Texas Electricity Blackouts Enabled by Feedback Loops; Reliance on Competition

Today, three days after the winter storm hit Texas, electrical outages are still continuing in parts of Texas. We don’t have all the answers yet, but let me tell you what I have pieced together about what has happened. One of the issues is direct and indirect feedbacks, as outlined in the graphic below, and described further in this post.

Figure 1. Cold weather affected both natural gas supply and electricity. In addition, a shortage of natural gas interrupted electricity supply, and electricity outages reduced natural gas availability.

Another issue is electricity deregulation in Texas. The competitive marketplace produces a situation not all that different from the situation in which BP operated that led to the oil spill in the Gulf of Mexico. Under Texas’ structure, there are many entities, each concerned primarily with its own bottom line. In this environment, cost cutting in the name of profitability is rewarded, but can lead to power outages. Integration with the many other units involved in electricity generation, while possible in theory, is extremely difficult in practice in times of market stress. The competitive marketplace provides price integration, but leads to a greater chance of cascading failure, since each company can be expected to look out for itself, leaving regulators with an expanded role in making certain that the system as a whole functions properly.

We are now considering adding more wind to the electric grid, as well as adding natural gas and electric vehicles. These will all have the effect of making the organization more complex. Each entity will be working to optimize its own profitability, with little focus on the overall success of the system. The failure of the Texas grid system in cold weather should act as a caution to those who expect that the integration of even more types of providers into the natural gas/electricity system can be done with few problems.

Feedback Loop Issues

What happened in Texas was that two coal fired power plants tripped offline, related to freezing water pipes, and this started a whole cascade of other effects. In the next sections, I describe this situation, and the feedbacks, in more detail.

Cold Affected Electricity Supplies

Cold weather had direct impacts on electricity production. In the Globe Newswire, we read that frozen pipes in two inadequately weatherized coal-fired power plants were the immediate cause of the crisis. Coal fired power plants tend to be large. Taking two of them off-line simultaneously can be disruptive in and of itself.

There were other weather-related issues. According to the Star-Telegram,

Trip Doggett, president and CEO of ERCOT, said there was no one reason that power failed Wednesday at 50 electrical generating plants. Instead, he said, there were a variety of reasons and no pattern emerged either geographically or by provider. Frozen pipes, valves and monitoring systems were just some of the reasons, he said.

Cold Affected Natural Gas Supplies

This happened in three different ways:

1. Newly pumped natural gas supplies lower

Cold weather affected the amount of natural gas extracted. Platts reports:

US production for Thursday’ gas day would be about 57.5 Bcf, Bentek said, down from more than 62 Bcf a week ago — before the emergence of the cold front that left a large swath of the US with snow on the ground.

“There’s a pretty sizeable amount. The cold has shown a large effect in more than just Texas. We are seeing freeze-offs or lower production in the Rockies, the Anadarko [field] in Texas and Oklahoma, East Texas and the Texas Gulf Coast,” senior Bentek analyst Matt Marshall said.

Freeze-offs occur when low temperatures crystallize the small amounts of water produced with natural gas, forcing blockages at the wellhead, and are most common in extreme and prolonged cold snaps.

Platts also says, “Much of the production loss was centered around Texas, where more than 2 Bcf was lost, according to Bentek data.”

2. Stored natural gas supplies didn’t give enough “boost”

Normally, natural gas supplies come from a combination of natural gas that is just now being stored, plus natural gas that has been set aside in storage during the time of year when demand was low. But the amount that is available from storage hasn’t been enough, since many states are now reporting low supply.

There are really two different functions that natural gas from storage can provide. It can  (1) add to total supply, as long as there is natural gas in storage and it can  (2) supplement daily needed amounts. It is clear that storage is not adequate for supplementing daily needed amounts, even though the caverns may appear to have plenty left in them. This is an issue of the “size of the tap” versus the “size of the tank”. It doesn’t matter if a natural gas tank is full, if users can’t get much out on a daily basis.

Natural gas storage is expensive, and is normally only created where naturally occurring caverns can be adapted for this use. No one would seem to have economic incentive to create gas storage if it will only be needed very rarely, and of course, adding such storage would add to the overall cost of natural gas. I don’t know the details of US natural gas storage. It may that to provide adequate short-term supplementation, one would need more, smaller storage locations, closer to where supplementation is needed.

