Watch out Texas. August is coming, and green energy won’t keep your air conditioning on

A woman attempts to keep cool with a wet bandanna in Austin, Texas, July 2023. Thousands died from heat related causes that year amid widespread power grid problems. This year may be even hotter
A woman attempts to keep cool with a wet bandanna in Austin, Texas, July 2023. Thousands died from heat related causes that year amid widespread power grid problems. This year may be even hotter - Jay Janner/Austin American-Statesman via AP

The summer weather in Texas has been fairly mild so far this June, with temperatures well below the near-record heat seen last year in one of the warmest summers in recent decades. But Texans would do well to prepare as best they can for much hotter weather – and worse, potential power grid interruptions at the same time – soon to come.

In recent testimony to the state legislature, grid managers at the Electric Reliability Council of Texas (ERCOT) told policymakers the state faces up to a 16 per cent chance of rolling blackouts in the depths of the August summer heat. That warning comes as no surprise to Texans like me, who remember last August, when ERCOT was forced to put out voluntary power conservation requests to consumers and businesses on what seemed like almost a daily basis. It’s an inconvenience to which many Texans have grown accustomed in recent years as the state’s grid, overloaded with unpredictable, intermittent wind and solar capacity, has trended increasingly into an unstable state.

The grid’s main weakness, a lack of adequate dispatchable thermal reserve capacity, has been well understood since 2011, when a major winter storm – comparable to February 2021’s Winter Storm Uri – caused days-long blackouts. But the lingering problem was largely ignored by power generation companies, which focused on building new wind and solar capacity to take advantage of an array of state and federal subsidies.

Following the devastation and more than 300 deaths caused by Uri, the 2021 legislature invoked significant reforms, including major revamps at both ERCOT and the state’s Public Utilities Commission (PUC). Unfortunately, the elephant in the living room – the lack of adequate thermal capacity, which in Texas means natural gas generation – was left lingering until 2023, when Lt. Governor Dan Patrick led the effort to create the Texas Energy Fund, a $5 billion fund designed to provide low interest loans and other incentives specifically for the development of new natural gas capacity.

The response to the TEF has been overwhelming, attracting 125 applications to build almost 56,000 MW of additional gas generation in the state, far more than the state’s goal of seeing 10,000 MW of gas capacity by 2029. But just days after that strong response to the TEF was announced, legislators were put on notice that they may need to consider expanding the program when they convene next January for their 2025 session.

In June 12 testimony before the Senate Energy and Commerce Committee, ERCOT CEO Pablo Vegas informed policymakers that the agency’s previous estimate that the grid’s generation capacity would need to expand from its current 85,000 MW to 110,000 MW by 2030 has been revised. To account for added demands from rapidly expanding AI technology and Bitcoin mining operations, the Texas grid will need to expand by about 75 per cent to a whopping 150,000 MW in just the next 6 years.

“We’re talking a magnitude of 10 to 30 times the energy use for an AI data centre versus a traditional one, so the impact is really significant,” Vegas said. “How many are coming? That’s still to be determined.”

In a post on X-was-Twitter, Lt. Governor Patrick called Vegas’s testimony “shocking” and questioned why legislators were only now being informed of the issue. He also took aim at AI companies and Bitcoin miners, saying they “produce very few jobs compared to the incredible demands they place on our grid.”

For policymakers and regulators at the PUC, this means that the estimated need for another 10,000 MW of reserve thermal capacity envisioned under the TEF, along with most other assumptions they’ve worked under, is already woefully out of date.

Warren Buffet’s Berkshire Hathaway firm brought a proposal in the 2021 legislative session for the state to allocate $10 billion to help fund the rapid buildout of 10,000 MW of new natural gas capacity. Senate Bill 3, passed by the state Senate late in the session, contained language based on that proposal. Unfortunately, that language was stripped out of the bill by members of the House State Affairs Committee.

Had that language remained in, it is likely that construction of some or all of that much-needed dispatchable thermal capacity would already be underway. Instead, with the grid’s needs more urgent now than ever, policymakers are left scratching their heads wondering what other shocks to the system await them around the next corner.

In the meantime, Texans are left to hope and pray ERCOT can find a way to keep their A/Cs running during the oppressive heat of August. It’s a dire situation that’s been created by decades of poor state and federal public policy. Expecting it now to be fixed by good public policy almost feels like the definition of insanity, but here we are.