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Climate Change and The Texas Electricity Grid

Climate change is having real impacts on the Texas grid. With Texas’ grid operator ERCOT recently declaring an emergency because of record-setting electricity demands, there is considerable pressure for the state to make changes.

With global energy needs projected to rise by 25%-58%, Nature states that even just moderate increases in global temperature will only drive the constant use of air conditioners and energy. According to the same study by Nature, Commercial electricity accounts for 80% of the global total climate-driven energy demand increase. 

These summers will continue to look like the norm, the Texas grid will be overused, and consequently, reserve margins will stay dangerously low if climate change continues at its current rate.

 

Can the Texas Grid Handle the Current Population Growth of Texas?

According to the Texas Demographic Center, the total population in Texas will be closer to 50 million than its current 29 million. The question to ask then is this: will enough of the pressure be alleviated for the Texas grid through power plants and sustainable energy?

The Department of Energy put out a report in 2015 that details all of the complexities of tackling climate change. To offer solutions, and to further prevent the grid from failing due to high temperatures and increased demand, the DOE demands for more resilient grids. 

This means that builders embrace smart technology, the government starts more projects to prevent hurricane damage, and more wholesale electricity is utilized from moderate weather states during peak summer months. 

 

Will Blackouts Become the Norm?

Actually though, blackouts are pretty normal. According to Climate Central, “147 million customers lost power, for at least an hour and often far longer, from weather-related outages since 2003, an average of 15 million customers affected each year.” And so far, there has been a ten-fold increase in blackouts between the years 2003 to 2014. 

Regarding the Texas grid, this might be alarming. ERCOT’s 2019 planning report forecasts the next 15 years without adjusting for climate change-induced increases in temperatures all that much. This data could be misleading and could mean that the reserve margin is too low to keep up with electricity demand.

But all of this is speculation at this point. Texas has been making huge strides in sustainable energy. And by 2050, once the population has increased drastically and the temperatures have risen to their projected amount, the country will most likely enough sustainable pieces in motion.

Texas Heat Wave Means Record-Setting Demand for Electricity

Texas is hot right now, and demand electricity demand is even hotter. Consumers are combating the temperature by turning up their A/C dial, but this is resulting in record-setting electricity demands. 

As Reuters has laid out, the demand has been steadily rising. These demands are happening despite The Electric Reliability Council of Texas (ERCOT) forecasting lower reserve margins overall in their most recent Seasonal Assessment of Resource Adequacy (SARA) report.

ERCOT and EIA Findings

In the summer SARA report, ERCOT expresses the potential need to enter Energy Emergency Alert (EEA) status to ensure the longevity of the electrical grid. They state that the “final summer SARA report includes a forecasted peak demand of 74,853 MW, which is 1,300 MW higher than the all-time peak demand record set last summer on July 19.” 

ERCOT also states that the forecast of total electricity generation is higher than it was during preliminary findings in March, meaning that total generation capacity is up, but electricity demands are still at record levels due to the sweltering Texas heat.

The U.S. Energy Information Administration (EIA) says that ERCOT surpassed the record for peak hourly load in July of last year. This year they report that just the start of the Texas heat wave was already producing heavy demand levels: they reported that from July 15th to July 22nd, “the demand in the lower states peaked at 7o4 gigawatts (GW).” 

The EIA also states that in 2017, gigawatts reached the 718 mark, meaning that this summer has definitely seen a huge demand. This will continue as temperatures stay humid and hot.

Increased Electricity Rates a Result of Lower Electricity Generation?

Generators are also being retired because low electricity prices are making it hard to justify their operation. Commensurate with the price of gas, some generators are not turning a profit because natural gas drives most of Texas power. So, as the Permian continues its profitable outpouring, generators disappear. And an absence of generators lowers the available reserve for electricity.