3. Everybody using the same natural gas

There are multiple users for natural gas:

  1. Homes heating with natural gas,
  2. Businesses heating and cooking with natural gas,
  3. Industrial users other than electricity users, who use electricity in their processes, and
  4. Electricity users.

Of course, all of the gas for these many types of users flows together through the same pipelines, until at the very end, when it goes to its individual destination. When it gets cold outside, at least three of the four users listed above are likely to have rising demand for natural gas: people heating their homes with natural gas need more gas for heat; businesses heating their establishments need more gas; and electric power plants need more gas.

One of the questions that comes up is whether the pipelines are of sufficient size to accommodate all of this demand simultaneously. Each new user plugs in, assuming that there will be enough. And there is, until it gets cold out. (We have been told that wind actually performed well during the initial day of the storm. If this had not been the case, the electricity shortfall would have been even worse.) It seems like adequacy of pipeline size should be something that is analyzed.

According to the Star-Telegram,

Fraser said that when several coal-fired electricity plants failed, providers turned to natural-gas-fired plants to fill the gap.

Except that didn’t work because Atmos had curtailed its supply of natural gas to industrial customers, including natural-gas-fired power plants, he said. Atmos did exactly as its protocol called for, he said, to make sure that residential and commercial users had enough gas pressure.

“We didn’t have enough gas pressure available to bring up the power plants,” Fraser said. “In a high-volume usage, the first ones they cut off are the power plants.”

This quirk in the system was unknown to Fraser and perhaps others in state government, probably because no winter storm had so taxed both the electricity grid and the natural gas supply.

So cutting off the electrical providers at the same time as other industrial users when there isn’t enough to go around is a problem that needs to be looked at. The Northeast had a similar conflict between homeowners and electric power plants during cold weather in 2004, according to the Wall Street Journal. It made a change to permit electricity generators to be able to request more supply.

Short Natural Gas Supply Reduced Ability to Make Electricity

This is one of my arrows on the diagram at the top of the post. Pretty clearly, if natural gas pressure in pipelines is low,  gas-fired electricity cannot be brought up, and this is a problem.

Lack of Electricity Affected Natural Gas Supply

This is my arrow going the other direction. When there are electricity outages, then natural gas pipelines that use electricity to pressurize their gas lose this ability, tending to put even more electric power plants out of commission. According to the Wall Street Journal,

Some natural-gas pipelines were unable to move gas to power plants because they had lost electricity and “they didn’t have a backup system to pressure the lines,” said State Sen. Troy Fraser, chairman of the Natural Resources Committee, who plans to hold hearings on the incident.

I wonder about the feasibility of retrofitting natural gas pipelines to have natural gas as a back-up to electricity for pressurizing their supplies. It would seem as though this option could more easily be added on new pipelines.

With arrows going both ways between natural gas supply and electricity supply, there is clearly a potential for escalation, through an unintended feedback loop.

Texas Deregulation of Utility System

Texas is one of the states that replaced the monopoly system of utilities with a system of competing sellers, under what is termed “restructuring”. Quite a number of states tried this approach and abandoned it (shown in gold on Figure 2). Texas is one of the states (in green) that kept this approach. It is striking that Texas had problems during cold weather, and other states nearby without restructuring did not.

Figure 2. EIA Map of Electricity Restructuring by State, September 2010

While economists like the idea of restructuring, physicists have major doubts about it. Eric Lerner, in The Industrial Physicist, says:

Experts widely agree that such failures of the power-transmission system [blackouts] are a nearly unavoidable product of a collision between the physics of the system and the economic rules that now regulate it. To avoid future incidents, the nation must either physically transform the system to accommodate the new rules, or change the rules to better mesh with the power grid’s physical behavior.

Lerner also writes,

The vast system of electricity generation, transmission, and distribution that covers the United States and Canada is essentially a single machine—by many measures, the world’s biggest machine.

The problem is that it is very difficult to keeping all the parts of this huge electrical machine working together properly under deregulation. When the system was originally designed, there were many vertically integrated electric utilities, with only a small amount of interconnection, each managing its own piece of the “machine”.

