In February, Texas experienced widespread power outages as a result of extreme winter weather throughout the region. Our thoughts are with all Texans who were affected by this difficult situation.
The Background
On February 14 and 15, Texas, as well as other central and southern regions of the United States, saw the worst winter weather conditions in decades, including large amounts of snow and temperatures significantly below seasonal averages when a winter storm passed through.
Even after the snow stopped, freezing temperatures remained for several days. As a result, energy demand climbed to record levels for the winter season while many power plants went offline due to the difficult operating conditions, and the imbalance between supply and demand led to outages.
How Demand Response Fit In
ERCOT, the transmission grid operator in Texas, declared Energy Emergency Alert (EEA) Level 3 conditions at 1:20 AM on Monday, February 15. ERCOT issues EEAs to protect the electric system from collapse when operating reserves drop below certain levels. EEA level 3 is the most significant notice, indicating that “operating reserves cannot be maintained above 1,375 MW.” Rotating outages began, with over 10 GW of load being curtailed. At this point, all load resources were deployed. This EEA level 3 condition stayed in place for 104 hours.
ERCOT deployed a variety of resources to reduce the stress on the grid, allow resources to come back on line and reduce the rotating outages, including demand response. While ERCOT worked to stabilize the grid, business customers across the state participated in demand response, where they were called upon to reduce their energy usage and to help lower overall grid-wide energy demand. Enel X demand response customers played an important role in these recovery efforts.
The ERCOT Emergency Response Service program has a maximum contractual deployment obligation of 12 hours per season; Load Resources providing Responsive Reserves must remain deployed until recalled. Many Enel X customers supported the grid by participating well in excess of their requirements. Their contributions are deeply appreciated.
Despite these efforts, however, widespread energy conservation measures were not enough to overcome the supply constraints, and many consumers and companies lost power at some point throughout the week, either due to local grid outages or rolling blackouts. Rolling blackouts were only intended to last for 15 minutes, but outages in some areas lasted multiple days.
Some facilities with backup power generation were able to maintain a level of operations for critical infrastructure while minimizing their load on the grid. One customer we spoke to understood the importance of helping during the grid emergency and ran on backup power at most of their sites in order to continue curtailing energy use. Due to the duration of the event, they had to temporarily shut down their generators for refueling before restarting again.
Price Spikes for C&I Customers in ERCOT
The real-time energy prices in ERCOT hovered around $9,000/MWh for at least 9 hours on Monday, February 15, and spent much of Tuesday, February 15 at $9,000/MWh. In total, between February 15 and February 21, real-time prices hovered around $9,000/MWh for nearly 86 hours – more than half of the total hours in the week. Prices returned to previous levels on February 19.
These higher prices were driven by the more-than-anticipated demand and a massive shortage of supply. For Monday, February 15, ERCOT had forecasted a peak load of 57.7 GW and resource outages of 8.6 GW. However, the winter storm completely disrupted the market -- the actual peak settled at 74.5 GW, while resource outages jumped up to 26.6 GW and there was a supply deficit of 21.1 GW.
During massive price spikes like these, customers with open positions or on an index product are typically advised to be mindful of potential real-time price spikes and to consider reducing electricity usage during these periods. Since recent market events like these are not always predictable, it is important for customers to consider a variety of scenarios – including rolling blackouts – when considering their risk tolerance and how to purchase their power. Enel X advisors and analysts work to help customers understand the mechanics of the regulated and deregulated markets, and the subsequent risks - and develop tailored strategies well in advance of market shocks.
The Role of Resiliency
The EPA notes that extreme weather events are growing more frequent, though some scientists are hesitant to directly connect this winter storm to climate change. Regardless, extreme weather often disrupts the grid when it arrives, as last year’s California wildfires showed.
Due to the increase in extreme weather events, more companies are evaluating solutions to mitigate the risk of future power outages. Companies are weighing the cost of potential equipment damage, lost operations, and safety against the benefit of resiliency. There are a wide variety of resiliency options – solar-plus-storage, for instance, can create relatively shorter-duration, sustainable resiliency, while a full microgrid with a backup generator can allow a facility to island and operate separately from the grid for long periods of time. Resiliency can be customized to the needs of individual sites, from the amount of power provided to the specific solutions that make up the microgrid.
Were Renewables to Blame? No.
Many have claimed that the recent growth of renewable energy like wind turbines in Texas was responsible for this event, but this claim has been widely disproven. Every type of generator failed in ERCOT due to the extreme temperatures and icing, including gas, coal, nuclear and wind.
At Enel X we believe more renewable energy can continue to be added to the grid safely, and we look forward to doing what we can to help ERCOT build a more reliable and sustainable grid as we move into the future.