As Keith Poli breaks down in this post, prices  there will most likely be an increase because of a dearth of electricity generation to meet the higher demands: “Higher real-time prices this summer would likely increase forward prices through 2022 or even longer, until enough new generation is in ERCOT’s planning queue and under construction. “

At this point, we just have to wait and see what comes out of this heatwave, and if the rises in temperature are illuminating future weaknesses in the grid. Once the heatwave cools some, and ERCOT publishes their data on the demand, we will get a more accurate read on just how much this heat wave affected electricity demand.

Analyzing The ERCOT Reserve Margin Prediction

Earlier this year, the Electric Reliability Council of Texas (ERCOT) made an optimistic prediction that raised alarms for NRG’s CEO, Mauricio Gutierrez. According to Gutierrez, ERCOT’s prediction that the next five years are looking good for Texas electricity generation and reserves is not true.

Gutierrez has said that ERCOT used outdated information in their latest forecast. He goes on to say that for a multi-year forecast (2020-2024), it’s suspicious that ERCOT included 1.7 gigawatts of power capacity from generators that are non-functional for the next 5 years. This doesn’t include another 1.4 gigawatts from thermal generation plants that are to be retired.

According to the NRG CEO, the amount of phantom power that ERCOT included in the report, accounts for 4% of the reserve margin. Currently, the reserve margin is around 8.6%, so according to next year’s projection of 10.5%, renewable energy is going to account for an increase in energy reserves.

Renewable Energy’s Effect on Texas Reserve Margins

The reserve margin is defined by the U.S. Energy Information Administration as following:  “Reserve margin is (capacity minus demand)/demand, where ‘capacity’ is the expected maximum available supply and “demand” is expected peak demand.”

This means that if the Texas Grid has a reserve margin of 12%, then there is a 12% buffer between the forecasted peak demand (total electricity demand) and the amount of electricity stored in reserves.

But will renewable energy projects generate enough electricity to push the reserve margin in the range that ERCOT predicts?

Despite what Mauricio Gutierrez says though, Texas renewable energy is humming. Wind recently surpassed coal for energy production in Texas. In addition, wind energy is continuing to drive the price of power down overall. And according to this post from Texas Policy:  “July 2018, project installations have grown to nearly 23,000 MW in Texas alone, which is now 25% of the total installed in the U.S.”

So a lot of projects are always underway in Texas, meaning that the projections and optimistic increase in the reserve margin for the upcoming summers could be an accurate assumption.

Will ERCOT’s Prediction Hold up?

Back in December, ERCOT had already predicted a lower reserve margin because of “delays and cancellations of planned generation projects.” And we will see if the optimism for Texas electricity was accurate or a little “overstated”.

As the Houston Chronicle article states,  NRG attempted to adjust the ERCOT report, they found that to reach a reserve margin in the 10-12% range, “Texas would need to add more than 17 gigawatts of new renewable generation sources in the next three years.” That’s a big margin considering that Texas currently has close to 80 gigawatts of total capacity. But time will surely tell.

 

Update:

Wholesale Electricity Rates in Texas Soar in Summer of 2019

This summer has seen dramatic spikes in wholesale electricity rates in Texas.  ERCOT has called for emergency conservation of electricity as demand for energy has pushed the electricity grid to the brink of capacity.

 

August 2019 Texas Electricity Rate Update

The electricity market in Texas this August has been a tale of two markets.  Wholesale electricity rates at times during the month spiked to levels seldom seen before.  The electricity market in Texas is designed to drive up wholesale electricity rates substantially during times of extraordinary demand.  Electricity producers make much of their annual revenue during such periods.  This occurred multiple times throughout the month of August.  With temperatures soaring to over 100 degrees in most of the state, grid capacity struggled to keep up with demand.  At times the real-time price in the wholesale market hit an astonishing level of $9,000 per MW.  This is the price cap set in place by grid authorities.

Despite the historically high wholesale prices, retail electricity rates actually managed to fall during the month of August.  This is particularly true for plans targeting the 1000 kWh usage rate.   The average electricity rate for electricity plans being offered in the Centerpoint (Houston) delivery area fell from 8.5¢/kWh in July to 7.6¢/kWh in August for 1000 kWh of usage.

