4 Things You Might Not Know About Electricity in Texas

Texas is a lot of things — big, diverse, gorgeous — but you can never say it’s boring. Its electricity usage is no exception.

Below we look at some surprising facts about power production and consumption in the Lone Star State.

Texas Is On Its Own Electric Grid

Texas is on its own electric grid. That is a fact many people weren’t aware of until the Event That Shan’t Be Named in February 2021. There are three electric grids in the United States: the eastern, the western, and the Texan.

Texas went this route around World War II when the Texas Interconnected System came into being. Texas electric companies joined ranks to take advantage of large hydroelectric dams. However, the federal government had just passed the Federal Power Act in 1935, giving them the right to oversee energy rates and sales for any electricity that crossed state lines.

Guess whose power didn’t cross state lines? Yes. Texas secured its own energy grid and has stuck with it to this day.

Texas Gets Overwhelmingly Powered By Natural Gas

Texas is the largest natural gas producer in the United States by a significant margin. And since the product is being extracted and processed there, why not use it to produce electricity?

Energy companies in Texas get about 47% of their power from natural gas. There are over 160 natural gas production plants in the state, and they produce around 20 billion cubic feet of natural gas per day — enough to account for a double-digit portion of the state’s annual GDP.

Texas Is A Renewable Energy Paradox

There are some strange juxtapositions in Texas when it comes to renewables. Of the state’s massive energy demands, only 1.1% is met by solar — yet Texas is second only to California for the number of solar rooftop installations. Around 780,000 homes in Texas currently have solar panels installed.

Furthermore, Texas uses the largest amount of fossil fuels in the country, from natural gas to coal to petroleum. However, they are also the top consumer of wind power. That makes Texas both a leader and a laggard in terms of renewables. It will be interesting to see how things develop in the coming decades.

Texas Consumes The Most Power Of Any Us State

That’s right. Texas is number one in energy consumption. The Lone Star State’s population is nearing 30 million, with an increasing number of mega-corporations and tech giants relocating thanks to the state’s inviting tax laws and labor supply.

In total, Texas consumed 13 quadrillion British thermal units of power in 2015 — that’s 13,000,000,000,000,000 BTUs. That’s 160% more than California’s consumption that year, 8 quadrillion BTUs — and nearly 100 times as much as the lowest consumer, Vermont (at 132 trillion BTUs).

A lot is happening in Texas: it’s an exciting proving ground for new technologies and developments among electricity providers.

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Vault Electricity is here to help you compare electricity rates in Texas, finding the best rates among all the state’s electric companies.

The Disaster that Shook the Texas Electricity Market

By now, the whole worlds know about the disaster that struck the Texas electricity grid when winter storm Uri struck the state in February.  There is no sugar coating it.  The debacle in February represented a failure of every level of the Texas electricity structure.  One of the world’s major energy hubs was unable to keep its citizens from freezing in their homes.

The Texas wind energy sector is one of the largest in the world but struggled to operate under the severe and prolonged freezing temperatures.  But wind was not the only or even the major contributor to the failure of the grid to supply enough power to keep the lights on for Texans.  The entire grid infrastructure was caught unprepared and under-winterized.

Texas still gets its largest portion of electricity from natural gas powered plants.  These failed in large numbers too along with coal and even nuclear power.  The winter blast affected all of these sources in different ways.  They all failed when they were needed most, leaving grid operators facing a nightmare scenario.   As the temperatures plummeted and demand for electricity skyrocketed, power plants began failing in rapid succession.  This was setting up a black swan scenario that could have resulted in a catastrophic failure that could have resulted in massive damage to the state’s electricity grid.  Residents could have been without power for months as much of the grid would have to be rebuilt.

In order to prevent the grid from succumbing to a cascading catastrophic failure, grid operators had to take the drastic step of off loading demand from the grid immediately early in the morning of February 15th.  And they had just moments in which to do it.  With snow covering virtually the entire state from Dallas to Houston to the border, they began cutting power to homes and businesses.  This action may have saved the grid from long term damage but it began a days long stretch of misery for Texans who would not be able to keep their homes warm.


Wholesale Electricity Rates Soar

The Texas electricity market is structured to incentivize private energy producers to build enough capacity to support the states’s electricity needs.  This is done by using the free market as a mechanism to set prices high enough in times of high demand to make it worth while for companies to invest in new power production.

Wholesale electricity rates update in real time to reflect the current demand for electricity within the marketplace.  On a typical mild spring night in Texas, the prices in the wholesale electricity market bottom out – often coming close to zero.   On hot summer afternoons, the spot price for electricity in Texas typically spikes.  The maximum allowable rate in the Texas electricity wholesale market is $9,000 per megawatt hour.  Over time the average price is around $50 per mWh.  This translates to about 5¢ per kWh.

