During the extremely hot summer of 2023, Texas' power grid became unstable as a surge in demand for electricity threatened to outstrip supply, and authorities repeatedly urged residents to conserve energy to avoid grid failure.
This year, the situation has improved significantly, helped greatly by the rise in renewable energy.
Texas' power grid weathered a summer that saw the state's energy demand reach new record levels despite mild temperatures, thanks in large part to a massive expansion of new solar power plants.
And in the early evening, after the sun had set and the overnight winds hadn't yet picked up, the power grid held strong in Texas and across the country, thanks to an even newer source of energy: batteries.
The federal government expects battery storage capacity nationwide to nearly double by the end of the year, from nearly nonexistent five years ago. Texas, which already surpasses California in the amount of electricity it draws from large solar farms, was expected to catch up with its West Coast rival in battery storage capacity as well.
The rapid growth of battery storage as a source of power for the electric grid and the continued expansion of large-scale solar farms come at just the right time. Texas, like many other states, is facing a surge in electricity demand driven by data centers, new manufacturing plants, cryptocurrency mining, growing residential demand and intensifying summer heat. Officials estimate that demand in Texas, already the nation's largest electricity consumer, could nearly double in just a few years.
“Every state is going to experience this. Texas just happens to be the furthest along because they were the first to increase their energy use,” said Michael Lee, CEO of Octopus Energy US, a subsidiary of a British utility. “You're going to see the same thing in every other state and around the world.”
Texas, one of the nation's top oil- and natural gas-producing states, is seeing rapid adoption of renewable energy sources, largely because of the relative ease of connecting them to the state's power grid and a largely deregulated energy market, business executives and energy experts say.
But some of those benefits have come under scrutiny since 2021's catastrophic power grid failure during a long winter freeze that killed hundreds of people across the state.
Gov. Greg Abbott took steps to prevent a similar fiasco from happening again, and since then, Texas legislative leaders have been wrangling with energy companies of all stripes about how to ensure there's always an adequate energy supply while preserving the state's relatively free market.
Since the winter storm, Governor Abbott and the state's Lt. Governor Dan Patrick have pushed for the construction of new gas-fired power plants, arguing that predictable, “dispatchable” energy is more reliable than wind and solar in emergencies.
In Texas' energy market, which was largely deregulated in the 2000s, with some exceptions, generators are compensated only for the energy they actually put onto the grid, not their future capacity to put it on the grid, and in contrast to other states, Texas' major power grid is contained entirely within the state.
In a somewhat surprising development, renewable energy companies are arguing that the market should be kept open and unregulated, while Republican leaders are calling for more government intervention, including incentives for the construction of more gas-fired power plants.
“It's a great irony that a once-free electricity market is now on the brink of total government control,” said Aaron Zubati, chief executive of Aeolian, which invests in energy projects. “New technologies have brought solutions to the market that have expanded rapidly,” he said. As a result, traditional gas-fired power companies and their political backers are raising barriers to new entrants and “trying to push the market toward natural gas,” he added.
He cited the rapid growth of batteries without state mandates as an example of why intervention wasn't needed to bring about innovation.
The growing importance of batteries to Texas' power grid was made clear one Tuesday in August when the state's energy demand hit an all-time high — a load that would have threatened the grid just a few years ago. But that day, the state produced a near-record amount of solar energy. When the sun went down, the big batteries provided more power than ever before.
Texas residents barely noticed the crunching noise, their air conditioners humming away.
Demand for electricity in Texas is growing rapidly. Experts say much of the increase is due to the electrification of oil and gas fields in the vast Permian Basin, an oil-rich region in West Texas where fracking has boomed. In other words, oil and gas companies are becoming more reliant on electricity as they use it to run their operations in the state.
Despite its small population, the region is expected to have energy needs comparable to those of a major city.
“The Permian Basin is projected to be about the same size as the Houston area, power-wise,” said Pablo Vegas, president of the state's market operator, the Electric Reliability Council of Texas, known as ERCOT.
Texas, the nation's second-most populous state, already uses far more energy than any other. Officials recently changed the way they calculate potential growth in energy demand, now estimating that the state's peak demand could nearly double by 2030.
The current record demand for a single event (a Tuesday in August) is about 86 gigawatts. (By comparison, California's record demand for 2022 is 52 gigawatts.)
ERCOT has said that peak demand in Texas could exceed 150 gigawatts in six years' time. The projection has raised concerns among some state leaders about whether the power grid can keep up with the exponentially growing demand. Patrick, in a social media post, said the state should “keep a close eye” on increased demand from data centers and cryptocurrency mining.
Ed Hirs, an economist and energy researcher at the University of Houston, said the state's electricity demand is a big reason why efforts by Republican lawmakers to curb renewable energy, which critics sometimes call “unreliable,” are unlikely to succeed.
“At this point, Congress can't stop the growth of solar, wind and batteries,” Hils said. “The state desperately needs it.”
Like the external batteries in your phone, grid-connected batteries are intended to provide short-term stored energy for a few hours of operation, charging when energy is plentiful and cheap, and providing power when energy supplies weaken and prices rise. As a result, the growth of batteries will complement the development of wind and especially solar power, which fluctuates throughout the day.
The potential price hikes are sending companies racing to build more battery storage facilities: Texas' queue of new energy projects waiting to connect to the grid contains roughly as much battery generation as solar, according to ERCOT data.
“Texas is a very unique place,” says Matthew Boms, executive director of the Texas Advanced Energy Alliance, which promotes renewable energy. “You have a free market and an electric grid, all in one state. That makes it attractive for private investment in batteries, solar and wind.”
As a result, there has been a lot of construction recently.
Not far from downtown Houston, at the site of a former gas-fired power plant, large containers filled with small lithium-ion battery cells—500,000 in total—are lined up in neat rows. On a relatively cool, overcast late summer day, the containers aren't doing much, but they're ready to dump power back onto the grid if needed.
The battery, owned by Jupiter Power, began operating last month. “Two or three years ago there were barely any batteries anywhere,” Jupiter Power CEO Andy Bowman said. “That's capitalism at work.”
