IEEJ：February 2021©IEEJ 2021
Special Bulletin
A Japanese Perspective on the International Energy Landscape (521)

February 26, 2021

Key Points of Texas Power Crisis
Ken Koyama, PhD
Chief Economist, Managing Director
The Institute of Energy Economics, JapanMy previous report, “A Japanese Perspective on the International Energy Landscape(520),” discussed a power crisis in Texas as of February 17. Following up on that, I would like totake up the Texas power crisis again and summarize key points of the crisis.
First, I would like to review the Texas power crisis. While power demand was expected tohit a record high amid the lowest temperatures in decades in Texas, power supply declined due tofrozen wind turbines and natural gas supply drops and restrictions, leading to large-scale rollingoutages from February 15. As the situation worsened on cold waves and a tightening power
supply-demand balance, some five million Texan electricity customers (27% of the total) were left
without power temporarily, with outages peaking at 16.4 gigawatts. Power generation capacity cut
off from the grid reached 46 GW on February 17, including 28 GW in fossil-fired power generation
capacity and 18 GW in solar and wind capacity. The tightening supply-demand balance pushed
wholesale power prices above the ceiling of $9 per kilowatt-hours at some points. As cold waves
weakened later, power supply restoration made gradual progress from February 17. On February 19,
the Electricity Reliability Council of Texas, which controls about 90% of Texas power grids,
announced the restoration of normal power supply. Large outages, power generation capacity cut off
from the grid, and unusual power price spikes represent the power crisis. The crisis involving power
as a lifeline for civic life and economic and industrial operations not only exerted great impacts on
Texas but also became huge news in the United States and in the world.
As the power crisis grew serious, the debate about the causes of the crisis attractedattention. Full official efforts to determine the causes will start soon, leading the official reports to bepublished someday. Discussions on the causes before the final official reports may have to remaintentative. The first key attention-attracting point was heavy dependence on some power sources.
Given that major factors behind the decline in supply included frozen wind turbines and natural gas
supply drops and restrictions, it was argued that electricity supply depending on wind as natural
renewable energy might have been vulnerable. This argument interpreted renewable energy as
unstable and attracted attention as renewable energy was expected to play a key role in the new U.S.
Biden administration’ initiatives to achieve a zero-emission power sector by 2035 and domestic
carbon neutral status by 2050.
Gas-fired power generation, the most important electricity source in Texas, declined as gas
production plunged and was supplied primarily for satisfying heating demand under cold waves. It
was argued that the crisis became serious as the important electricity source failed to function well.
While the power supply shortages were attributed to heavy dependence on some specific electricity
sources, it was pointed out that attention should be paid to insufficient cold wave countermeasures
for all electricity sources, rather than to degrees of dependence on specific electricity sources. In fact,power supply declined not only from wind and gas-fired power generators but also from coal-fired
and nuclear power plants under the cold waves. As a matter of course, power supply declines were1

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far more serious for wind and gas-fired electricity sources than for others. Among nuclear powerplants, South Texas Project Unit 1 came to a halt due to a malfunction of peripheral measurement
devices under the cold waves on February 15, restarted on February 17 after safety checks, andrestored normal operation on February 19. The three other nuclear power plants in Texas maintained
normal operation. No electricity source was free from the influence of the cold waves. In this sense,
cold wave countermeasures for all electricity sources are expected to become one of the key points
for stable power supply.
Texas has failed to implement sufficient cold wave countermeasures despite its pastexperiences with outages caused by cold waves. When rolling outages totaled 4 GW during cold
waves in February 2011, the Federal Energy Regulatory Commission noted that wind and gas-fired
power generation facilities’ preparedness against cold waves was insufficient. However, sufficientcountermeasures have failed to be implemented. Whether Texas would take full-blown cold wave
countermeasures after the latest serious power crisis may attract attention.
In this sense, necessary and sufficient cold wave countermeasures for key power supply
facilities are likely to become a key challenge peculiar to Texas. At the same time, however, we must
not forget key points for stable electricity supply and energy security to learn from the latest powercrisis. First, the most important point is the securement and maintenance of sufficient supply
capacity including reserve capacity. Power demand fluctuates wildly depending on weather andother various factors. It is important for stable electricity supply to possess necessary and sufficient
supply capacity meeting fluctuating demand and secure reserve capacity to respond to demand
fluctuations. As a matter of course, it is also important for the demand side to adequately manage
demand to secure an optimum, rational supply-demand balance. Under cost-cutting pressure in the
deregulated and competitive power market, however, it is not easy to secure sufficient supply
capacity including reserve capacity. The problem is complicated further at a time when renewableenergy diffusion exerts downward pressure on wholesale power prices. As additional costs areinevitable for securing reserve capacity, it is also important to hold down such costs.
In the latest power crisis, shortages and declines in power generation capacity werecombined with constraints on gas supply for gas-fired power plants as a major electricity source. Theconstraints came on fuel supply or relevant power generation output (kilowatt-hours) rather than on
installed power generation capacity (kilowatts). As Japan’s tightening power supply-demand balancein the beginning of this year involved restraints on LNG supply, it has become apparent that
abnormal weather conditions can cause fuel supply constraints as a key bottleneck. This means that
it will become important to enhance the resilience of relevant supply chains, secure the flexibility offuel procurement, and ensure buffer supply capacity. The securement of supply flexibility and theenhancement of resilience include the diversification of supply networks and the promotion ofcooperation with external markets. These initiatives cannot be implemented in a day or two but
require considerable costs and investment. In this sense, the enhancement of cold wave
countermeasures for power supply facilities in Texas may be positioned as part of resilienceenhancement initiatives. The diversification of supply sources remains a basic stable supply measure.
If the power system excessively depends on a specific supply source, problems regarding the sourcecould seriously affect overall supply. The best mix of power sources based on their respective
characteristics is indispensable for stable power supply.
The Texas power crisis and the earlier tightening power supply-demand balance in Japan
have had interesting common points, including fuel supply constraints for gas-fired power plants as amajor electricity source, drops in power supply from renewable energy that has expanded into a2

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major electricity source, supply-side challenges represented by falls in coal-fired and nuclear power
generation in Texas and a delay in the restart of nuclear power plants in Japan, and the basicallyindependent power grid in Texas and Japan. Towards the enhancement of stable power supply, Japanis required to fully learn lessons from the Texas power crisis.

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