When security of supply is the most important thing

The importance of security of supply has been underlined this week by events in the US state of Texas which has been hit by extensive power outages as unprecedented cold weather saw temperatures fall as low as -22 ^oC, leaving millions of homes without power. Brownsville, Texas saw snowfall for just the second time since 1898. Wholesale power prices broke through the market’s $9,000 /MWh price cap to settle at $9,009.40 /MWh, in the West hub at 1 am in Houston, a staggering 3,466% increase from Friday.

The issue is not just affecting electricity supplies, oil refineries have been forced to close and restrictions have been placed on gas pipeline operators.

Alongside the inevitable claims that this is climate change in action, the situation has illustrated something which is often forgotten: the most important leg of the energy trilemma (affordability, de-carbonisation and security of supply) is security of supply by some distance. We take for granted that when we hit the switch, the lights come on, but if you find in the literal depths of winter that neither your lighting nor heating can come on, this is not just an inconvenience, it is a major health risk.

“They have been in the car all day with the heater on…The inside of their home has dropped below 40 degrees,”
– Texas resident speaking about his family

Those of us that live at the edge of the grid (our house is the last house on both the electricity and gas networks, and we have no water connections) are aware that our supplies may be less resilient, and therefore plan accordingly. We have a battery that can run our sewage pump and a generator that could both charge the battery and keep essential appliances such as the freezer running. We have open fires and wood burners and various storm lamps and candles. Losing our electricity and or gas supplies would be inconvenient, and definitely not pleasant in winter, but we would manage.

But most people don’t live at the grid edge, and therefore don’t plan for outages. They may have a few candles lying around, but not much else. In Texas, people were advised to boil their water since a water treatment plant had lost power, without considering that this might be difficult in the middle of a blackout.

So what actually happened?

The situation began when severe cold weather hit large parts of the US and caused temperatures to plummet. This had two effects: demand rose sharply, exceeding the previous record by around 3.4 GW, while at the same time, a large amount of generating capacity went offline.

The Texan electricity grid was designed with high summer demand in mind, when air conditioning use is high. Some of the generators that power the grid during the summer are offline during the winter, while others were knocked out by the extreme cold weather, due to ice build-up on key equipment and severe disruptions to gas pipeline supplies. Covid pandemic measures as well as the cold weather kept people indoors, boosting electricity demand to record levels, at which point the grid was unable to cope and a series of rolling blackouts was implemented.

“Beginning around 11:00 p.m. [Sunday night], multiple generating units began tripping off-line in rapid progression due to the severe cold weather,”
– Dan Woodfin, senior director of system operations at ERCOT

“We are experiencing record-breaking electric demand due to the extreme cold temperatures that have gripped Texas. At the same time, we are dealing with higher-than-normal generation outages due to frozen wind turbines and limited natural gas supplies available to generating units,”
– Bill Magness, President and CEO of ERCOT

According to Jesse Jenkins, assistant professor at Princeton University with a joint appointment in the Department of Mechanical and Aerospace Engineering and the Andlinger Center for Energy and Environment, at once point yesterday, around 30 GW of capacity was offline: 26 GW of thermal – mostly natural gas which saw restricted fuel deliveries due to a mixture of frozen pipelines and gas being diverted for heating, and 4 GW of wind due to icing. (Other sources claimed that about half of the state’s 25 GW wind capacity was offline.)

This meant that around half of the gas fleet was offline, representing about 30% of total system capacity. However, ERCOT’s winter planning assumes 100% thermal plant availability in winter peaks, the loss of which is a major cause of the current blackouts.

The precise reasons for all of the outages are not yet available, but a report from a previous cold snap in 2014 suggested a range of causes, from natural-gas pipelines freezing up to the failure of plant safety equipment.

Temperatures this week have been low enough to trigger so-called freeze-offs, when wells shut down and pipeline use is restricted due to liquids freezing inside gas pipelines. Texan facilities operated by pipeline companies DCP Midstream LP and Targa Resources were reportedly shut on due to the cold. Gas utility Enbridge said it was limiting requests to transport gas on a pipeline from Texas to New Jersey.

