08/20/2024
Texans love to feel like they are special and in some cases, we are more hat than cattle. This is not the case when it comes to extreme weather and our power grid status. I frequently attend utility conferences and get to meet with various industry leaders, most recently an executive of a REP in Canada. She had concerns about grid volatility due to increased demand, but weather? Not an issue for them. While Canada may not be immune to weather impacts (given climate change is here for us all), in Texas, we have the perfect storm of both demand and weather to create strain on our systems. In fact, Texas was the state with the most billion-dollar disasters including storms and tornados, hurricanes, wildfires, freezes, earthquakes, and floods within 2023 alone. Combine this with an independent grid built to handle only one or two of the above weather events at a time and the lights are at risk for the majority of the calendar year.
The Heat Is On
It’s not just you—Texas summers are getting significantly hotter. The NOAA estimates Dallas’ average temperatures have risen by two degrees since 1970 and the summer season is lasting two weeks longer. Considering historical average residential consumption reliably doubles or triples in summer months, having more of them significantly impacts our customers.
Hurricane season also coincides with our hottest months. Recently, Hurricane Beryl took out power for 2.6 million customers, some without power for over 10 days. Add in the additional strain the heat causes—sagging transmission lines and reduced power plant efficiency in extreme heat—and you start to see the wobble in supply and demand on the grid.
We can hedge the rest of the year, right? Not necessarily. In Texas, we’ve seen winter weather events become less of an exception and more of a seasonal expectation, such as the headline-making 2022 Storm Uri. Our infrastructure is often not efficiently winterized and isn’t able to be supported by natural gas production during these cold times. Paired with near-summer usage rates, rolling blackouts will likely remain our main mitigation strategy if no other changes are implemented.
Additionally, there is increasing demand for new innovation. The United States witnessed a 52% rise in electricity consumption from EVs during the first two months of 2024 compared to the same period in 2023. Many of those EVs can be found parked at the new tech companies that have migrated to Texas. These corporations serve as significant energy consumers due to the use of AI data centers, which the Dallas-Fort Worth metroplex ranks second in the nation for inventory. In fact, Goldman Sachs predicts a 160% increase in data center power demand due to AI between 2023 and 2030 to effectively power the massive amounts of data and computations we are asking of AI. To put it in perspective, the Electric Power Research Institute estimates that data centers could consume between 4.6% and 9.1% of US electricity by 2030.
How to Stay Cool
The good news is, there’s a lot we can do to put the potential impacts on ice.
Know Your Customers and Their Tech
- Understand that demand is changing. Yes, we will see more EVs on the road as forecasts predict EVs to account for 40% of global auto sales by 2030. More than that, there is a shift in consumers’ relationship with energy providers as they become more active participants (and generators themselves) in the market. AI will likely provide more advanced ways to select utility providers, so a partnership needs to be planned for and fostered beyond low cost.
- Know your customers to better serve them. Do they have solar panels? Educate them on maximizing their efficiency. Did they recently buy a new EV? Help them set up a smart charging schedule to minimize grid strain and wholesale prices.
- Practice proactive communication. Most customers only communicate with their energy providers in the case of outages. Get ahead of the disappointment by leveraging your data to foster and protect that relationship through proactive communication when strain is expected.
Invest in the New Future
- Utilize consumer understanding for future innovation. Once you know a consumer’s energy trends and have a trusting relationship, leverage that to build towards a more resilient grid through innovation investment and solutions. Virtual power plants and managed charging are two common solutions to this problem, but proper positioning is required to roll out successfully.
- Modernize the grid. In partnership with legislation, we should take a serious look at our current infrastructure to find improvements to benefit both grid reliability and the bottom line. In addition to implementing 2021 weatherization standards, there is room to continue modernizing the grid via smart technologies and expansion efforts, such as microgrids and battery storage solutions.
- Go to the source. Not only increased diversification of generation but the solidification of existing alternative supplies naturally decreases risk, as well as brings more opportunity to meet growing demand.
Energy Management: Looking to the Horizon
The heat and grid volatility aren’t going anywhere. In order to face weather and other grid challenges like we have never seen before, we need to change our thinking to rise to the occasion. This will likely require changes to how we get our power through diversification of sources and modernization of the grid, as well as investing in and partnering with our customers as they become a new player and potential solution. Nothing Texans can’t handle.
