What can China learn from the Texas blackout?

Markets have a ‘poor track record’ of preparing for extreme weather
<p>A drone image of South Lamar Boulevard in Austin, Texas, on 15 February 2021 (Image: Pearcey Proper / Alamy)</p>

A drone image of South Lamar Boulevard in Austin, Texas, on 15 February 2021 (Image: Pearcey Proper / Alamy)

Over the past year, a spate of power outages and grid disturbances in the US have raised questions about the resilience of electric power systems around the world. Energy security is a major policy priority for China, and a basic requirement for quality of life everywhere.

In Texas and California we can identify one or two leading factors contributing to recent incidents.

Texas’s rolling blackouts of 15-19 February were caused by a long period of extreme winter cold that resulted in unexpected outages at the state’s natural gas power plants, coinciding with surging demand for electricity. Electricity demand reached 14% above the level grid analysis had forecast as the worst-case scenario for a winter storm. The grid operator for the state, known as Ercot (the Electric Reliability Council of Texas), reported over 30GW of outages at thermal plants, mainly gas plants, but also coal and nuclear. This was far higher than the worst-case planning scenario of 14GW of outages.

A well-insulated house is a heating or cooling energy storage device in itself.

Compared to the Texas case, the outages in California last summer were relatively brief and minor. On 14 August, the California grid operator asked utilities to shed 500MW of load for approximately two hours. The next day the state lost 500MW of load for 20 minutes. An official report from the state agency responsible for the grid cites the main causes as an unprecedented summer heatwave, antiquated planning (particularly to meet demand in the early evening when solar is unavailable), and poorly functioning power markets.

In December, provinces in China experienced planned power outages. In the case of Zhejiang, the outages were ordered as a measure to meet energy consumption targets. Contributing to the other power cuts were high demand due to cold weather, outages at hydro plants, and insufficient availability of imports from neighbouring regions.

Climate change is making extreme weather more frequent, and spread over a wider area than many planners have accounted for. Power outages typically result from a confluence of unexpected and infrequent events, among which weather is just one.

Officials in China have already stated that it is unlikely to face a blackout such as the one in Texas, because cold-resilient equipment was installed across the Chinese grid after freezing conditions led to a similar outage in southern China in 2008, and China adopted much more preventative planning measures to anticipate extreme weather conditions. Certainly, gas-fired power is a small part of China’s electricity, and most of China’s coal plants are in cold-weather climates and well-prepared for extreme cold. Still, key lessons can be drawn from these incidents that may guide the evolution of power systems in both countries towards greater resilience and preparedness.

Texas Winter Storm - Linemen work to restore power
Workers attempt to restore power after the Texas winter storm (Image: Jonathan Cutrer / Flickr, CC BY-NC 2.0)

Lesson 1: Involve multiple stakeholders in integrated, scenario-based planning

Electricity planning often focuses too narrowly on the design and function of power plants and the power system. Several aspects of the Texas power cuts highlight the need to include more stakeholders – such as pipeline pumping stations, water treatment plants, and hospitals – in power-sector planning.

Scenario analysis and multi-stakeholder crisis-management games can help actors and experts in one field correctly anticipate how well or poorly prepared those in other sectors are. They can also help to design operational protocols and policy incentives to bring about more lasting solutions.

Scenario planning is especially relevant to work out the increasing effects of climate change. Not only does climate change bring more extreme weather, but as mentioned it results in these extremes covering a wider and wider area. Disturbances and outages that might have been highly localised are now exacerbated by the lack of support from neighbouring regions (a particular issue in Texas). This has been shown in recent extreme weather events in California, Texas and China, as well as earlier incidents such as the Polar Vortex storm that affected the US Midwest in 2019.

2: Improve the flexibility of the power system and expand energy storage solutions

Because both California and Texas have large amounts of gas-fired generation and long-established spot electricity markets, they are typically considered among the world’s more flexible electricity markets. However, in one area of flexibility they both fell short: transmission.

Texas has opted to remain electrically separate from the rest of the US grid, and this undoubtedly contributed to the duration and size of its power problems. (Neighbouring states also experienced shortages, but these were far less severe.) California is relatively well connected to its neighbours, but an official report noted how inflexible transmission scheduling hindered grid operators’ ability to respond when unexpected shortages loomed. A similar situation occurred in the case of the outages in Hunan this past winter, when limited transmission capability, combined with high demand in neighbouring provinces to exacerbate the problem.

