An Overview of the Texas Power Market to Understand the Impacts of Winter Storm Uri
Written by Michelle Avalos, Deputy Director of Impact Hub Houston
It’s February 22, 2021, and millions are dealing with the aftermath of the winter storm that ran across Texas last week. As our community bands together, mourns the friends and family we’ve lost, and aid begins to reach Houstonians in need, some of us are starting to piece together the facts so we may be able to co-create recovery and resiliency solutions to prevent this from ever happening again.
To support these efforts, we’ve put together a high level and unbiased outline focusing on mapping the existing process and infrastructure of the Texas power market. We hope this will give you some clarity and allow you to better problem solve as we move forward.
The first thing you need to know is that the United States is broken up into three primary power market transmission grids called the Western, Eastern and Texas Interconnection. Yup, most of Texas stands alone. Why? Interestingly enough, our grid underwent changes in 1970 after a major blackout that occurred in the Northeast in 1965. Since then, our state’s power grid has undergone several hiccups, but we’ve continued to remain independent from the rest of the country, with only minor connections to the Eastern and Western grids as well as to Northern Mexico’s grid. If you want to dig deeper into the history, check out this article by the Chron.
Figure 1. U.S. Power Grid Map (Source: EPA)
There are two primary characteristics of the Texas Interconnect:
The Texas grid system has minimal transmission interconnections to the other grids in the U.S.; and,
Our power market is largely unregulated, which means no single entity has a monopoly on the sale of electricity in the state. As a result, across most of Texas, consumers can choose their electricity provider.
Our power market is run by a power grid operator, or Independent System Operator (ISO), called The Electric Reliability Council of Texas, or “ERCOT.” There are six other ISOs in the U.S. and a couple more in Canada. (See Figure 2.)
Figure 2. Map of Other ISOs in North America (Source: CME Group)
ERCOT, however, is one of the least interconnected to the rest of the country’s grid. In a way, you can say that ERCOT is an island, which you can see more clearly in Figure 3, below.
Figure 3. Map of U.S. Grid Interconnections (Source: EIA)
So, what is behind our “Power to Choose” in Texas?
A lot of people assume that their electricity provider is also the one generating the actual power for their homes or businesses. Nope. In fact, for most providers, this is not the case.
While some electricity providers own generation facilities, most are just retailers who purchase power in bulk from the wholesale market, then, mark up the price to sell it to customers on the retail market. In other words, most of the electricity providers we have accounts with are like grocery stores: They are responsible for selling, managing, and providing support to the customers (you and me), while profiting from their retail price markup margins. In the Houston area, there are about 50 of these companies for the residential sector.
Some people think that CenterPoint Energy is the one generating our power in Houston. Not true. CenterPoint Energy is responsible for the delivery of power and maintains the infrastructure (wires/ poles) that allows electricity to reach the 2.3 million customers in the Houston metro area. CenterPoint Energy also distributes natural gas for cooking and heating, but they do *not* generate or sell electricity to customers.
So then, who actually produces our electricity?
There are 500+ independent power generators across Texas. They own and operate the power plants that convert various fuels and renewables into electricity for our power grid. However, the power generators across our state do not decide when and how much power is produced for customers. They are only able to submit offers to sell their generation capacity at a given price in hopes that they will be selected (or dispatched) to supply electricity to meet the markets demand for energy. These offers get sorted into a “supply stack” and dispatched daily starting with the lowest price offers.
Who tracks our power needs and signals the power generators to produce electricity?
ERCOT, our power grid operator, is responsible for properly managing the supply of power to meet the actual or “real-time” demand and importantly, the system operator must ensure a balanced market at all times. What balancing really means is that if power demand is greater than the available power supply, ERCOT will forcibly reduce demand by executing power blackouts. ERCOT estimates short and long term power needs, but ultimately, the market supply and demand balance is managed by 24/7 operations. The forecast generated by ERCOT serves to let power generations know when they might be needed but does not give them any guarantee that they will be dispatched.
Is ERCOT the one buying and selling the electricity for the grid?
