America’s Fragile Grid Faces a Perfect Storm Ahead of Winter
- Years of underinvestment, fragmented oversight, and poor coordination have weakened U.S. energy infrastructure, leaving states vulnerable during severe weather.
- Explosive growth in data centers—especially in Texas—is sharply increasing baseline electricity demand, adding new winter reliability risks.
- Regulators warn that extreme cold could create a double crisis of reduced power supply and rising demand, underscoring the need for stronger grid planning before approving new mega-projects.
The energy infrastructure in the United States has failed repeatedly in instances of severe weather, due to years of underinvestment and the failure of utilities to work together to strengthen larger networks. During winter storms and wildfires, a wide range of energy infrastructure has been known to fail due to the lack of preparedness by utilities and state governments. Going into the winter months, there are fears over more potential network failures across various parts of the U.S.
Texas, California, and several other states face annual power outages due to severe weather events, from winter storms to heatwaves. In February 2021, Storm Uri brought plunging temperatures to the state of Texas and left millions of people without electricity, heat, or running water, as much of the infrastructure froze. These outages turned off electricity in various parts of Texas, including parts of the natural gas network that are electrically operated, such as pumps and antifreeze injection systems. This led to the shutdown of several power plants.
During the storm, as demand increased for heating, Texas grid operator ERCOT ordered 20 GW of rolling blackouts to prevent a total system collapse, according to the Federal Energy Regulatory Commission (FERC). It was the “largest manually controlled load shedding event in U.S. history,” with 4.5 million people losing power for several days, stated a FERC report.
The U.S. energy network is highly fragmented, with different state governments each managing parts of the grid, and a multitude of utilities responsible for different infrastructure. The fractured nature of the system makes it extremely hard to fix. For example, investment made in the transmission lines of one state may not be replicated by the neighbouring state, meaning that the network in part of a region may be more resilient than another.
In 2021, the Biden administration introduced the $2 trillion Bipartisan Infrastructure Law, aimed at upgrading U.S. infrastructure. The plan earmarked $100 billion in financing to update and modernise the electric grid to make it more reliable and resilient. However, due to a multitude of challenges standing in the way of a complete overhaul, U.S. energy infrastructure remains highly unprepared for severe weather events.
Now, another threat is adding to fears of winter blackouts – data centres. There has been a rapid rollout of data centres across the U.S. in recent years, as tech companies invest heavily in the infrastructure needed to power advanced technologies, such as artificial intelligence. This has driven up energy demand in several states, particularly in Texas. The concern now is that this will increase the risk of energy shortages, which could result in power cuts during freezing temperatures.
Requests for new data centres are on the rise in Texas, thanks to its growing renewable energy capacity and natural gas resources. In recent years, Houston has become known by many as the Silicon Valley of energy, for its strong reputation for energy production, growing cleantech sector, and welcoming business environment. This has helped attract significant investment to the state from tech companies looking to expand operations.
The North American Electric Reliability Corporation (NERC) warned in November that the 24/7 energy demand of data centres will make it increasingly difficult to maintain sufficient electricity supply during times of high demand, such as if the temperature drops to an extreme low.
During a severe winter storm, Texas’ power demand could rise to as much as 85.3 GW. While the state’s 92.6 GW electricity capacity would normally be enough to power this demand, the available power could decrease to roughly 69.7 GW during a severe weather event, meaning a deficit of over 15 GW.
In a recent analysis, NERC stated, “Strong load growth from new data centres and other large industrial end users is driving higher winter electricity demand forecasts and contributing to continued risk of supply shortfalls.” It went on to say that while Texas will experience elevated risk during extreme winter weather, but the grid will remain stable during normal peak demand.
Over 120 GW of projects have requested to be connected to the Texas grid, marking a 170 percent increase since January requests. Approximately 73 percent of these projects are data centres, according to ERCOT. If all these data centres are built, it would equate to the average annual power consumption of almost 154 million homes. However, experts believe that it is unlikely for the massive project pipeline to be developed in its entirety, as there is simply not enough power to serve it.
Years of underinvestment in the U.S. grid, a lack of preparedness from utilities, and the rise in demand for data centres could lead to a power deficit if Texas, or another state, is hit by severe weather this winter. This demonstrates just how dramatically the tech sector is changing the landscape of power demand through data centre development. It also implies the need for stronger regulations to ensure that the electricity supply is sufficient and stable enough to meet demand before approving new projects.
By Felicity Bradstock for Oilprice.com