As the shortages emerged, large industrial users with interruptible supply agreements were disconnected, but the situation deteriorated rapidly, requiring rotating outages for all consumers across much of the state. Almost 34 GW of generating capacity was offline at one point, which is higher than the summer peak demand for the whole of GB, and 10.5 GW of customer load was shed. But even with planned load shedding, the system struggled to cope, with system frequency struggling to reach 60 Hz (the US system operates at a higher frequency than the UK which runs at 50 Hz).

Alongside the obvious impact of the outages, the effect on one group of consumers is particularly hard: those exposed to spot market prices. A company called Griddy offers its customers wholesale price linked tariffs – some of its customers are facing $1,000-$2,000 costs for just this week, and are struggling to pay.

Another supplier called Volt has apparently been offering its customers incentives to switch to other suppliers, while others are encouraging customers to reduce consumption by a variety of means including entering them into a draw for a Tesla car if they cut usage by 10%. Whether or not consumers will be able to switch is another matter with reports that suppliers are unwilling to take on new customers before Wednesday when the weather is set to improve.

(This issue was discussed in this excellent overview of the situation by Paul McArdle of Watt-Clarity, who also carried a guest blog on his site recently describing a consumers experience of spot price exposure, both of which are worth reading.)

This is not the first time cold-related blackouts have hit Texas

In August 2011, six months after an ice storm crippled caused similar rotating outages in the state, the Federal Energy Regulatory Commission and the North American Electric Reliability Corporation issued a report into the causes of the blackouts:

“Generators and natural gas producers suffered severe losses of capacity despite having received accurate forecasts of the storm. Entities in both categories report having winterisation procedures in place. However, the poor performance of many of these generating units and wells suggests that these procedures were either inadequate or were not adequately followed.”

According to the investigation, the 2011 outages were preceded by similar events in 1989, the first time ERCOT ever implemented rotating outages:

“The experiences of 1989 are instructive, particularly on the electric side. In that year, as in 2011, cold weather caused many generators to trip, derate, or fail to start. The [Public Utility Commission of Texas] investigated the occurrence and issued a number of recommendations aimed at improving winterization on the part of the generators. These recommendations were not mandatory, and over the course of time implementation lapsed. Many of the generators that experienced outages in 1989 failed again in 2011.”

“Winterising” equipment to ensure it can sustain extended periods of below-freezing temperatures has never been a requirement in Texas as it is in other states, but with such outages only happening roughly every decade there is a question over whether the costs are justified.

In 2019 Great Britain experienced a once-in-a-decade blackout, and the same questions were raised (including by me), and while I believe the definition of SQSS should be amended to take into account co-incidental losses of embedded generation, I believe caution is appropriate when it comes to the cost of protecting against such rare events. But the Texan situation is not the same because the cause of its once-in-a-decade outages is severe cold weather that presents a significant danger to public health (extreme cold temperatures can be lethal) and safety (increased risk of accidents due to frozen roads). Many vulnerable inhabitants of the state live in poorly insulated homes, and are particularly at risk.

Texan lawmakers now have a few years to decide how to address this risk, but improving Texan homes and their energy resilience might be as worthwhile as making generating equipment cold-proof, since this would have wider system benefits.

Importance of security of supply

The importance of security of supply was explicitly recognised on 14 February when ERCOT asked the Energy Secretary to authorise all power plants in its area to run at full capacity, “notwithstanding air quality or other permit limitations”. The letter goes on to explain that a number of generators in the State had contacted ERCOT to inform it that their ability to continue running was at risk due to operating restrictions that restrict emissions, but that in the system operator’s view, breaching these restrictions was the lesser of two evils:

“However, in ERCOT’s judgment, the loss of power to homes and local businesses in the areas affected by curtailments presents a far greater risk to public health and safety than the temporary exceedances of those permit limits that would be allowed under the requested order.”

The letter identified around 100 affected power plants.

The read across to the UK is limited by a number of factors, not least that ERCOT is an energy-only market where there are no explicit payments for capacity but it does provide a useful reminder that security of supply can and does over-ride the other elements of the trilemma. And it should not be assumed that the situation in Texas could not be repeated here: this week GB also saw very low temperatures (-23^oC in Scotland), and this winter the British system has been unusually tight. As the weather warms up, we should avoid complacency and ensure that electricity system resilience is not compromised during the energy transition.