No. ERCOT does not buy or sell the electricity on our power grid. They just coordinate the various pieces to ensure balance. You can think of ERCOT as a real time matchmaker between the power generators and our demand for electricity. The buying and selling ultimately happens 1) on the wholesale market (between the power generators and the electricity providers) and 2) on the retail market (between the electricity retailers/providers and the commercial/residential customers).
Figure 4. Flow of Electricity under ERCOT Structure
Before we move to outline the impacts of the winter storm, here are a couple more important factors you need to know about our power market:
We explained how the deregulated market works for you as the customer, but how does the market impact the companies who are producing our electricity?
The power generators that operate inside of ERCOT make decisions about their fuel source, infrastructure, operating schedule and more based on forecasted demand trends and their need to operate a profitable business. These power generators only make money when ERCOT selects their price offer for a certain amount of electricity and dispatches their power plant to add electricity supply to the grid. The power generators receive revenues only for the actual amount of electricity that is dispatched by ERCOT and consumed by the end user. If you are a power generator and your price offer is not selected by ERCOT, you don’t make money that day and your power plant just sits there. This revenue structure is referred to as an energy payment.
In Texas, most power generators receive the bulk of their energy payments in the peak summer months, particularly late July and August. During the winter months, when our state’s electricity demand is typically lower, some power generators tend to schedule power plant maintenance or full shutdowns because the likelihood that they will be dispatched and paid to generate power is significantly lower.
Seems pretty straight forward, right?
Well, this is how the structure defers from other states:
Power generators that operate in a regulated market also get paid a capacity payment which is calculated based on the maximum output that the power generator can produce. States that offer capacity payments to power generators will pay the amount even if the respective power plant is not called upon to produce electricity. Essentially, the state pays the capacity payment to have the power plants built and available as needed. When those plants are dispatched, energy payments will also kick in.
Power generators operating inside of ERCOT do not receive capacity payments: They do NOT get paid to be on standby.This payment structure lowers the power generator’s incentive to make other significant investments to their facilities.
So, how did Winter Storm Uri shock the ERCOT power grid?
There are a fair share of articles to choose from that are aiming to answer this question. Here’s a brief summary:
The Texas grid is set up to support peak demand during the summer heat but doesn’t have similar reliability measures in place during our winter months.
Last week, electricity demand for heating spiked as a response to the winter storm.
The spike in demand occurred in the midst of scheduled power plant maintenance and shutdowns which traditionally take place during winter in Texas. These are referred to as planned plant outages.
The power plants that were actually operating and able to generate electricity for us also ran into unplanned outages caused by the extreme weather conditions.
This combination further cut the supply of electricity to the grid.
ERCOT’s supply stack became very thin and it was not able to dispatch sufficient power generators to meet our electricity needs.
Millions were left without power for days.
While the power generators worked to get their facilities back online and ERCOT worked to prevent a full system shutdown, pressure was placed on the consumer (you and me) to conserve power.
After a series of rotating outages and forced power cuts, more Houstonians began to regain power until eventually, ERCOT’s supply stack was replenished and supply and demand was rebalanced. This was also supported by a drop in heating demand from the customers once the extreme weather had past.
Our largest bottlenecks during the storm were both the physical infrastructure and the nature of how our power grid functions.
As mentioned , February is historically not a peak demand season in Texas. This meant that several power plants were previously scheduled to undergo maintenance because they didn’t expect to be called upon to generate power this month. The maintenance process varies by power plant type, age and other factors. The duration of the maintenance can last for days, weeks or months depending on the needs of the respective power plant. Once a power plant is undergoing maintenance or a full shutdown, they can’t immediately flip the switch to be back online.
On February 8, ERCOT sent an Operating Conditions Notice (OCN) to all power generators to prepare their power plants for the anticipated winter storm. The Chron outlines the timeline that followed in this article which is derived from the Operating Messages sent by ERCOT in the days to follow.
Power generators received about a four to five day notice to prepare their facilities. Whether or not this was sufficient time for the power plants that were offline to come back online is truly dependent on where they were in their maintenance/shutdown process.