But now we have stresses in many different directions. We are trying to trade electricity long-distance, over transmission lines that were not really designed for this purpose. We are gradually bringing the electrical system closer to other systems–the natural gas system, the system for charging electric vehicles, and the system of delivering natural gas to vehicles, for example, so that these systems become interconnected with the huge electrical machine as well. They need to function together as a unit, or there will be the possibility of cascading failures. We have just seen how there can be feedbacks between the electrical and natural gas systems, and there no doubt will be feedbacks with other systems, as they are grow and become more integrated with the electrical system.

One of the stresses under deregulation is the fact that instead of vertically integrated utilities, we now have a much larger number of independent entities, each looking out for its own profitability, but not having a great deal of concern about making the system as a whole work together well. The economic incentive for each of these units is to cut costs as much as possible. For example, units have an economic incentive to cut corners on details like making certain that the unit can operate in any kind of weather. Units cannot be expected to have much concern about how their action contributes to the smooth operation of the whole. They certainly will not spend much time looking for feedback loops among different systems, such as the ones discussed above.

Without vertically integrated utilities with a concern for keeping everything going as smoothly as possible, and rates that allow the companies to spend as much as needed on preventive maintenance, the regulator suddenly has a much greater role. The regulator must anticipate everything that can go wrong among the many different types of entities, and set up regulations to prevent such failures. At some point, this task becomes impossibly difficult.

Looking ahead

Where does this all lead? It seems to me that the United States is headed for more electrical blackouts, as we try to press our grid system to do more and more (for example, charge autos at night) and add additional unconnected parts (such as wind turbines) to the system. States that use a competitive pricing approach, such as Texas and the other states in green on Figure 2, are especially at risk because of the financial incentives of individual units to cut corners, and the lack of overall co-ordination, except through regulators. The limits under the laws of physics can be expected to become more and more apparent.

Not only are we likely to have more electricity outages in the future, but the outages are likely to spill over into other systems as well. Natural gas pipelines affected by electricity outages will stop pumping, if they are electrically operated, as they were in Texas. Pipelines carrying gasoline and diesel to their destinations will also stop pumping, if they are located in blackout areas. If gasoline stations are affected by blackouts, their electrical pumps will not work, so customers will not be able to buy gasoline and diesel, even if the service station’s tanks are full.

There is no easy fix for the problem. We clearly need to look into the feedbacks that are causing our current outages, but doing this is not likely to solve our long-term problem, since that is “fighting the last war”. We also need to be looking for potential feedback loops that are likely to cause different problems in the future.

Eliminating competitive pricing in Texas and other states with the system would seem to be helpful in preventing future blackouts. Eliminating competitive pricing may make integration of wind and solar into the overall electrical system more difficult, but if we want to have a system without major blackouts, we will need to make the health of the overall system a priority. This will likely mean going back to more of a regulated utility model, to the extent this is practical. It may also mean scaling back plans to add wind, solar, electric vehicles, and natural gas vehicles to the system, so that only the amount that the system can readily accommodate is added, given local constraints such as the size of natural gas pipelines and the amount of natural gas storage capacity available for short-term supplementation.

We also need to be doing more real-life testing, so we can figure out what feedback loops are likely to be in an integrated system. We really don’t know how the system will work when it starts reaching its limits. For example, we have built a huge number of “peak demand” natural gas electrical generating units, but I doubt that anyone has really tested running them simultaneously, especially when the weather is very warm, which is one time when we are likely to need them.

We recently have experienced a period of over fifty years when the electrical grid was “up” most of the time, and almost everyone has come to take its existence for granted. I think the time has come for a much more conscious awareness of our electrical system’s limits; we need to start making decisions with its integrity as a first priority. The Texas power outage fiasco has not turned into the equivalent of BP’s oil spill, but if we continue down the path we are headed, we could easily find ourselves with electrical outage problems much worse than the oil spill.

See also: Will the US Electric Grid be Our Undoing?

This entry was posted in Alternatives to Oil, News Related Post and tagged , , by Gail Tverberg. Bookmark the permalink.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.

19 thoughts on “Texas Electricity Blackouts Enabled by Feedback Loops; Reliance on Competition

  1. EIA Working Gas in Storage. Elsewhere EIA data shows that production of natural gas in the US has increased very little since 1973. I tend to be skeptical of the extreme claims of abundance from Boone Pickens and others??


    • I agree with you. Most people don’t realize that despite the supposed abundance, the US is still a gas importer. Our big source of imported gas is Canada, and its supply is declining, so we pretty much have to increase our gas supply, just to make up for the shortfall in Canadian imports. There are a lot of posts I should write. One on natural gas is up on the list.