One of the roles of Retail Electricity Providers (REPs) in Texas is to smooth out the prices by taking on the risk of volatility in the wholesale market while offering a more consistent rate to end users of electricity.


Shocking Electricity Bills for Some

The most sensational aspect of the misery suffered by Texans that week were the eye popping electricity bills reported on social media and evening news reports.  There were reports of electricity bills of over $16,000 for just a few days of electricity.  This however was not the experience of the typical Texas electricity consumer.  These bills reported in the media were largely, if not exclusively, from customers of the electricity provider Griddy Energy.

Griddy built their business by removing the safeguards provided by traditional electricity providers and exposing their customers directly to the prices of the wholesale electricity market.    Customers paid Griddy a monthly membership fee to gain access to the wholesale rate for electricity.

Most of the time this worked out great for Griddy customers because most of the time wholesale rates are lower than the rates one will find on fixed rate plans from Texas electric companies.  But when things went terribly wrong on the Texas electricity grid these consumers found themselves trapped.  They had no choice but to pay up to $9 kWh for electricity or turn their power off and freeze.

For some perspective, a home that uses 2000 kWh of electricity in a month may expect an electric bill of about $200 if we assume an electricity rate of 10¢ kWh.  If that same consumer had to pay $9 kWh, it would result in an electricity bill of $18,000!

For unsuspecting consumers, gambling on the wholesale electricity market was like canceling your homeowners insurance.  In most months you would save money because most of the time insurance isn’t used.  You could save money every month and could save money for years.  But when disaster strikes you could end up paying a ruinous amount of money.  Note: As of February 26th Griddy has been barred by ERCOT from participating in the Texas electricity market.  Their customers have been transitioned to other electric providers.

The vast majority of residential electricity users in Texas are on fixed rate electricity plans (or at least plans where rates are bound within a certain range).  This means that even as the wholesale electricity market shot to 180 times its typical price, electricity rates on bills stayed within the expected range.  For most Texans their electricity bill might be higher than normal to reflect higher usage during that period but will not be thousands of dollars higher than usual.  Ironically, some consumers may not see their bills go up at all since they were without power much of the time when temperatures were at their worst.

Renewable Energy Could Overtake Coal For Electricity Production In 2020

New data shows that the rest of the U.S. could be following Texas with renewable energy set to surpass coal as a source of electricity for the first time. Renewable energy is booming across the U.S. now that solar and wind are exponentially cheaper than they were a decade ago.

Although Texas passed this threshold last year, this will be the first time that the U.S., as a whole, is set to have renewable sources of energy overtake coal for the production of electricity.

Will Coal be another victim of the Coronavirus pandemic?

With businesses shutting down nationwide because of the COVID-19 pandemic electricity usage has declined precipitously.

Because coal plants are more expensive to run than natural gas, there has not been a lot of justification for a resurgence of coal. Or in other words, as businesses are shuttered, coal plants continue to gather cobwebs.

As mentioned before, Texas has seen a decline in coal for many years. This was first driven by cheap natural gas and in recent years more so by the proliferation of wind energy.  This year, Texas has almost tripled the amount of electricity derived from renewable means over coal production. Of course, a lot of this has to do with large renewable energy infrastructure that Texas boasts, but it is still a telling detail.

Will Coal Rebound Later This Year?

The question that many are asking is will coal rebound later this year?

Many are expecting a resurgence – or a brief return to form – for coal once business reopen. More than likely though, keeping coal plants running will continue to be more expensive than they are worth.

After all, coal plants have fallen below 50 percent of operating capacity, meaning that they are quickly making less sense to keep running. Especially with the EIA projecting average coal consumption to decrease by 23% in 2020.

Their rationale behind the percentage is derived from low natural gas prices, the COVID-19 economic impacts on the coal industry, and an already strong uptick in renewable energy sources.

Texas has only produced 16% percent of energy from coal so far this year. It seems safe to say that alternative renewable energy models are cheaper and more sustainable  in the long term than coal.

Could Texas See a Similar Blackout to California?

Despite their best intentions to inform customers on the looming shutdown that would probably affect a million people, PG&E’s computer systems failed before they could adequately let those affected know. When it was all said and done, about 700,000 California residents were powerless.

PG&E as a utility is understandably under a lot of scrutiny. They have stated that it was most likely one of their downed transmission lines that led to the  deadliest wildfire in history, Camp Fire, last year. And this most recent outage put them under the magnifying glass again. 

Regardless, with everything as interconnected as they are,  and networks not having strong enough backup emergency operations in order to prepare for grid emergencies or shutdowns, there might be something to worry about if climate change continues to progress at its current rate.

A pressing question is this: could a similar scale blackout happen in Texas, say from a hurricane or tornado?


Tornadoes? Hurricanes?