As the winter storm moved in, we also began to see unplanned outages at the power plants that were still online. These outages occurred for a couple of reasons: 1) infrastructure at the facilities was not prepared for harsh winter weather, and 2) at some point, access to the fuel sources was also obstructed by the winter weather conditions.
Why didn’t we have any back up power?
Looping back to how our power generator makes money: Since they only receive “energy payments” and not “capacity payments,” power generators are not incentivized to build and manage back up power facilities, so they don’t.
In a time of crisis, our “Power to Choose” worked against us.
The outcomes of Winter Storm Uri shed a light on fundamental opportunities for improvement to our power grid. The same structure that was set up to save us money on electricity, also worked to disincentives investments in infrastructure that could have prevented the massive outages that occurred last week.
There are so many other factors we can discuss around this topic, but for now, we want to leave you with an objective outline so that you, dear problem solver, can use this information as you digest and prepare for the decisions to come.
What will Texas choose going forward?
What do we truly want as consumers when it comes to our access to electricity?
Impact Hub Houston and SpenDebt Announce New Economic Empowerment Partnership to Help People Do Well While Doing Good
Furthering its goals to Reduce Inequalities and promote Decent Work and Economic Growth, Impact Hub Houston (IHH) is proud to announce a new partnership with SpenDebt, a Houston-based fintech company on a mission to help one-million families turn every swipe of their debit card into an investment in their future.
Joined by a common mission — to strengthen local economies and empower people to improve their financial situations so they can get on the path to wealth creation — Impact Hub Houston and SpenDebt decided to launch this partnership during Black History Month, to spotlight SpenDebt, a black-owned startup founded in Houston, and its financial tools platform.
Under the partnership, SpenDebt will offer members of the Impact Hub Houston community the opportunity to use the app for FREE for 3 months. Anyone who would like to participate in the partnership pilot can sign up for an account at SpenDebt and enter “IHH” (case sensitive) under the promotion code to receive the 3 months free.
SpenDebt will help participants set their own goals to pay down their debt as they use their debit card for everyday purchases. Users will also be able to donate to Impact Hub Houston alongside their micropayments; and SpenDebt will generously match up to $500 for all donations made to Impact Hub Houston. Participants are welcomed to continue to use the application after the 3 month offer, and the $0.10 per transaction will continue to be donated to Impact HUB Houston every month.
Impact Hub Houston encourages people to begin paying down their debt through manageable micropayments, so they can get on a faster track to positive wealth creation. To learn more about SpenDebt and how it can help you improve your financial situation, SpenDebt Co-Founder Kiley Summers will present it and answer questions during Houston’s Open Project Night on February 10 at 5:00pm.
SpenDebt is a financial technology company designed to assist people to pay off debt, leveraging micropayment through everyday transactions. SpenDebt is on a mission to help save one million families from financial fatalities every time they swipe their debit cards or have a banking transaction.
Impact Hub Houston is a 501(c)(3) non-profit impact innovation incubator that equitably empowers diverse changemakers and entrepreneurs working to solve society’s most pressing issues. A member of the Impact Hub global network — recognized by the United Nations as the world’s largest community for accelerating entrepreneurial solutions towards measurable and scalable impact for the Sustainable Development Goals (SDGs) — Impact Hub Houston provides intentional programs, an inclusive innovation ecosystem, and an international network of experts and peers aligned to inspire, connect, and empower people to create the change they wish to see in the world.
Impact Hub Houston and the Black Marketing Initiative Partner to Launch “#MarketBlack”: A Virtual Business Success Training and Small Business Fund for Houston Area Businesses.
In service to our community, and in honor of Black History Month, Impact Hub Houston and the Black Marketing Initiative (BMI) are excited to announce #MarketBlack — BMI’s new training, mentoring, and networking program specifically designed to help black entrepreneurs and small business owners in the Greater Houston area elevate their businesses, connect with resources, and uplift them during and after the pandemic, with the belief that community can positively impact us all.