  2. Centralized Storage/Distribution of Electric Power and Heating Fuels has always had its minor problems in the past in the US, but Europe last year and the US this year would seem to point to narrower peak capabilities then in the past. I’ve never trusted NG for data center electric backup (or for my farm). I want local storage of he fuel which means diesel.

    The interdependance or the faust choice between generating heat or electricity as England experience in the previous winter is experientially new, but some have predicted it. One wonders, even post modeling one would have to wonder if there would be sufficient capital to build additional peak/backup capability to make it happen. And that assumes we can model the weather as accurately as we think we have in the past, or we can afford the Operating costs of that additional infrastructure and backups.

    I’d prefer to see more effort in engineering and protocols to move a portion of this problem to the “end-user” and put intelligence and generation at the customer premise. The amount of diesel backup generation at commercial sites is enormous, during the Enron/California crisis I had put in place 4MW of generation for 2 data centers in Silicon Valley, there had to have been Gigawatts out there from Cisco to Adobe, etc. Having modest technical means to start them, and protocols to buy the offload might be significantly cheaper than a centralized “fix”, especially when you consider lead times (modeling losses for 10 year fixes), and distribution costs.

    During this past storm I lost power for 18 hours, the Onan genset kicked in 1 second later, and I did my normal routine of feeding the outdoor furnace wood from my woodpile. When my neighbors enquire what to do for heat backup, I tell them to buy a “Mr. Heater” for the top of a propane bottle, and buy more bottles (I prefer the 100lb ones myself). Aristotle wrote that virtue and self-sufficiency were appropriate objectives for life, I checked on my neighbors during this so I’d probably add “loving your neighbor” to the list.

    • Hi Marty,

      What a great suggestion! I checked Mr Heater on Amazon and the prices are very reasonable. Have you found a way to minimize the low oxygen issue in a tight building?

      • The context here was low cost, short periods, my solution would be to buy an alarm/sensor. I actually have unvented propane fired gas fireplace that is correctly sized to the volume of my house, it is my backup heat. A healthy person should have no problem living in a 50 degree house, in poverty I did this for 3 winters in the Adirondacks. For many Europeans this is quite normal, but they wear a Tshirt, Shirt, sweater in their homes unlike many Americans who I visit who have a tshirt on in the winter.

  3. Hi Gail,

    What a strange situation – NG prices are at nearly historic lows and predicted to go lower – actually fell in price today because temps are expected to go up.

  4. Posters that were following natural gas during the 70’s will recall the severe supply disruptions. It was quite interesting to see the market clear as price controls were removed


    “The Effects of Wellhead Price Controls 1954-1978”

    “All three of these systems of price control discussed above had disastrous effects on the natural gas market in the United States. The artificially low price ceilings that had been set since 1954 had a number of outcomes in the market, coming to bear in the late 60s and 70s. Because the set rates for natural gas were below the market value of that gas, demand surged…”

    “However, at the same time, there was little incentive for natural gas producers to devote the money required to explore for and produce new natural gas reserves. The selling price for natural gas was so low, it simply wasn’t worth it for the producers. Producers also saw little incentive to search for new reserves. While the price at which they could sell interstate gas was fixed, the finding and development costs for establishing new reserves was as variable and unpredictable as ever. Producers saw little reason to engage in the exploration of new reserves that would cost more to find than they could be sold for under FPC wellhead price control.”

  5. And on the other side of the world, high temps in Sydney, Australia (it’s summer there) have everyone turning up the air conditioners. The grids can’t cope – blackouts in major parts of Sydney. And these blackouts have been going on for over 3 days.
    http://www.heraldsun.com.au/news/breaking-news/sydney-power-blackout-could-continue/story-e6frf7kf-1225999719941 and

    I have had a number of forceful discussions on how even a low 1 in 10 household penetration rate of plug in EV’s will crash grids. But oh no, we are being told our “modern” grids can handle the demands for EV’s. Baloney.

    The grids in Houston & Sydney can’t accommodate demand at high & low end temperature use now. If there were significant plug in EV demand then grids would crash earlier & stay down longer.

    And if you did have an EV then you would be walking to work in the blizzard in Houston & the heat in Sydney. No electricity : No car.

