‘A joint effort’ has kept Texas power grid strong amid record heat, electricity demand

Natural gas, solar and wind are playing a bigger role in the state’s energy generation mix.

By Alexandra HartAugust 14, 2023 1:07 pm,

We’re entering yet another week of scorching heat across the state, with highs forecasted to reach triple digits in Texas’ metro areas.

Along with record-breaking heat, we’ve also seen record-breaking electricity demand to keep homes and businesses cool. And so far, the lights – and AC – have stayed on as the Texas grid has avoided major failures.

Matt Smith, energy analyst for Kpler, joined the Standard with more on why ERCOT – the grid’s manager – has managed to avoid major issues.

This transcript has been edited lightly for clarity:

Texas Standard: Texans understandably get a little uneasy about the grid’s instability after, of course, that days-long deadly blackout in the winter storm of 2021. But even with all these triple-digit days, we haven’t seen major issues so far. So what’s your perspective? How is the grid managing to cope?

Matt Smith: Well, essentially, it’s been a joint effort. So as you mentioned, electricity demand hit a new record early last week. But it has been a combination of energy sources that are stepping up to make sure that Texas doesn’t experience blackouts.

So natural gas typically leads the charge, is about 40% of power generation in Texas – it’s actually stepped up to typically meet over 50% in the afternoons and evenings. But solar and wind are also playing their part as they increasingly become a bigger role in the Texas generation mix – particularly earlier in the day – so they’re combining to meet about 30% of needs. And then coal and nuclear accounting for the other 20%. So a team effort here.

» MORE: Texas could be required to connect with other states’ electric grids

So no failure so far, thank goodness, knock on wood. But are there any signs of strain on the grid? 

Yes. So, as you mentioned, ERCOT, they manage the grid; they continue to extend their weather watch warning, and so that’s in place until Friday. And so basically, that warning just highlights the underlying concerns.

It isn’t like a call to action or anything, but the step up from that is a voluntary conservation notice, which is voluntary for consumers, but a firm one basically to government agencies to implement reduced energy use. Beyond that, we’re getting into in the realm of controlled outages and additional tools to meet supply, but we’re not there yet.

Just one thing or so: It’s clear why the weather watch is in place. When you look at ERCOT’s supply and demand forecast – and you can go on their website and look at this in real time – it shows that demand for Tuesday, Wednesday and Thursday evenings are getting very close to maximum supply levels. So we’re not quite out of the woods just yet.

You know, I think this is one of those things that people just take for granted or don’t think about: It’s just like, ‘I can I can use energy whenever I want. It’ll be there.’ But then the message that ERCOT is really trying to get across this year especially, is, ‘hey, there are some peak hours where if you could, like, shift your energy use, that would make a really big difference.’ And that’s that’s one of the big messages, right?

Yeah, exactly. Because there’s just like a trend, not seasonality, but kind of on a daily basis at certain times of the day, you do see peak demand because we’re all switching the AC on or cooking dinner or running the washing machine. So is there is that kind of element of peaks here that tend to hit just because of have human behavior, essentially.

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Well, you mentioned natural gas meeting part of this demand. Prices remain low, still holding, I understand, between $3/MMbtu despite strong summer cooling demand. Why is that?

Well, we have near-record production in the U.S. here. Storage levels are really good, so we have a lot in reserves. They’re up sort of 20% versus last year and 14% versus the historical average.

So we’re really well supplied on that side of things. But that said, as as U.S. LNG exports increase, we become more at the mercy of global prices as well. But for now, prices below that $3 level, which is great for consumers.

I understand European prices just jumped up like 40% last week, is that right? Is that an impact we could see soon?

So that happens – and they’ve come back down a little bit – but they jumped because of a threat of strikes at the LNG export terminals in Australia. So across the other side of the world.

But because, you know, Qatar, Australia and the U.S., each account for 20% of total global LNG exports, such a supply ding would really impact the European market. So that’s why we saw prices spike.

Well, you mentioned LNG there, that liquid natural gas that U.S. as has become such a big exporter of. Are we expecting that to continue? Is that market share going to get even bigger?

Yes, for sure. So there’s going to be additional capacity coming through. We currently export about 12 BCF a day – that’s billion cubic feet. That’s set to rise to 15 BCF a day probably next year with new capacity coming online, after that getting possibly over 20 BCF a day as we move into the second half of this decade. So that rise is going to continue.

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