Designed by educators and entrepreneurs, #MarketBlack brings together 7 weeks of expert-led workshops, creative community cultivation, and interactive training modules specifically geared toward Black entrepreneurs in Houston. Impact Hub Houston serves as The Black Marketing Initiative’s fiscal sponsor for the project, to provide promotional and fundraising support, access to its network and community, and ensure the project’s success. Another key community partner, Sankofa Research Institute, is providing research services for the program, tracking partners’ and participants’ progress and outcomes in order to report on the health of Houston’s black business community and determine the efficacy of the program.
MarketBlack enjoys the support of more than 20 businesses and entrepreneurs in the Houston area, and is continuing to grow every day. In addition to Impact Hub Houston and The Black Marketing Initiative, partners and participants in the project include: Action One Media, Marcus Bowers of Marcus Bowers TV and She’s Happy Hair, Sankofa Research Institute, Choose to Do, Inc, Emergent Business Solutions (the creator of African Fashion Week), South Union CDC of the Sunnyside Energy Project, and many local business owners who are serving as expert panelists, instructors, and financial partners throughout the program.
Action Jackson, one of the leaders and organizers of MarketBlack, shares: “The Black Marketing Initiative is not just about being Black — it is also about the belief that community can positively impact us all. Successful Black entrepreneurs are good for business. Good for community. Good for everybody. We have to be the change we want to see. Join us in our mission to not only ensure Black Owned Businesses survive, but THRIVE! Be a part of history TODAY: Help us raise money to ensure sustainability of small businesses in our area. Together, #WeAllCanWin!”
Due to the surging COVID-19 case numbers in Texas, we’re sharing these resources with you in order to make sure you have updated and accurate information to keep you and your loved ones and community safe and healthy over the holidays:
The Houston Health Department and its agency partners are announcing the schedule for sites offering free COVID-19 tests the week of December 14, 2020. The week will offer 19 FREE+FAST+SAFE testing sites across Houston.
Houston Health Department
The Houston Health Department will offer drive-thru testing at two surge sites affiliated with U.S. Department of Health and Human Services. The Southwest Multi-Service Center, 6400 High Star Drive, and Houston Community College – North Forest, 6010 Little York Rd., will offer nasal self swab tests Monday through Saturday from 10 a.m. to 7 p.m.
Appointments are available at doineedacovid19test.com and on-site registration is also available. Each site has a daily capacity of 1,250 tests.
The department also offers free drive-thru testing via self-nasal swab at the Aramco Services Company, 9009 W. Loop South. The mega testing site will open Monday, Wednesday and Saturday from 8 a.m. to 3 p.m. and Tuesday and Thursday from 11 a.m. to 6 p.m. The site has a daily capacity of 1,000 tests.
People wanting to get tested at the Aramco site can call the department’s COVID-19 Call Center at 832-393-4220.
The department will offer testing at three community sites that don’t require appointments and remain open until each reaches its daily capacity of 250 tests. The sites and their hours of operation are:
Holy Ghost Catholic Church, 6921 Chetwood Drive, Tuesday-Saturday 10 a.m.- 6 p.m., drive thru or walk up, self-nasal swab,
Melrose Community Center, 1001 Canino Rd., Tuesday-Thursday. 10 a.m.- 5 p.m., drive thru, self-nasal swab, and
Unity of Houston Church, 2929 Unity Dr., Friday-Saturday 10 a.m.- 4 p.m. drive thru or walk up, self-nasal swab.
The department will provide self-nasal swab testing at the METRO Addicks Park & Ride, 14230 Katy Freeway, and the Multicultural Center, 951 Tristar Drive, city of Webster. Appointments are available by calling the department’s call center at 832-393-4220.
Texas Division of Emergency Management
Texas Division of Emergency Management (TDEM) and the Houston Astros offer self-oral swab tests daily at Minute Maid Park (Lot C), 2208 Preston. The testing site’s capacity is 1,200 tests per day.
The site features evening hours twice a week, eight drive-thru testing lanes and four walk-up testing lanes. It opens 8 a.m. to 4 p.m. Saturday through Wednesday and from 12 p.m. to 8 p.m. Thursday and Friday. Spanish-speaking staff is available on-site.