    • I think the problem with these analyses is they only analyze one aspect of the likely electrical shortfall–perhaps, could the generating units be operated more hours a day. They forget that there are a lot of things that could go wrong in the analysis–will there be enough down-time for maintenance, if the units are operating all the time; where will all of the additional fuel come from, and how will it be transported; will the transmission system be able to handle the extra load when it is hot or cold out. It very often happens that under ideal conditions the system will work. The problem is that conditions aren’t always ideal.

  6. Economists prefer “restructuring”.
    One feels one should be kind to economists.

    The Rhodesian Railways, Electricity supply Commission, and Post and Telecommunication models worked with superb efficiency, with narry an economist in sight. (Bookkeepers are not economists.). And they worked with steam and copper wires, no less.
    I married a Communist Economist. We decided that the best model is a mixed economy. Running the National grid is different to running a milliner. (Hat shop).

    Has anyone else noticed that everyone is talking about the weather recently?
    Or is it just me. (Bob Dylan, Before The flood.)

    Some light poetry for your Amusement and Gratification.

    It sates itself on the life-blood
    of fated men,
    paints red the powers’ homes
    with crimson gore.
    Black become the sun’s beams
    in the summers that follow,
    weathers all treacherous.
    Do you still seek to know? And what?

    (reference to Ragnarök in the Poetic Edda.)
    Just some light relief.

  7. Do none of you remember natural gas shortages in the 70’s? Regulated energy has never worked. Jimmy Carter’s price controls were a disaster. When natural gas was deregulated prices rose briefly and then dropped like a stone for years. You could get gas in Canada for a dollar per mmBTU. We import from Canada because of price. There are trillions cu. ft. of gas out there for the drilling. Supply declines because of price not for lack of reserves. I have been in natural gas operations for 30 years. If you think you can regulate reliability without huge price increases, you’re nuts. even then, you have no guarantee. The weather always seems to find a way to beat you.

    • I am afraid it is easy to not be tuned in to the Natural Gas situation. With gasoline and diesel, there are huge signs as you go into stations, telling price. But natural gas does not have as easy numbers to remember, except people saying my heating (or cooling) bill for the month of x was $500. We usually don’t know about industrial users picking up and leaving. I am afraid I don’t remember the natural gas shortages of the 1970s. I was young then and working in insurance, so I didn’t notice.

  8. Gail,

    A couple things to keep in mind that contributed to this as well:

    1. TXU (the local energy co back in 2006, before an LBO in 2007 iirc) tried to build 7 or so power plants. They were slated to come online in 2010. Then Mayor Laura Miller of Dallas, campaigned hard against the power plants , citing environmental concerns. She won and the power plants were scrapped. TXU’s wholesale energy executive Mike McCall predicted rolling blackouts w/in 5 years if the plants weren’t built based on population growth. Decent NPR article that gives you a flavor of the controversy:


    2. Texas leads the nation in wind energy. Due to the record cold this past week, our wind turbines that Boone has been championing froze up and stopped generating energy. So not only do wind turbines not work in calm air, but they don’t work when they are frozen either. Who would have thunk it.

    My point here is not that the power plants should have been built, or population growth should have been curtailed ( it doesn’t matter now), but rather what happened to New Mexico because of what happened in Texas. This is just the latest example of a cascading failure in a complex system. It started and stopped before it became systemically destabilizing, not due to human ingenuity or adequate preparation, but simply because the weather changed.

    Maybe we should change the “Got Milk?” campaign to “Got Resiliency?”


    • I like the “Got Resiliency?” idea. I think the smart meters are a way of getting around that issue, if they just cut off unwanted portions of users business, when supply isn’t available. I know most of them being discussed will just raise rates, say, when the wind isn’t blowing, but how many folks are going to check whether the wind is blowing when the decide to wash a load of clothes or run the vacuum cleaner?

      Thanks for the link with respect to not adding new capacity. I think the idea of adding capacity is being nixed quite often, with the idea that smart meters can just be used to cut down peak demand. (So long, resiliency.)

      Do you have good links to the wind energy issues?

  9. I do not even know how I ended up here, but I thought this post was great. I do not know who you are but definitely you are going to a famous blogger if you are not already 😉 Cheers!

  10. Pingback: Commodities Broker | Texas Electricity Blackouts Enabled by Feedback Loops; Reliance on Competition | Commodities Options | Commodities Futures | Commodities Prices

Comments are closed.