“I think the Texas model, in the long-run, is very vulnerable.” That is a quote from a national energy leader. It seems obvious following the Texas blackouts of 2021. However, that quote is from 2017.

This article also said: “In the two-plus decades since ERCOT’s formation, naysayers in and out of Texas have been watching the Lone Star State with skeptical eyes, waiting for the perfect storm when a lack of forward-procured capacity proves fatal to grid stability.”

ERCOT (Electric Reliability Council of Texas) is the Texas regional transmission organization that oversees the state’s power market. An RTO is supposed to ensure there is power to serve utility customers.

All RTOs are not the same, though. The Texas system was designed to get the very lowest cost power possible. When there was no anomaly, the system worked well. When there was an extreme weather anomaly recently, the Texas system failed. The Texas electric system behaved as it was designed. In several ways.

Here’s one. Two RTOs in the nation do not use a capacity market as part of their system. A capacity market commits to power generation on a day-ahead and even years-ahead basis. They pay generators to be ready and have power available, even if that power turns out not to be needed. That extra power is a reserve margin.

That could be part of the Texas issue; it is not the entire reason that Texas had problems. Bloomberg News even ran this headline: “In Texas’s Black-Swan Blackout, Everything Went Wrong at Once.”

The lack of a capacity market likely hurt Texas, though. Investigations may find that even if extra power was available it might not have gotten to the transmission and distribution lines and to customers. We’ll see.

RTOs with capacity markets have their own debates and complaints about paying too much for power not used. The concern about one regional transmission organization is this – too much money is spent on un-used power, and that leads to higher prices.

Using a least-cost design can restrict cleaner power alternatives. Cheap and dirty coal can be in the mix, while non-emitting sources like existing nuclear and even some new renewables can’t compete. Decisions must be made about what is really wanted, and what the business model encourages.

The Arctic Plunge on Feb. 15, 2021. (NWS)

The Southeast works well with interconnections, utility cooperation, and affordable power without an RTO.  The independent regulators ensure reliability, reserve capacity, and affordability. The coordinative function is represented.

The Arctic Plunge of 2021 was not the first close call for Texas. A 2018 heat wave tested the system. A 2011 cold snap created problems. In 2021 the system snapped.

Part of the investigation about the Texas cold snap will probably involve a Texas capacity market. It is one power reliability factor that was not in the toolbox for Texas.


Feature image is from an Austin area neighborhood during the blackout.