Solutions to Texas Power Grid Failure

by Neil Cowan on September 26, 2024

In 2021, a winter storm and sustained frigid temperatures resulted in power outages affecting millions of people and businesses in Texas. The “Big Freeze” led to 57 deaths and more than $195 billion in property damage, according to the Energy Institute at the University of Texas at Austin — and it highlighted vulnerabilities in the state’s electric grid, such as power shortages and a lack of preparation for extremely cold temperatures at natural gas power plants.

When Hurricane Beryl reached the coast of Texas in July 2024, the storm set records for its strength early in the season. As it swirled inland, Beryl took down trees and damaged power lines, causing more than 2.6 million Texans to lose power. A week later, several hundred thousand customers were still waiting for the lights to come on — a fresh reminder of the vulnerability of the Lone Star State’s power grid.

A recent report from Climate Central highlights the problem: growing numbers of weather-related power outages in many areas of the U.S. as extreme weather escalates. Unfortunately, Texas wins as the state with the most reported weather-related power outages — 210 between 2000–2023.

How Texas Is Addressing the Power Grid Failure Problem

Texas utilities are looking at ways to build a more resilient power grid that can withstand the growing number of weather events. Strategies include moving overhead lines underground, building more transmission lines to increase capacity, diversifying power sources, and adopting technology-enabled solutions like smart grids.

Efforts to build out power grid resiliency are often lengthy projects, made more difficult by the ever-growing strain on the state’s power grid due to rapid population growth. The Electric Reliability Council of Texas (ERCOT) predicts a 72 percent increase in energy demand by 2030, or approximately 62 GW of additional load. The staggering increase in demand could exceed the pace at which transmission capacity can be built out to support it, meaning Texas businesses could be left in the dark.

One source of optimism? More battery energy storage systems (BESS) are coming online to provide reliable, flexible demand. According to the 2023 CDR report, BESS is the fastest-growing technology in ERCOT’s energy mix and will be increasingly needed to balance the expanding amount of solar generation across the grid. Flexible BESS and gas technologies will be necessary to maintain reliability, and up to 44GW may be needed in ERCOT by 2035.

The Cost of Power Failures in Texas

Businesses face rapidly compounding costs when the power goes out at their facilities. According to a recent global survey, unplanned outages cost industrial businesses nearly $125,000 per hour.

Another recent report including data from manufacturers across sectors states that downtime costs 50 percent more than it did prior to 2020 — and an average large plant experiences 25 hours per month of unplanned downtime, costing between $39,000 and $2 million (for automotive plants) per hour.

In Texas, where ice and frigid temperatures triggered the 2021 grid failure and widespread blackouts, businesses in many areas of the state lost power for several days. Total associated costs are estimated at $130 billion. The crisis impacted businesses in every industry, including:

Hospitality: Power loss interrupted the cold chain, leading to food spoilage and supply chain issues
Healthcare: Medical facilities, including hospitals, struggled to care for patients using auxiliary power
Manufacturing: Extended downtime at production facilities resulted in staggering economic losses and delays
Technology: For companies built around data storage and processing, the outage meant extended and costly downtime — and impaired customer service

Energy Reliability in Texas

While there’s no single standard ranking system for energy reliability in the U.S., a few metrics are commonly used to calculate grid reliability:

System Average Interruption Duration Index (SAIDI): Considers the average length of power outages within a given system or state
System Average Interruption Frequency Index (SAIFI): Looks at the number of outages per customer
Customer Average Interruption Duration Index (CAIDI): Averages the duration of outages in the region

Drawing on data from the U.S. Department of Energy on how many minutes of power outages the average customer experiences each year, U.S. News & World Report ranks Texas as #28 in the nation for power grid reliability.

The state’s relatively low score may be related to its independence in terms of power production — Texas has its own grid that’s primarily dependent on natural gas power generation along with wind turbines — and its vulnerability to severe weather such as thunderstorms, hurricanes, and intense heat.

How Power Disruptions Impact Business Growth

Power failures cause damage that goes far beyond a momentary loss of productivity. Even an hour of power loss can drive up labor costs, cause missed deadlines, or market share loss in a competitive industry.

