At the turn of the 20th century, Texas opted out of the national powergrid in favor of its own.
The effects of this choice can be seen today.
Here’s what you should know.
1. How is the Texas powergrid different?
The U.S. powergrid is divided into three sections:
One serves the west
One serves the east
One serves the state of Texas
Texas decided to create a powergrid for their state.
It generates power by Texans for Texans.
While this may sound good in theory, it can cause problems like the 2021 winter power blackout.
We’ll discuss more of the issues related to this below.
2. Why did Texas choose to have its own powergrid?
The state knew that power was a necessity at the turn of the 20th century (the early 1900s).
To avoid federal and interstate rules, the state decided to create its own grid by merging all the power companies in the state to create bigger companies that would share power.
This would prevent the need to export power over state lines.
As a result, Texas began to regulate its own power companies to guarantee that energy would be provided equitably.
These regulations included establishing which companies could sell electricity and discussing how much the companies could charge.
3. Why didn’t other states follow the Texas powergrid system?
Other states saw what Texas was doing and admired its efforts.
However, they found that they weren’t large enough to generate the energy required to consistently serve their residents.
Texas was able to do this because of its size.
Additionally, the state covers two time zones which means that not all its residents required power during the same period.
When parts of the state were at peak power usage, others were not.
This distribution allows Texas’s power authority — the Electric Reliability Council of Texas (ERCOT) to produce sufficient energy for Texans.
In total, ERCOT produces around 90 percent of the power for the state while other state grids supplement the rest.
4. What happened to the Texas powergrid during the 2021 winter blackout?
If you remember the big Texas snowstorm back in February 2021, you’ll probably remember that the power was out for days.
This has to do with the Texas powergrid and the fact that it isn’t connected to the rest of the country.
Just under half the state’s power comes from naturally gas-powered steam generators.
Wind turbines produce another 25 percent (approximately).
Because Texas has a generally mild climate, natural gas wells and wind turbines aren’t weatherized.
In fact, Texas normally has the most demand for power during hot summers when residents are running their air conditioners.
Minimal heating is required during typical wintertime.
The 2021 winter storm prompted snow to hit the state, which they weren’t prepared for.
The power sources failed, and the ice/cold left 4.5 million Texans without electricity for days.
The property damage was estimated at $195 billion.
5. Can the problem with the Texas powergrid be solved?
Any Texan who encountered issues during the winter 2021 storm will agree NOT having power is far from ideal.
Preventing an outage like that in the future is critical.
To prevent problems, Texas should winterize natural gas and wind power against extreme cold.
This will help to prevent the same problem that prompted the blackout.
They should also diversify their power sources to create a more reliable supply of energy.
Diversifying looks like evaluating areas that are too dependent on solar power or gas and ensuring there are backup options implemented.
For instance, solar power is a solid option, but what options does an area have at nighttime?
Additionally, those areas dependent on gas could have either price volatility or shortages that cause issues for consumers.
Texas should also look at upgrading its grid (particularly in high-population areas like cities) to help insulate them from issues in the future.
6. How does wind power contribute to the Texas powergrid?
As of 2020, Texas has over 150 wind farms which have a total nameplate capacity of 30,000 MW.
Of all 50 states in the U.S., Texas produces the most wind power of any state.
Only a few states exceeded Texas’ installed capacity.
In 2021, Texas produced nearly 26 percent of the U.S. wind energy.
The state’s vast and diverse geography makes it the leader in solar generation.
Farmers in Texas often lease their land to wind developers because it’s so valuable.
They do this through a land lease.
The Roscoe Wind Farm is the state’s largest wind farm.
Though, there are several other large wind farms throughout the state that help to supplement the energy required by Texas residents.
7. How does solar power contribute to the Texas powergrid?
Solar power is also an abundant energy source in Texas.
The western portions of the state are open with lots of sun.
The area has been widely developed for solar power, and this has been encouraged by simple permitting and significant available transmission capacity.
