• Grid Resilience
  • Power Generation

Could Distributed Energy Resources Help Alleviate the Texas Blackout?

Brett Feldman
Mar 11, 2021

Guidehouse Insights

As a lifelong energy wonk, I am often amused when listening to politicians and the media try to explain to the public how the electric grid works. Putting aside the human tragedy that resulted from the blackouts and loss of heat and water, there has been nothing close to a consensus on the cause of the problems, at least in the public domain. If I look at energy industry sources, there is much more clarity, but that message seems to have a hard time penetrating the mass media market.

The simple answer is that the Texas grid is not winterized. This includes all forms of generation (nuclear, coal, natural gas, wind, solar) as well as the fuel delivery system (oil & gas pipelines). Pretty much every aspect of the energy generation chain failed in the extreme cold temperatures. However, in this case, there wasn’t really anything that the distribution utilities could do since it wasn’t primarily an issue with their system, just the generation getting to their wires.

So what are the potential solutions? There are a spectrum of options with different economic and political ramifications:

  • The government forces the generators and distributors to winterize their assets
  • ERCOT creates new market rules to incentivize winterization (as PJM and ISO-NE have done to address winter issues)
  • Texas interconnects with the rest of the US grid to provide backup resources should something similar happen in the future
Enhance the Grid with DER Assets

All of these ideas (and many more) will be debated in the public sphere. My personal focus is on DER. As an example, Generac’s stock price jumped following the blackouts under the assumption that a lot of Texans will look for backup generation at their homes and businesses. Most people probably know Generac for its diesel and natural gas generators, but the company has been busy preparing for the future, acquiring Pika, a battery storage company, and Enbala, a DER management company, to diversify its business and examine how customers and the grid will operate going forward. 

What can utilities do to enhance the grid with DER assets? 

  • Work through the state and regional regulatory processes to create business models that reward DER and market rules that treat DER equally, like FERC Order 2222
  • Educate customers about DER solutions and design rate structures that encourage DER adoption

Hopefully people won’t just hastily add more fossil fuel backup resources as a response to the blackouts. Rather, we can and should encourage clean solutions and figure out how to intelligently manage them as a portfolio to improve personal and grid-level resilience.