not a good business model, companies need to make a profit) and being reliable (in all situations). During years where there are lots of price spikes (and power generators do not trip the grid, the politicians do not care), power generators make huge profits…and give out large bonuses, which I appreciated.

Renewables

Replacing fossil fuel power generating units with renewables was a political decision and makes wind and solar a target of those with a political agenda. We should understand the consequences of our actions. Renewables put you at the mercy of the environment; fossil units allow ERCOT to control generating supply.

However, the fact that multiple fossil units tripped offline during this cold weather leads me to believe the renewables performed no worse than the fossil units.

Natural Gas Transmission

During the cold-weather event, the demand for natural gas increased (people heating their homes, natural gas peaking generating units coming online to meet the electricity demands). The natural gas demand puts a strain on the natural gas transmission lines, but I do not know how many (if any) natural gas plants had to shut down because of lack of fuel. ERCOT needs to evaluate.

The only thing that matters is what ERCOT does next. We did not learn, or should I say we learned but forgot what happened during the last extended cold weather event in 2011. I call that the eyelash learning method. See attached chart below.

*Eye Lash Learning method chart

Every sailor is a great captain during calm seas. You do not discover how good the captain is until there is a storm. The utility companies in Texas do an outstanding job when the waters are calm. Evidence shows they are not so good at handling freezing weather events (stormy seas).

Without a systematic change in how Texas incentivizes the power generators, we will have significant grid failures again and again. Maybe not next year or in the next few years, but as time passes where we do not have an extreme weather event, people will forget why protecting the grid against extreme cold is essential. Those that do not learn from history are doomed to repeat it.

State regulators must be more stringent on winterization requirements.