Visit curative.com to set an appointment or obtain more information. On-site registration is also available.
TDEM and the department will also operate drive-thru sites offering tests Monday through Saturday from 10 a.m. to 7 p.m. at:
HCC – Northeast Campus, 555 Community College Drive, self-mouth swab tests, and
HCC – South Campus, 1990 Airport Blvd., nasal swab tests by healthcare professionals.
TDEM and the department offer drive thru, nasal-swab tests administered by healthcare professionals at LeRoy Crump Stadium, 12321 Alief Clodine Rd. The site is open Monday through Wednesday from 8 a.m. to 4 p.m. and Thursday through Friday from 8 a.m. to 2 p.m.
Federally Qualified Health Centers
The health department is providing test kits, lab access and equipment to local Federally Qualified Health Centers (FQHC) so they can expand their COVID-19 testing capacity. The centers and phone numbers people can call to set up testing appointments are:
HOPE Clinic, 713-773-0803
Spring Branch Community Health Center, 713-462-6565
El Centro de Corazon, 713-660-1880
Avenue 360 Health and Wellness, 713-426-0027
Lone Star Circle of Care at the University of Houston, 346-348-1200, and
Scarsdale Family Health Center, 281-824-1480.
FQHC patients pay what they can afford, based on income and family size, and are not denied services due to inability to pay or lack of insurance.
The department and its agency partners may shift locations and schedules of test sites to better meet community needs. Houstonians can visit HoustonEmergency.org/covid19 for current Houston testing sites and information about stopping the spread of the virus.
Information obtained through testing, treatment or services will not be used against immigrants in their public charge evaluation.
We are grateful for YOU! After a year riddled with challenges and crisis, we truly appreciate all of you who stepped up to host an event, made time to speak and share your insights, and showed up to connect with and learn from your peers for The Houston Innovation Summit this year. You helped ensure Houston and Texas were at the top of people’s minds for Innovation + Impact during Global Entrepreneurship Week (GEW).
Thanks to you, Houston became the #3 city in the country for GEW this year!
A few quick stats on #THIS2020:
Number of Houston-based events and conferences: 55
Approximate number of speakers and participants: 1513 people
Lastly, if you took any fun screenshots, photos, or video during the summit, please share them with us on online by tagging us and adding #THIS2020 + #HOUImpact.
We hope you’re having a wonderful holiday weekend; and we look forward to seeing you on the interwebs again soon!
Cheers to impact,
Grace, Michelle, and the Impact Hub Houston community
P.S. Established in 2017 after Hurricane Harvey, THIS celebrates Houston’s impact + innovation ecosystem by bringing together startups, entrepreneurs, funders, talent and support organizations through a week of programs and events. If you’d like to participate in THIS next year as a sponsor or event host, please contact Grace!
Special Thanks to Houston Downtown Redevelopment Authority, Syzygy Plasmonics, Cy-Fair Federal Credit Union, Houston Exponential, HCC, Z Labs, SoGal Foundation, Greentown Houston, and Impact Hub Houston Members for your continued support!
We hope you’re staying safe and taking care of yourself. If you think you’ve been exposed, you can find local testing locations at https://covidcheck.hctx.net/.
Announcing the Fourth Annual “THIS: THE HOUSTON INNOVATION SUMMIT” – Celebrating Houston During Global Entrepreneurship Week!
October 28, 2020 – Houston, TX – Impact Hub Houston, a 501c3 nonprofit startup incubator dedicated to helping diverse changemakers and social entrepreneurs launch impact-driven ventures, is excited to announce the fourth annual “THIS: The Houston Innovation Summit.” A week-long celebration of Houston’s entrepreneurial ecosystem during Global Entrepreneurship Week, November 16-22, THIS 2020 focuses on the intersections of Innovation and Impact, bringing together economic stakeholders, startups, startup development organizations, entrepreneurs, investors, funders through a series of events around the Global Entrepreneur Network’s themes of “Education, Ecosystems, Inclusion, Policy.”
