Texas Is Booming On A Brittle Power Grid, Posing ‘Disastrous’ Risks For All Of America

Texas’ economy and population are growing rapidly compared to the rest of the country, but the state’s power grid is fragile enough to pose risks that extend far beyond its borders.

The Electric Reliability Council of Texas (ERCOT), which manages the state’s grid, has flirted with blackouts in recent summers, and officials are projecting that there is a 12% chance of rolling blackouts this August between the hours of 8 and 9 p.m., according to The Dallas Morning News. Reliability concerns are persisting even as Texas plays an increasingly important role in the wider American economy, which means that a dire power emergency in Texas could cause serious disruptions to American energy production and industry, according to energy policy experts who spoke with the Daily Caller News Foundation.

“There’s no question that a failure of the Texas grid would have disastrous national implications. Texas is home to one of the biggest industrial bases in the U.S., and those operations supply goods and equipment to national markets. They all rely on the grid to remain in operation,” David Blackmon, a 40-year veteran of the oil and gas industry who now writes and consults on the energy sector, told the DCNF. “Also, electricity is the single biggest cost element for the oil and gas industry, which provides about a third of both oil and gas to the country, not to mention a large portion of refined products, plastics, fertilizers and other products derived from petroleum. A failure of the Texas power grid would result in big cost increases to every American.”

Texas has seen its population expand by more than nearly any state in the U.S. since 2020, with an estimated increase of 1.3 million people between 2020 and 2023 alone, according to data aggregated by Macrotrends. At the same time, Republican Gov. Gregg Abbott has boasted that the state’s economy is growing at a faster clip than the nation writ large, citing Bureau of Economic Analysis data, and numerous technology companies are picking the state to host massive, new power-hungry data centers, per the state comptroller.

The state is also pivotal for U.S. energy production: Texas produced about 42% of the country’s crude oil and more than 25% of America’s marketed natural gas in 2022, according to the U.S. Energy Information Administration (EIA). Texas is also home to 32 refineries, the most of any state in the country, which cumulatively amount to about one third of the country’s oil refining capacity.

Taken alone, these facts are positive for Texas. However, they suggest that power demand will only grow in the state in the coming years, a troubling sign given concerns that the grid could be pushed to failure as soon as this summer, even though the state managed to generate more electricity in 2022 than any other state in the country, according to the EIA.

“The ERCOT region is forecasted to experience tremendous electric demand growth in the next 5-7 years, which is driving the need for ERCOT to adapt and plan differently for the future,” an ERCOT spokesperson told the DCNF. “It is important to note that the August Monthly Outlook for Resource Adequacy (MORA) report provides a probabilistic assessment of grid conditions (not actual forecasts) to evaluate the risk of emergency conditions on August’s peak load (demand) days.”

The spokesperson also referred the DCNF to ERCOT’S “New Era of Planning” document, which states that the organization is in “a better position today than it ever has been” to handle the challenges facing the grid thanks to changes at all key levels of the grid planning process. However, that same document concedes that “the forecasted pace of load growth could exceed the pace at which transmission capacity can be built to support it.”

ERCOT came dangerously close to an emergency last September, especially as a prolonged heat wave took hold over the state. Conditions got so tight that the Biden administration stepped in and declared a short-lived emergency that allowed ERCOT to temporarily ignore certain pollution rules to keep the lights on.

Jason Isaac, a former state legislator who is now CEO of the American Energy Institute and a senior fellow at the Texas Public Policy Foundation, had a similar view about ERCOT’s weaknesses and the ramifications that a possible failure could have on the rest of the country.

“We’re in this situation because of market-distorting policies, namely the federal Production Tax Credit, that favors unreliable, variable, weather-dependent generation over reliable generation from natural gas, coal, and nuclear,” Isaac told the DCNF. “With Texas producing 40% of domestic oil production, refining at least 25% of our nation’s fuels and sending increasing amounts of natural gas to Mexico, a collapse of ERCOT would be devastating to Texas and the United States, and create pain for Mexico.”

Despite being a red state, Texas led the U.S. in terms of wind power generation in 2022, and the state installed more new solar capacity in 2023 than did California. Blackmon has criticized the state for incentivizing these intermittent forms of generation while not moving decisively to push new natural gas capacity over the finish line, though the state is currently providing developers with billions of dollars in assistance to build 41 gigawatts of new natural gas generation, according to UtilityDive.

“Much like Germany and the U.K., deindustrialization isn’t too far off if the legislature doesn’t act this upcoming legislative session and fix the market,” Isaac continued. “Subsidies chasing subsidies is not a solution that benefits ratepayers, taxpayers, or sends signals to industry that affordable and reliable electricity will be abundant.”