The 2021 Texas Power Crisis: What Happened and What Can Be Done to Avoid Another One?

Introduction

The electric power system in Texas failed to meet customer needs during the extreme cold that descended upon the state in mid-February, 2021. The failures generated a lot of finger-pointing: too much wind power, not enough reliable natural gas, too little regulation, failed long-run planning, and too few connections to neighboring grids, among other targets. Most early complaints were wrong.

Extreme cold overwhelmed winter preparations in Texas: this is the main story. High power bills and other financial repercussions also have created challenges. The electric power system failures were severe, but any diagnosis of the failure or proposed remedy focusing solely on the Electric Reliability Council of Texas (ERCOT) will miss the mark. Electric power was not the only industry to see failures, and power systems did not only fail in the ERCOT. Natural gas wells and pipelines began freezing up. Municipal water systems broke down in several southern states. Roads were closed due to snow and ice. Ranchers and farmers saw severe losses from the cold.

This report focuses on ERCOT and the electric power system because the power outages were the proximate cause of many hardships suffered during the failures. No single cause was responsible and no simple fix will prepare the state to survive the next extreme cold weather event. Many details will only emerge with time, but this paper aims to provide a clear analysis of what is now known, along with a bit of background on how the system works, to help the public and policymakers understand what happened and what should be done next.

Table of Contents

Part 1 Introduction

Part 2 What Happened?

2.1 How Cold Was It?
2.2 Natural Gas and Electric Power Entanglements
2.3 Not the First Time

Part 3 How Did ERCOT Perform During the Emergency?

3.1 The Financial Fallout Continues

Part 4 What Can Be Done?

4.1 Winterization Requirements
4.2 Resource Adequacy Assessments
4.3 Does ERCOT Need a Capacity Market?
4.4 Interconnecting With Neighboring Grids
4.5 Microgrids, Battery Storage, and Other New and Improving Technologies
4.6 Analyzing the Financial Challenges

Part 5 Recommendations

Part 6 Conclusion: Looking Forward

Full Policy Brief — Texas Power Failures: What Happened in February 2021 and What Can Be Done