Both solar power and wind power put Texas in the position to be an energy-exporting state if it’s developed and maintained correctly.
8. How does energy impact the economy of Texas?
Outside of being a necessary part of Texas life, energy is a major component of the economy of the state.
The state is the largest energy producer in the nation.
It generates twice as much energy as Florida, which is the state with the second-highest production.
In 2019, Texas was also the national leader in wind power generation, comprising about 26 percent of national wind-powered electrical production.
9. Is all of Texas on the ERCOT powergrid?
While Texas has its own powergrid — ERCOT — it doesn’t actually cover all of Texas.
The Electric Reliability Council of Texas only covers about 90 percent of the state.
The portions of the state on another grid include El Paso, the upper Panhandle, and a chunk of East Texas.
This has to do with the history of these service areas and the remoteness of non-ERCOT locations.
For instance, the Panhandle is actually closer to Kansas than Dallas.
10. Is Texas really isolated from all other powergrids?
No, the Texas powergrid isn’t as isolated as it could be.
ERCOT actually has three ties to Mexico.
It also has two ties to the eastern U.S. grid, but they don’t trigger federal regulation for ERCOT.
These ties can allow power movement both commercially and in emergencies.
Another sixth connection is also being studied.
This connection is called Tres Amigas, and it would link the three big U.S. grids together in New Mexico.
However, Texas’ top regulator hasn’t shown much interest in participating.
It likes to avoid dealing with the feds at all costs.
11. Has Texas improved the grid since February 2021?
A recent (October 2022) federal assessment says NO!
The Texas electricity grid is almost as vulnerable to extreme winter weather as it was during its near-collapse during the prolonged deep freeze during February 2021’s winter storm.
That said, state regulators have deemed this analysis by the feds flawed, stating that the report contains inaccuracies and ERCOT has called on the agency to correct the report.
Although an updated report was released on October 20, it drew the same conclusion about a potential shortfall of the Texas powergrid in extreme winter conditions.
It stated that consumer electricity demand could exceed available generation capacity by 18,100 megawatts under a similar scenario as the 2021 winter storm.
To put this in perspective, one megawatt of electricity is enough to power about 200 homes during periods of peak demand.
During the 2021 storm, ERCOT ordered power providers across Texas to cut off consumers.
At one point, the demand totaled 20,000 megawatts of demand.
ERCOT cut off power to consumers to stop the Texas powergrid from failing completely.
A blackout of this magnitude again would be dangerous.
In 2021, it caused hundreds of deaths and billions of dollars in property damage.
That said, the federal assessment did state that the ERCOT grid would have more than enough generating capacity should winter conditions remain “typical.”
It’s only in the event of severe weather that grid functionality is threatened.
Final Thoughts
The Texas powergrid needs to be monitored and updated to ensure it can provide electricity to its residents even with its population growth.
People have flooded the state, and this has caused an additional burden on the grid.
To help meet the demand, the state can winterize the grid, make improvements, and ensure that no one area is dependent on a single energy source.
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Disclaimer: we are not lawyers, accountants, or financial advisors and the information in this article is for informational purposes only. This article is based on our own research and experience and we do our best to keep it accurate and up-to-date, but it may contain errors. Please be sure to consult a legal or financial professional before making any investment decisions.
Prior to starting Gokce Capital, Erika received a Bachelor of Architecture from the University of Southern California and a graduate degree in Urban Policy from Columbia University. She worked as both an architectural designer and engineer in New York before joining the New York City Department of Housing Preservation and Development.
Erika currently lives in the New York Metropolitan area with her spouse, daughter and cat. She is originally from Chicago and still considers herself a midwesterner at heart.
Erika also loves to read, write and travel (fun fact, she has visited all 50 states and more than 30 countries!). Her new book, Land Investing Mistakes: 11 True Stories You Need To Know Before Buying Land, is now available on Amazon.