“Each year, Global Entrepreneurship Week amplifies the great work being done to support entrepreneurs across the country while connecting them to more opportunities to start and scale in their own communities,” said Ellen Bateman, director for U.S. ecosystems at the Global Entrepreneurship Network.
“From the COVID-19 pandemic to racial injustice to the increasingly dire effects of climate change to one of the most polarized political environments this generation has seen, 2020 has presented a number of crises for changemakers to respond to” said Grace Rodriguez, CEO/Executive Director of Impact Hub Houston and Founder of THIS. “But Houston is resilient. Houstonians are resilient. We’ve made great strides in rising to this year’s challenges by launching new resources to help diverse communities survive and thrive; by strengthening collaboration among our startup and small businesses ecosystems to support diverse entrepreneurs; and by developing more inclusive practices and sustainable policies for our city to move forward. We are excited to bring together Houston’s startup community and Impact Hub’s global network to showcase this progress, share lessons learned, and raise awareness for our innovation ecosystem internationally. With many in-person events postponed and people continuing to work from home, THIS is a great way to help everyone connect, get inspired, learn from and celebrate each other as we grow the next generation of big ideas.”
THIS 2020 highlights include:
Nov 5-20: Climathon Houston 2020 – a global hackathon/ideathon for climate action solutions
Impact Hub Houston is a locally rooted, globally connected, 501c3 nonprofit startup and small business development organization that works to make Houston a role model for how the world solves its most pressing issues. A member of the Impact Hub global network—the world’s largest community recognized by the United Nations for accelerating entrepreneurial solutions towards measurable and scalable impact for the Sustainable Development Goals (SDGs)—Impact Hub Houston intentionally designs places, platforms and programs to empower diverse changemakers, social entrepreneurs, and impact supporters and build an inclusive innovation ecosystem that looks like Houston and works for all.
Global Entrepreneurship Week is the world’s largest celebration of the innovators and job creators who launch startups that bring ideas to life, drive economic growth and expand human welfare. During one week each November, GEW inspires people everywhere through local, national and global activities designed to help them take the next step in their entrepreneurial journey. These activities, from large-scale competitions and events to intimate networking gatherings, connect participants to potential collaborators, mentors and even investors — introducing them to new possibilities and exciting opportunities.
Review Voter ID Requirements – Voter ID requirements can frequently change, so double check your state’s Voter ID Laws to ensure you have what you need before you head to the polls.
Practice COVID-19 Safety – Continue to follow essential COVID-19 health tips including wearing a mask, sanitize/wash your hands before and after voting, and maintain social distancing while waiting in line. Select your state to view COVID-19 election information.
VOTE! – Make sure your voice is heard on November 3. Vote early to avoid longer wait times on Election Day. Make a voting plan and check in with your friends to make sure they are ready to snag a snazzy “I Voted” sticker, too.
To find your voter eligibility and your closest polling locations, visit voteamerica.com.
To protect your rights as a voter, get to know what they are and what you’re able to do about them at vote.org’s Election Protection Guide. If you encounter any issues when trying to vote, call the Election Protection Hotline at 1-866-687-8683.
Now share this with your friends and family, and make your plan to get to the polls on Tuesday, November 3rd!
If you are an impact-driven social entrepreneur and have an idea or startup that is creating a positive impact in your community, we are launching “Close the Gap” to help accelerate your project!
To encourage and support change on a community level, Impact Hub and adidas have partnered to support 30 early-stage social start-ups, non-profit organizations, or initiatives from around the world.
The aim is to empower businesses that are led by underrepresented entrepreneurs, BIPOC (Black, Indigenous, and People of Color) and changemakers who are supporting diverse populations to close the opportunity gap through education and/or sports. This will be done by providing tailored virtual support, expert advice, and networking opportunities.
If selected, you will receive:
Expert business advice from adidas’ employees on the main challenges facing the entrepreneur.
Venture visibility in the Impact Hub and adidas network.
A FREE Global Connect Membership and access to the Impact Hub network.