Considering that the US experiences 147 big blackouts every year, as E&E News shares, it’s safe to assume that the number will only rise. The U.S. averages about 65 weather-related outages a year. 

For Texas in particular, Hurricane Ike in 2008 caused 7.5 million power outages in Texas and the midwestern states. Basically, anyone on the Gulf Coast is at obvious risk for hurricane damage, as well as the electric grid. All the reminder we need is Hurricane Harvey, which knocked out 10,000 Megawatts of electricity near the coast and Houston. Additionally, wind turbines were turned off because for their protection because they have a maximum recommended speed at 55 mph. Wind-generated electricity was, in turn, drastically reduced.

But despite the affected power lines, ERCOT was able to effectively manage the power problems because of cooler temperatures and high reserve margins to cover the emergency. 

Yet, what if hurricanes and tornadoes (like the recent tornados in Dallas) continue to grow more frequent, so that ERCOT doesn’t have the necessary electricity to meet the demand?  On a similar note, writers are wondering if California will ever have a solution for the increasingly prevalent wildfires. 

But there’s one thing that’s for sure, as the weather gets more extreme, so too policy makers, engineers, utilities, and so forth will need to change a lot about current infrastructure. Not only to prevent disasters, but to have adequate backup plans. Texas very well could be a state that is similarly affected, especially with the extreme heat we received this summer. Will Texas see as massive a blackout as California? Probably not, but don’t count it out entirely. 

 How Plausible is an All-Renewable Electric Grid in the US?

Is the key to tackling climate change really as simple as ‘electrifying everything’. According to Vox, and many others, it is. 

Electrifying everything in this sense means that all means of energy production should be replaced with an electrical alternative (if at all feasible). Sounds great, but we aren’t quite there yet and will still have to burn natural gas to generate the majority of our electricity need (about 35% according to 2018 numbers).

Vox goes a step beyond this in another article and says that it’s economically plausible to run the U.S. entirely on renewable energy by 2050, citing this projection, among others. The authors of that Energy & Environmental Science report believe that Wind, Water, and Solar (WWS) energy will prevail and be robust enough to generate zero-carbon energy. And although there are criticisms about just how reliable most of that renewable energy would be, those same experts actually agree that the grid will be more secure with renewable grid modeling.

But there’s so many complexities at play that span all political, logistical, and technological corners of the country. Additionally, over-generation and duck curves are a commonly-posed problem with renewable energy. 

Let’s explore some solutions for facilitating this all-renewable vision for the U.S. energy system as a whole.

Some Solutions: Larger Scales, Increased Storage Facilities, and Microgrids


Let’s ignore the incredibly dense and mind-boggling policy considerations and Congressional cooperation that would need to take place to enact this global green initiative for energy. Instead, let’s explore some smaller scale solutions.

This article by David Timmons, which was featured on TechXplore, offers some insights on the importance of how cost has an inverse relationship to how large the scale of the project is. As an example, this is what he says about scalability, “in the United States, large-scale solar farms can be more than 1,000 times larger than residential rooftop systems and about half the cost.”

Switching gears, microgrids can also inch the U.S. much closer to a renewable grid. Through smaller, more flexible grids, power outages are less a threat because there are always back-up systems in place. In addition, more energy is saved because about 5% of all electricity is lost through longer transmission lengths, according to the EIA. So microgrids can be a game-changer if they are utilized strategically with key points of high renewable energy generation. 

Lastly, better battery capacity means less wasted energy. And because there is an over-generation problem with renewable energy, storing excess electricity is key for efficiency and can mean a more robust electrical grid. Using the ‘duck curve’ as an example, solar energy hits points of peak production and then obviously falls off during the night time. Better batteries can minimize the wasted electricity. 

Wind to Surpass Coal in Texas in 2020


Texas wind power has been impressive for some time now. It was this year after all that wind surpassed coal for energy production, offering 22% of all energy generated in the state in the first half of the year. And the divide between coal and wind will only grow larger come 2020. 

This is a huge difference from a decade ago when experts lamented the future of renewables, pegging them for energy generation pipe dreams. But with Texas having the most amount of wind power out of any state, reliance on this renewable is obviously very viable. 

And the rest of the world, according to BP, will follow suit with renewable energy sources to make up for increasing global energy demands: BP says that by 2040, the global energy demand will grow by a third. Additionally, natural gas and renewables will rise commensurately to generate enough energy. 

Wind Power Projections and Stats

In Texas, the Department of Energy projects that wind energy will account for 24% of all Texas energy in 2020, according to the Houston Chronicle. So, combined with coal’s steady decline as of late, forecasters are confident that wind will overtake coal all of next year, and possibly for the foreseeable future in Texas.

This contradicts what Trump says about wind energy, showing instead that wind is as relevant as ever and will continue to rise in the states. It also accounted for 114,000 jobs last year, which makes it a pretty robust talking point for not only environmental health but also employment growth.