The cheapest electricity rates for the 1000 kWh usage level in most parts of the state are currently being offered by Pulse Power.  The Texas Saver 12 plan offered by Pulse has a rate of 7.0¢ per kWh in the Houston area.  The 24 month version of this plan is even cheaper.

August Top Electric Companies

 

Many electricity providers are currently marketing electricity plans that aggressively seek to have a cheap average rate at the 1000 kWh usage level.  As a shopper, however, you need to make sure that this fits your needs.  Many of these plans have rates that jump substantially if you use 2000 kWhs of electricity or more for a given month.

Go Griddy Customers Burned

Meanwhile, consumers whose electric bills are tied directly to the wholesale price of electricity have had a very difficult month.  Go Griddy is a retail electricity provider based out of California who promised Texas consumers savings by allowing them to buy directly from the wholesale market in exchange for a monthly membership fee.  Customers of Griddy found themselves paying more that 100 times the price of a fixed rate electricity plan at times.  Many unhappy Griddy customers took to social media to complain that their entire monthly budget was wiped out in a matter of a day or two.

 

Electricity rates for 2020 and Beyond

Although the turmoil in the wholesale market hasn’t directly hit customers who are on fixed rate electricity plans yet, wholesale prices will eventually impact the price consumers pay on their bills.  Electricity rates in Texas have been steadily falling through out 2019.  Even in the summer, when electricity rates usually go up, they have continued to decline.  Look for rates to bottom out soon, however, and start to clime towards the end of this year and going into 2020.

How Much Does Texas Use in Energy Compared to the Rest of the US?

Do Texans lead the U.S. in energy consumption? According to a 2017 report compiled by the U.S. Energy Information Administration, we do. The Lone Star State has kept this streak going for almost 60 years. If you’re a trivia buff, check this out: about 13 percent of the energy consumed in the U.S. comes from Texas. Makes sense, after all, Texas is the second most populated state, and the second largest by land area. Here’s another staggering statistic to throw around at your next trivia match: the power consumed in Texas is nearly 100 times more than the state of Vermont!

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June 2019 Texas Electricity Rates Update

Electricity rates in Texas typically trend higher as summer approaches.  Summer brings high temperatures and high demand for electricity which typically puts upward pressure on rates.   So far this season, however, electricity rates are continuing their year-long decline.

The average electricity rate available in the Oncor delivery area fell to 7.6¢ per kWh in June for the 1,000 kWh usage level.  This was down from 7.9¢ in the previous month.  In fact, average rates ticked down for all deregulated regions of Texas across all usage levels.

 

Texas Electricity Rate Chart

Texas electricity rates

Gexa energy is still offering 24 month and 36 month electricity plans that are at or below the best rates being offered for 12 month plans.  This represents a good opportunity for homeowners to lock in the current rates for a long time.

Once again, the cheapest rates available for 1000 kWh usage levels are mostly from electric plans offered by 4Change Energy and Gexa Energy.  For those looking for cheap electricity for an apartment, all of the cheapest plans listed currently are from Trieagle.  Trieagle also has competitive rates for larger homes that usage around 2000 kWhs a month.

 

electricity plans in Texas
Average and Best electricity plans in Texas

 

Among the larger electricity brands, TXU is offering generally cheaper rates than Reliant this summer.

 

Concerns About The Summer Electricity Supply in Texas

The continued downward trend in electricity rates in Texas is particularly interesting considering that the state is preparing for what could be a difficult summer for the Texas electricity grid.  Officials are warning that Texas may run short of electricity this summer during peak demand periods.  Look for emergency warnings from ERCOT this summer asking Texans to temporarily curtail their electricity usage during hot days when demand for electricity threatens to exceed the available supply.

 

For a more detailed look, check out our Texas electricity rates page.

