Texans Facing Another White-Knuckled Summer, an Industrial Info News Alert
SUGAR LAND, Texas–(BUSINESS WIRE)–Researched by Industrial Info Resources–Summer doesn’t officially begin until June 20, but officials at the Texas electric grid and the public utilities commission already have taken plenty of heat. And, as Texas faces another trademark hot and humid summer, officials can expect more of the same–a lot more if rolling blackouts materialize, as the state’s grid operator, the Electric Reliability Council of Texas (ERCOT) (Austin, Texas), recently acknowledged could happen this summer.
On June 7, ERCOT released a report that said there was a 12% chance of rolling blackouts in August as electricity demand, driven by high temperatures, high humidity, robust demand growth and other factors, could overtake electric supply. Several unknowns could decide whether the air conditioners stay on this summer, including the number of unplanned power plant outages and output from renewable energy generators.
A few days after that report, leaders from ERCOT and the Public Utilities Commission of Texas (PUCT) (Austin) appeared before two legislative committees–the House Committee on State Affairs and the Senate Business and Commerce Committee–to answer questions about the adequacy of the state’s electricity market. The hearings were long and occasionally contentious.
ERCOT officials have been sounding alarm bells for some time, starting with an April 23 Board of Directors meeting where Pablo Vegas, the agency’s president and chief executive, told his board that “tremendous electric load growth,” coupled with a 2023 legislative mandate that the agency plan for future electric load that previously had been considered less-than-certain, could nearly double the state’s electric demand in six years.
Vegas told the ERCOT board that “large loads,” including cryptocurrency mining, hydrogen and hydrogen-related manufacturing, data centers and electrification, could add about 41,000 megawatts (MW) of new, unplanned-for electric load by 2030. Electricity demand in the Permian Basin, the state’s largest oil and gas producing area, could add another 24,000 MW of electric demand that had not been forecast.
At that board meeting, and again last week before Texas lawmakers, Vegas said, “This new view shows unprecedented and rapid load growth (approximately 40 GW greater than last year’s forecast), which is creating new challenges and opportunities for the ERCOT system.”
The agency has held numerous local public meetings to discuss the skyrocketing projected electric demand and the potential electric shortfall.
And it’s possible there is even more data center electric load out there than ERCOT has projected. According to a report in the San Antonio Express-News, Vegas told Texas lawmakers that “some crypto mining facilities are registered with us, and we can track their performance on any given day, on how much (electric) load they’re consuming, (but) there’s quite a few that are not (registered).”
Vegas said as many as half of the state’s data centers have not registered with ERCOT, so the agency’s projections don’t include those unregistered data centers.
The Express-News report said ERCOT tracks more than 2,000 MW of crypto load, but Vegas said there could be “upwards of about 4,000” MW that it can’t track. Last year, Texas lawmakers mandated that cryptocurrency miners register with ERCOT, but many have not yet complied. ERCOT and the PUCT continue to work through implementation of that legislative mandate.
ERCOT, which serves an estimated 90% of Texas, hit a record peak load of 85,508 MW on August 10, 2023, the agency said. By 2030, Vegas said April 23, ERCOT’s load could reach about 152,000 MW–nearly double its historic peak and far higher than what it projected in 2023. For more on that, see April 25, 2024, article – Data Centers, Oil & Gas Industry to Drive Surge in Texas Electricity Demand.
It took a few weeks for the news to travel the eight miles between ERCOT’s headquarters and the Texas legislature, but when the news arrived, it caused quite a stir at two hearings last week.
Lt. Governor Dan Patrick said the ERCOT head’s testimony was “shocking” in a post on X (formerly Twitter). He wasted no time in casting a jaundiced eye at data centers, which are sprouting up nearly everywhere like mushrooms after a spring rainfall. “Crypto miners and data centers will be responsible for over 50% of the added growth,” Patrick wrote, adding, “We need to take a close look at those two industries. They produce very few jobs compared to the incredible demands they place on our grid.”
“We want data centers, but it can’t be the Wild, Wild West of data centers and crypto miners crashing out the grid and turning the lights off,” he added.
Vegas told state lawmakers that an artificial intelligence-powered data center uses 10 to 30 times the energy of a traditional data center, adding, “The impact is really significant.”
For more on the dramatic rise of data centers as drivers of electric load growth, see April 16, 2024, article – Data Center Construction Propels Electric Load Growth and Utility Capex and June 7, 2024, article – EPRI Report Sees Dramatic U.S Electric Demand Growth from Data Centers.
Earlier this month, Patrick had celebrated the overwhelming market response from power developers to a newly created $10 billion state fund to support the construction or refurbishing of dispatchable (mostly gas-fired) generation in the state. In less than a year, about 125 companies reportedly have applied for approximately $39 billion in grants and low-cost loans from the Texas Energy Fund to construct about a proposed 55,800 MW of new natural gas generating capacity. For more on the creation of that fund, see June 9, 2023, article – Texas Legislation Would Give $10 Billion Boost for New Dispatchable Generation.
Given the dramatic load growth projected by ERCOT, one has to wonder if $10 billion will be enough to keep air conditioners humming in the next few years. Of course, some of that projected load may not materialize: data centers could hunt for more hospitable places to locate, and a slump in oil prices could cut expected load growth from the Oil & Gas sector.
ERCOT’s new electric load growth projection reportedly caught several members of the Texas Senate off guard. State Senator Charles Schwertner, a Republican from Georgetown and the committee’s chairman, asked why lawmakers were just now hearing it. An ERCOT official said prior projections used a different, more conservative methodology. But a state law, HB 5066, enacted in 2023, required ERCOT to plan for future loads before developers make final investment decisions (FIDs) on those projects. And data centers can be built faster than power plants or new transmission lines.
At the June 12 hearing, a Dallas Democratic senator, Nathan Johnson, said ERCOT’s revised projections have “huge policy implications, and every assumption we’ve made in the last four years is now called into question once again. All of them.”
“Artificial Intelligence has just come on the scene, but who knows what’s next, even after that, that will consume even more?” State Senator Donna Campbell, a Republican from New Braunfels, asked. “Can we just say, ‘No, you can’t come’?”
Matt Boms, the executive director of Texas Advanced Energy Business Alliance, testified during the hearing on the importance of distributed energy resources, such as rooftop solar and smart meters, for grid reliability.
“From our perspective, you can’t solve this problem without working on the demand side of the solution,” he told a Houston TV station after his testimony. “How do we tackle energy efficiency, demand response and distributed energy resources in Texas, in a state that really needs every megawatt that it can get?”
Texans may disagree about the exact future mix of supply- and demand-side resources that are needed to keep the air conditioners humming this summer. Right now, here’s what ERCOT projects for this summer: a peak electric demand of about 78,000 MW in August, and a projected supply of about 83,000 MW.
The critical hours this summer will be in the evening, around 8 p.m. on weekdays, when renewable generation declines and electric load shoots up due to air conditioning. The grid manager said there would be a 16% probability of energy emergencies, when people will be asked to voluntarily cut their electric use. If not enough load is shed through voluntary means, then there’s a 12% chance the grid manager may have to implement rolling blackouts.
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