A report written by China’s Energy Research Institute (ERI) and published in 2020 by GIZ, a German federal enterprise providing services in the field of international development cooperation, suggests that the most cost-effective way to boost the flexibility of the power grid in China’s Beijing-Tianjin-Hebei region is by retrofitting coal plants and upgrading existing transmission corridors. Energy storage and demand response were rated as less cost effective.

This does not imply that energy storage and demand response should be taken off the menu though. Storage is already cost effective for some functions, including peak shaving, when stored energy is used to boost supply during high levels of demand. California has accelerated its procurement of storage to prevent summer afternoon power shortages in the future. The importance of distributed energy storage is also increasingly apparent. California homeowners – especially in rural areas – have been snapping up home battery systems to prepare for its wildfire season. While distributed energy storage for detached homes may seem irrelevant for China, with its predominance of high-rises, this ignores the many villages, hutongs, and other old neighbourhoods where distribution systems are difficult to upgrade.

Vehicle-to-grid (V2G), a technology that enables energy to be pushed back to the power grid from the battery of an electric car, has not played a role in resolving grid problems to date. But that is likely to change quickly. More major vehicle manufacturers are introducing this technology, and customers who have experienced outages recognise the obvious benefit. Distributed energy storage and EVs are likely to play a steadily larger role in balancing the grid.

3: Increase energy efficiency in buildings with policy incentives and financial support

Keeping the power on is easier when the building stock is efficient, because energy efficiency dulls the spikes in demand when extreme weather hits. In both Texas and California, owners of passive houses, highly energy-efficient buildings, have enjoyed the privilege of living through heat waves and cold snaps in relative comfort, with little extra energy consumption. A well-insulated house is like a heating or cooling energy storage device in itself.

Standards in many places focus on unifying building practices to satisfy developers’ desire for lower cost, with little attention given to the health, welfare or energy costs of residents. This is especially true for energy-efficiency upgrades, which may incentivise upgrading individual components (LED lighting, or adding a superficial layer of insulation) without measuring the overall performance of buildings as a system. If all buildings are uniformly mediocre, the building industry never develops the capability to build high-performance buildings at a lower cost.

Energy security is considered mainly in terms of energy supply. That is natural, since it is hardly possible to upgrade energy efficiency when a big storm is a few days away. But it can result in over-investment in new sources of supply for a peak day, which may rarely be used and never pay off its initial cost, while investments in efficiency – which would benefit residents and users every day in terms of comfort and cost – are considered “too expensive”. Energy-efficiency investment also faces another hurdle in that those tasked with ensuring energy security have little control or authority over efficiency policies, and derive no benefit (or even public credit) when efficiency improves.

4: Planning and markets have to work together

We all know markets can help allocate energy resources more efficiently. But there is now extensive research indicating that electricity markets have a limited track record at signalling investment in new resources to meet system peaks or respond to emergency conditions.

The limitations of the market were shown clearly in Texas, a state which has an electricity spot market but no capacity market. Regulators allowed spot market prices to reach US$9,000/Mwh and stay there for days. That’s over 200 times the normal price level, just to incentivise generators to stay online. It also left some consumers with massive, unexpected bills.

California’s official outage report noted deficiencies in market design and planning, stating that certain aspects of the planning process were outmoded and unsuited to the state’s new predicament, with large amounts of solar and consistently higher region-wide summer temperatures. Instead of introducing new incentives (such as capacity markets), California planners are upgrading weather models, changing the requirements for having sufficient reserves available in evening system peaks, and, most importantly, removing regulatory and market barriers to energy storage, demand response and other flexibility upgrades.

Many problems, many solutions

The upcoming summer and winter will undoubtedly feature a new series of extreme weather, resulting in more energy outages. Responding effectively and increasing resilience requires a more holistic response that moves beyond treating the causes of each event and improving the overall performance of the system. That entails upgrades to planning, stakeholder involvement, flexibility, transmission, distributed energy/storage, the energy efficiency of buildings, and markets. Each of these is a subject in itself, but addressing energy security requires all of them at once.

In China, policymakers need to consider energy security a priority, and the state grid has made ambitious plans for new high-voltage transmission corridors to carry renewable energy. The National Energy Administration has recently published a new policy promoting the integration of generation, the power grid, load and storage. All of these measures aim at greater integration of the power system. China has had decades of experience with energy efficiency upgrades to buildings. However, incentivising grid companies, energy companies and local officials to work together is also important in order to boost resilience via buildings’ energy efficiency and distributed storage as well as adding supply.

This article reflects the personal opinion of the author.