 

Map of Electrical Providers in Texas

 

If you’re in a deregulated energy market in Texas, you can choose REPs (Retail Energy Providers). The REP is the company that sells electricity to consumers, and it’s also the name that appears on the bill. Some people confuse the REP with the TDU. However, they’re different from the TDU (Transmission Distribution Utility). TDUs deliver power to everyone within a given region. It’s the TDU that maintains the power lines and responds to outages.

There are seven regions in Texas – the Panhandle, North Texas, East Texas, Central Texas, West Texas, South Texas and the Upper Gulf Coast. Below are some options of retail electrical providers’ plans by region.

North Texas

6.8 million people live in the Dallas-Ft. Worth-Arlington metro area, with 7.1 million in the North Texas region. The population continues to grow. In fact, up to 7.8 million people are predicted to call the North Texas region home by 2020. The TDU for most of North Texas is Oncor, with the TNMP serving other parts. Residents and businesses can choose between a broad range of plans and providers. If you’re new to the area and have not established any credit, Payless Power offers pre-paid electricity plans, and everyone is approved. TXU is one of the best-known REPs in the area, offering a variety of plans including free nights and 100% renewable energy options. Don’t worry about coming up with a deposit when you choose the right plan from First Choice Power.

East Texas

The region of East Texas represents 8% of Texas’ total population. Beaumont and Tyler are the two most populous cities in this region, and the residents in this region can choose an electrical provider. Oncor is the TDU serving most of East Texas, and the TNMP serves the rest. Residents can sign up for a free 3-day weekend electricity plan from Gexa or find a plan from Cirro Energy offering auto-pay options. If you’re new to the area, consider a plan from Payless Power, where everyone is approved, and you can have same day activation.

Central Texas

Residential and commercial customers in Central Texas cities like Killeen can choose electricity providers. The TDUs that serves the Central Texas area is the TNMP and Oncor. There are a variety of great electricity plans in this area. Businesses can find no term contract plans from Cirro Energy. If you want to make the switch to green energy, check out 100% renewable energy plans from TriEagle. Lock in a low green energy plan with a fixed rate from Direct Energy. With proper usage management, you can receive bill credits from plans offered by 4Change Energy.

Upper Gulf Coast

The region known as the upper gulf coast is where you’ll find Houston, the largest city in Texas. Centerpoint is the TDU for the Houston area. Discover great plans for larger homes to save you money, such as Eco Saver plans from 4Change Energy. If you’ve just moved to the Houston area and have yet to establish credit, consider a no credit check, no deposit plan from Payless Power. If you work from home, you’ll want to look into plans with free mornings and nights from Gexa. When you’re ready to go green, you can make the switch to Green Mountain Energy or go with the Houston-based Champion Energy, among others.

South Texas

The South Texas region has seen a 7-percent increase in population since 2010. The cities of San Antonio and Corpus Christi reside in this region. AEP Central is the TDU for South Texas. San Antonio is exempt from deregulation, but you can find cheap electricity rates and plans in Corpus Christi and other areas in this region. Lock in a great rate with a 24-month fixed electricity plan from First Choice Power. If you want to switch to a renewable energy plan, TriEagle features 100% renewable energy options, and TXU Energy offers green energy plans with free nights. Worried about bad credit? Payless Power provides no credit check electricity.

West Texas

You can find deregulated electricity providers in West Texas cities like Abilene. Oncor, AEP, North and TNMP are the TDUs that serve this region. 4Change Energy offers generous save plans, which are great for larger homes. If you’re planning to move to another place, Direct Energy and TXU Energy offer convenient month-to-month plans, and you can find plans by First Choice Power with no contract required. Gexa Energy wants you to be happy with their services, so they offer a 60-day happiness guarantee.

Panhandle

The Texas panhandle accounts for 1.7% of the state’s population. Most of the panhandle region of Texas has not adopted power to choose electricity.

Vault Electricity makes it easy to compare the best electricity companies in Texas. Find an electricity plan in your region that is best suited to your needs.