If your business serves customers directly, such as a hotel or retail store, the consequences of a power failure can be immediate and severe — for example, food spoilage, frigid or sweltering temperatures for your employees and customers, downtime for your POS system leading to lost sales, and more. Let’s take a look at some of the ways power disruptions impact business growth:

Reduced Productivity: In manufacturing, production delays are the most visible consequence of a power outage. Some equipment may need to be rebooted and reset and production schedules revised, resulting in lost efficiencies and missed deadlines
Customer Loss: In retail or hospitality settings, a loss of power — without a reliable backup generator — can cause immediate losses as customers go elsewhere for what they need
Increased Labor Costs: Paying your workforce through downtime can be expensive — and scheduling overtime hours adds more to your labor costs
Cost for Repairs: If a power surge or failure causes equipment to malfunction, you might need to pay for parts and labor to make repairs
Region-Wide Investment Loss: When a region becomes known for frequent power outages or unreliability, investors may avoid sinking more capital into your business
Unemployment: Extended or frequent outages can prompt businesses to cut jobs or relocate facilities, contributing to unemployment in the region

Dependable access to power is critical to the growth of businesses of all sizes, across industries. That’s why Texas lawmakers and utilities are working to mitigate potential grid issues.

Learn More about Energy Solutions for Texas

Mitigating Power Failures in Texas

Following the catastrophic winter grid failure in 2021, Texas began a multi-tiered effort to modernize its infrastructure and improve resiliency. Some of these efforts include:

Emergency Coordination Updates

ERCOT worked with the state’s power companies to build out stronger emergency plans that focus on improving communications and coordination between utilities and government agencies.

Grid Expansion Efforts

In response to both the recent weather-related challenges and the predicted dramatic increase to energy demand, the state is investing in resilient infrastructure to build the grid’s energy capacity.

Requirements To Weatherize

Many natural gas power plants were not weatherized prior to 2021, causing them to fail in frigid temperatures. Texas has since issued mandates requiring power generation facilities to improve standards for weatherization, helping to ensure resiliency in extreme temperatures.

Microgrid Incentives for Modernization and Clean Energy

In 2023, Texas voters approved a $10 billion Texas Energy Fund to support the development of microgrids, modernize the main electric grid, and fund efforts to build out new natural gas-based power plants.

As public utilities work to modernize the Texas grid, many businesses are turning to microgrids to mitigate risks in the meantime. A microgrid is a self-sufficient energy system with several primary components: distributed energy sources (DES) such as solar panels or wind turbines, a battery energy storage system (BESS), and a software management system. Capable of operating independently, a microgrid can manage power for your entire business site or manufacturing plant, maintaining a steady flow of conditioned power — even when the public grid is down.

A Turnkey ‘Beyond Microgrid’ Solution: The R3Di^® System

While microgrids promise to be a viable solution to Texas’s grid crisis, building one on your own can be pricey and time-consuming. With a turnkey solution such as R3Di^®, you can cut out the red tape and have even more energy autonomy.

A utility-grade, onsite power generation system that delivers conditioned, uninterrupted power to end users, R3Di is a self-contained power source installed without requiring an interconnection agreement or costly public utility upgrades.

It’s capable of providing instantaneous full-load pickup — which means zero interruption — in the event of an outage and sustaining power during long-duration blackouts. It can also run as a prime source of power, giving businesses control over their power source.

Relying on safe and sustainable lithium iron phosphate (LiFePO4) battery chemistry for energy storage, R3Di^® can store and provide up to 1 MW of power and includes a natural gas generator for additional support.

In addition, e2’s Grove365 uses historical data and advanced analytics to predict peak demand times, helping you avoid increased charges. And we work with a large supplier network to secure the most competitive rates and terms based on your company’s needs.

To safeguard your Texas-based business against loss due to power failure, it’s a good idea to explore an easy-to-implement ‘beyond microgrid’ solution like R3Di^®. The R3Di^® Virtual Utility^® creates an on-site source of power, complete with 24/7/365 monitoring and optimization, delivering more than just back-up power for your business.

Schedule a Discovery Call today!