However, the Texas wholesale market only trades energy, and there is no capacity market. Normally, power generators are paid for energy production (amount of electricity) and capacity (having megawatts available on demand). In addition to having an independent power grid, Texas also has a unique energy market. There are other states beyond Texas with a deregulated power sector, where you can choose your electricity provider, but their grids are interconnected regionally. Texas is the only state with an independent grid, which makes its own rules independently from the FERC. How is the Texas power grid different from all other states? The extreme cold disabled natural gas wells and power stations that were not weatherized for such an event. However, the February winter storm was an unexpected event that caught the energy industry by surprise. The summer months the most challenging for the Texas grid, since air conditioning systems in homes and businesses consume plenty of electricity.

Since Texas gets most of its electricity from gas-fired power stations and wind turbines, there were major blackouts across the state.

For example, natural gas production was temporarily cut by 50% due to the cold weather, and wind farms went offline.

However, isolation makes the grid vulnerable to events like the February 2021 winter storm:

This is not normally a problem, since Texas has the highest energy production among all states. The WECC, SPP and SERC all operate across multiple states and are subject to federal regulation, unlike ERCOT.īeing isolated, the Texas power grid depends on internal resources to provide electricity.There are also eastern areas covered by the Southeastern Electric Reliability Council (SERC).Some northern and eastern areas are covered by the Southwest Power Pool (SPP).Some western areas of Texas are covered by the Western Electricity Coordinating Council (WECC).Texas has four power grids in operation, but ERCOT covers 75% of the state territory and 90% of the population.Minor interconnections exist, but they lack the capacity for large-scale energy trade with neighboring states.

However, 90% of the state’s population gets electricity from the ERCOT grid, which has limited its operations within the state.Įlectricity grids with interconnections across states are subject to the Federal Energy Regulatory Commission (FERC), but ERCOT is almost fully isolated. There are neighboring grids that cover small areas of Texas (WECC, SPP, SERC), and they are subject to the FERC. In other words, the Texas power grid has been independent since its creation. To avoid regulation, Texan energy companies from that time decided to operate without interstate connections, and this continues today. Roosevelt passed the Federal Power Act in 1935, which regulated any electric company with operations across state borders. The first electric companies in the US were created in the late 1800s, and there were no federal regulations for the electric industry when it was new. Why Does Texas Have Its Own Independent Power Grid?

Texas electric grid