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The state’s main power grid operator has significantly increased its forecast for how much electricity demand will increase in the coming years. If accurate, the state should be able to provide nearly double the amount of electricity within six years.
Two factors led to the higher forecasts: A new law allows authorities to count companies’ grid connection requests before they are finalized. And demands from large users such as data centers, hydrogen production facilities, and oil and gas companies electrifying their operations have increased significantly.
On top of that, the state’s population continues to grow, Electric Reliability Council of Texas President and CEO Pablo Vegas told state lawmakers during a Senate Committee hearing. Business and Commerce last week, repeating information he shared with the ERCOT board in April.
“All of this paints a picture of very significant and different demand growth that requires us to really rethink how we think about planning to make sure we can meet these needs and continue to meet everyone’s expectations. Texans Vegas told lawmakers.
Demand on the power grid reached a record 85 gigawatts last year, the highest ever in the state. ERCOT experts now estimate that demand could reach around 150 gigawatts by 2030.
More than a third of the projected growth comes from the Permian Basin, where oil and gas operators are converting their operations to run on electricity rather than gas or diesel. Much of it also comes from large users such as data centers that power artificial intelligence and cryptocurrency mining. Some require several times more power than the city of Lubbock currently uses, according to ERCOT.
The new estimates raise critical questions, such as whether large energy users who can scale up and down need more state oversight, said committee chairman Sen. Charles Schwertner, R -Georgetown, in an interview. Last year, a Bitcoin mining company said it made millions of dollars in the electricity market by reselling pre-purchased electricity when grid conditions became strained, angering some Texans who have seen their electricity bills increase.
“I think we have the challenge of bringing the necessary generation onto the grid,” Schwertner said. “But there is possibly some prioritization that could be discussed, and obviously Texans – their families, their homes, their businesses – are the most important individuals, the most important customers for electricity.”
In an article on “We want data centers, but this can’t be the Wild West of data centers and crypto miners destroying our network and turning off the lights,” he wrote.
Electricity experts said the projected growth also makes clear that the grid will need more transmission lines — which are paid for by customers and take longer to build than most facilities that require more electricity.
“There is no question that there will be a need for additional production,” said Michael Lozano, communications and government affairs manager for the Permian Basin Petroleum Association. “But I think the biggest thing right now that we’re trying to address is the lack of transmission.”
Previously, to plan for future transmission needs, ERCOT could only count electricity users who had signed agreements with a utility, said Mark Bell, president of the Association of Electric Companies of Texas. House Bill 5066 allowed grid operators to count potential users without a signed agreement if the utility considered it “a serious project and very likely to interconnect,” Bell said.
It’s unclear whether data centers will actually be built in Texas, said Katie Coleman, an energy adviser to the Texas Association of Manufacturers, which represents large energy users. Companies that want to build data centers could “look for places to do business,” she said, making applications in multiple locations where they could build.
Cyrus Reed, conservation director for the Sierra Club’s Lone Star chapter, said demand could decline if some projects never come to fruition. “There are a lot of unknowns,” Reed said, “but that’s what they’re putting into their system for planning purposes.”
“If I were ERCOT, I would prefer to overestimate so that we have more capacity and we don’t have a shortage,” said Michael Webber, an energy resources professor at the University of Texas at Austin. “It’s hard to tell if it’s hype or if it’s real.”
The state’s grid has faced intense public and legislative scrutiny since a 2021 winter storm crippled its operations, causing power outages across the state for days amid severe temperatures freezing temperatures that left millions of Texans without light or heat. Hundreds of people died.
Lawmakers responded by demanding that power facilities be better prepared to operate in extreme weather conditions. They invested $5 billion in a fund to provide low-interest loans to companies planning to build gas-fired power plants, a priority lawmakers have prioritized because they can provide electricity quickly on demand. State regulators are now accepting applications for that money.
Sen. Nathan Johnson, Democrat of Dallas, a member of the Senate committee, said the need to meet higher demand could spur innovation in renewable energy; implement more programs to encourage people to use less energy by making their homes or businesses more efficient; and incentivize individuals and small businesses to be paid to use less energy during times of crisis.
“This massive increase in load is going to put more momentum behind some really good trends,” Johnson said.
Disclosure: The Association of Electric Companies of Texas (AECT), the Permian Basin Petroleum Association and the University of Texas at Austin have financially supported The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part through donations from members, foundations and corporate sponsors. Financial support plays no role in the Tribune’s journalism. Find a complete list here.
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