Energy shortages in Texas, and China

Load shedding is one of the issues that I annually brought before my mining students, in discussing electric power within the mines that they will work at, and in time run. Load shedding means dealing with interruptible power through voluntary reduction in demand at the supplying power companies request. Because it is likely to be a feature of a future mine superintendent’s life I spent a little time on some of the things that need to be planned for before the phone rings and a voice at the other end says “your power is being cut 20% in 15 minutes, good luck!” At one time in that class about a third of those in it had already worked at a mine where it had happened.

And in Texas, it happened again this week.

The Electric Reliability Council of Texas, Inc. (ERCOT), system operator for the state’s bulk transmission grid, initiated Energy Emergency Alert Level 2 at 2:26 p.m. today (August 4th) due to responsive reserves below 1,750 megawatts (MW).

“Interruptible loads – large customers paid to be dropped in a level 2 emergency have been deployed,” said Kent Saathoff, vice president of system planning and operations.

“Capacity is expected to be very tight over the peak today – particularly between 4 and 5 p.m. We are asking consumers and businesses to reduce their electricity use as much as they are able during peak electricity hours from 3 to 7 p.m.,” Saathoff said.
Consumers can help by shutting off unnecessary lights and electrical appliances, minimizing the use of air conditioning and delaying laundry and other activities requiring electricity-consuming appliances until later in the evening.

It has since been noted that the state was one power station outage away from rolling blackouts (a Level 3 emergency). The last of those occurred last February, when severe cold caused power plant failures.

The emergency conditions have continued through today (Friday) where a level 1 emergency was declared at 3:10 pm.

At Level 1, ERCOT asks all available power plants to come online, begins drawing on power from neighboring grids, including Mexico, and asks consumers to cut back usage through 7 p.m.

Two major users were dropped from the network, releasing 1,500 MW of power, but demand still exceeded that anticipated, with the projection at 4 pm exceeding the levels on Thursday.

Texas power demand, relative to estimates at 4 pm (The situation returned to a more normal condition later in the evening, but I was out to dinner at the time).

It is difficult, given unanticipated failures (the ice storms in February, two coal-fired plants totaling 4,800 MW are currently offline for unplanned maintenance) for power suppliers to balance available supply against actual demand. In this case Texas is buying power from Mexico, and has requested that all producers come on line (and those at the margin are the most expensive). Unfortunately hot days are not that windy, and less than a quarter of the wind turbine potential is currently available. (1,400 MW out of 9,000 MW).

And this inevitably also raises the question as to how much additional power should be built into the network to provide insurance in times such as this. Part of the problem lies in the lead time that it takes to permit and then construct a power plant, and more recently in trying to decide the politics of choosing between the different fuels available. Much has been made of the decision by the power industry to cancel or change fuels away from coal at over 100 planned plants over the past few years. At present the alternative fuel of choice, as I have noted in earlier posts, has been to move towards natural gas. Certainly if demand rises sufficiently for this then the increased price will help balance the books for a number of companies who currently see the price that they sell the gas at being below the price of production. (See Art Berman’s piece on shale gas on TOD today.) But there is a catch in that if prices remain as low as the EIA project, then the supply may fall at critical times such as this week, and may not be restocked in time to keep the generators at full power. At least with coal, nuclear and oil the fuel can be stockpiled at the plant for use as needed.

Yet having said that, China is currently seeking one of the worst power shortages in their recent history. Up to 30% of demand cannot be met by the Guangxi power plants, with a shortage of some 3.5 to 4 gigawatts. That for the entire country is estimated to be around 30 to 40 gigawatts. The problem is that the coal supply has not kept up with demand, and some stations have already exhausted supplies and shut down. Over a thousand factories have been affected. Whle there are, in other parts of the country a surplus of power, distribution remains an intractable problem.

As the crisis spreads around the country it seems likely that more factories will close, and more workers laid off. That in turn leads to significant popular unrest, with consequent political impacts. As a consequence it is unlikely that China will do anything other than continue to aggressively purchase coal on the world market that it can ship back and provide the power sources that the country demonstrably needs.

Power reduction and its consequence are easy to theorize over, but when those harsh realities of what it truly means become evident, and the crisis does not have a short term resolution then as we are seeing in Pakistan things can start to get ugly.