The EIA, in their September energy review, show that renewable energy has continued to rise across all sectors for electricity generation, and that coal has consistently fallen. In addition, hydroelectric has always accounted for much more energy production, but recent national trends show wind and hydroelectric almost intersecting on the Y-axis for most graphs. This convergence speaks to just how quickly wind has progressed throughout the country. 

So, with renewables becoming cheaper and offering more jobs, the rest of the country will only add to the continually climbing numbers of renewable energy generation. Can’t argue with that.

Wind Energy Updates in 2019

What’s new in wind energy for 2019? The forecast is promising. There is an increase in both onshore and offshore development projects. Many more powerful wind turbines are popping up across the nation and even out at sea. Several states are ramping up their capacity to generate electricity from wind. It looks as if policymakers, investors and developers are starting to think outside of their comfort zones. This is great news for clean energy enthusiasts and our environment.

Costs are Dropping

Wind energy used to be costly. Now, wind energy is one of the cheapest sources of generating electricity. In fact, wind energy today costs 69 percent less than it did in 2009. Modern turbines can generate much more power at a lower cost. Projects costs are falling, and this trend is continuing. According to the DOE (Department of Energy) what once cost 7 cents/kWh for power purchase agreements in 2009, has now dropped even further to about 2 cents/kWh. The offshore wind industry is about to bloom, big time. There is potential to generate more than 2,000 gigawatts of power. That number is almost double our nation’s current electricity use. To get an idea of how many utility-scale wind turbines 2,000 gigawatts of power is, check this out: four hundred thirty-one utility-scale wind turbines are equal to 1 gigawatt of power. Of course, this technology is evolving quickly, and wind turbines are becoming more powerful.

Coastal states like Maryland, Massachusetts, New Jersey, New York and Rhode Island are driving the offshore wind industry on the east coast. And out west, California is researching floating wind turbine structures. Floating wind structures are vital to the wind industry because it enables these structures to be placed further out into the ocean, where the potential to generate clean electricity from wind is high.

The Forecast is Looking Good for the Wind Energy Job Sector

New wind industry projects mean lots of new jobs. Construction and operating jobs are on the horizon, and these are well-paying jobs. In fact, according to the Bureau of Labor Statistics, the second fastest-growing job in the U.S. is a wind energy technician. Right now, there are wind jobs in all 50 states. Land-based wind industry jobs already support over 114,000 American jobs, and it’s continuing to grow. There are over 500 factories in the U.S. for building wind-related parts, and these factories are employing Americans.

Texas leads the nation in producing the most wind power. In fact, Texas’ wind capacity is at least three times more than the runner-up, Iowa. Of course, oil is still king in Texas, but things are starting to change. The rise of jobs and the need for clean energy is evident. Along with operational roles, there are numerous manufacturing facilities and component suppliers in Texas. With the advancement of offshore and onshore wind farms, the job market potential in Texas is enormous.

The east coast is embracing the wind industry, especially with regards to offshore wind farms. A study by the Clean Energy States alliance found that even 8 gigawatts of offshore wind from Maryland to Maine can create over 36,000 full-time jobs over the next ten years. Everyone can benefit from the wind industry. The offshore wind industry is poised to revitalize ports and coastal communities, and it will deliver reliable, clean energy to some of America’s most populated areas. It’s a win-win situation.

Farmers and ranchers in rural America are embracing wind turbine placement on their property. There are significant advantages, for one, it’s a reliable, drought-resistant cash crop. Plus, there’s lots of money to be made from leasing out space for wind turbines. Landowners can receive up to $8,000 per year for a single wind turbine lease on their property. So, landowners able to host several hundred wind turbines can cash in on the growing demand for clean energy.

What to Expect

Floating wind turbines. As mentioned earlier, we can expect to see wind turbines far out at sea. They’ll be floating because the water is too deep for a fixed, solid foundation. As of now, there are operational floating wind farms in Hywind, Scotland, with five turbines generating a total capacity of 30 MW. The other, in Japan, has four floating wind turbines with a combined capacity of 16 MW. Northern California is poised to become the home of America’s first floating wind farm.

Cleaner energy support from corporations. Corporations are purchasing more and more renewable energy every year. Did you know that Facebook has committed to 100% clean energy by the year 2020? Facebook plans to do this by opting for more wind and solar power. Facebook purchased more than 7 GW of renewables in 2018, compared to 5.4 GW in 2017.

Continued growth. There is always going to be wind blowing. Best of all, it’s free. With technological advancements, lower costs, and a thriving job market, the growth in wind power is expected to grow by leaps and bounds.

It’s easier than ever to make the switch to clean energy. Compare and shop for 100% clean, renewable energy plans at Vault Electricity.