How the Texas Power Grid Works, and Why It Failed

Flip on a light, toast a bagel, crank up the heat. Most of us take for granted the electricity running things in our daily life, and never think about the national power grid that delivers energy to our homes.

With the possible exception of Texans.

Key Takeaways

  • Texas opted for its own power grid at the turn of the 20th century.
  • Natural gas and wind generate most of Texas’s electricity and its infrastructure isn’t winterized against freezing temperatures, leading to the 2021 winter blackout.
  • Diversifying its energy sources beyond natural gas and wind, as well as winterizing and updating the grid, may help the state avoid future blackouts

Power by Texans, for Texans

The U.S. power grid is divided into three sections: One serves the west, another the east, and the final portion is reserved for the state of Texas. Power generated by Texans, for Texans.

You may have heard about the state’s energy problems after a massive ice storm hit in February 2021. Temperatures plummeted, and as people flipped on heaters to stay warm, the surge in demand surpassed Texas's capacity to generate electricity, and parts of the state went dark for days.

Why Is Texas on Its Own?

At the turn of the 20th century, states saw power as a necessity and began regulating companies to ensure energy was provided equitably. Regulations were established covering which companies could sell electricity and how much they could charge. Texas, seeking to avoid federal and interstate rules, opted out. Instead, the state's power companies merged to create bigger companies and share power without exporting any over state lines.

Other states saw this as a good idea, but they couldn’t generate enough energy to reliably serve their residents. Texas was different because of its size: It covers two time zones, meaning some parts of the state require peak power an hour later than the rest of the state, and some parts throttle demand back an hour earlier than other parts. This permits Texas's power authority, the Electric Reliability Council of Texas, or ERCOT, to produce sufficient energy for its customers. ERCOT produces power for 90% of the population, with other states' grids providing the rest.

Why Did the Grid Perform so Poorly in the Storm?

In Texas, just over half of the power comes from natural gas-powered steam generators. Another approximately 25% is generated by wind turbines.

Natural gas wells and wind turbines aren’t weatherized in Texas’s normally mild climate. So, when the winter ice storm hit the state, these sources mostly failed. Texas’s power demand usually peaks during hot summers, with minimal need for heating during mostly mild winters. During the winter storm, residents stayed home, pushing demand beyond the already diminished capacity.

The state wasn’t prepared for the massive storm and falling temperatures. The ice and cold left 4.5 million Texans without electricity for days, and property damage was estimated at $20 billion.

How Will Texas Solve Its Grid Problem?

Winterizing natural gas and wind power against extreme cold may be Texas’s best bet against future electricity blackouts. Diversifying their power sources may also help create a more reliable supply of energy. For instance, an area too dependent on solar power may have electricity problems at nighttime. One that depends too highly on gas can also be problematic as gas can have shortages and price volatility. Upgrades to the grid, particularly in large cities, may also help.

Texas Power Grid FAQs

Why Is Texas the Only State With Its Own Power Grid?

Texas wasn't the only state that wanted to regulate its own power generation. But Texas had the size to pull it off. Straddling two time zones, peak electric use is staggered—people in the eastern portion are turning off lights to go to bed an hour earlier than those in the west, and turning lights back on an hour earlier. This permits some evening of demand and helps the state provide enough power in ordinary circumstances.

What Caused the Feb. 2021 Blackouts?

A confluence of unfortunate circumstances led to power being cut to millions of residents over several days. The first was an unusual winter ice storm, which caused temperatures to plummet and energy demand to soar as people sought to keep their homes warm. Second, the state's gas and wind supplies hadn't been winterized—the systems weren't built for severe winter weather, and failed to function in the ice and freezing temperatures.

How Can the State Prevent Future Winter Blackouts?

A wider variety of energy sources is needed in the event that gas and wind again fail. The state needs to monitor its growing population, as incoming residents add burdens to the grid. And properly preparing the gas and wind networks for freezing weather will also prevent blackouts.

Bottom Line

Reliable electricity service for Texas may depend on closely monitoring population growth, since the influx of residents is taxing its grid. Winterizing its gas and wind infrastructure, making needed improvements to the grid, and adding power plants and transmission lines can also go a long way to preventing Texas blackouts in the future.

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. ERCOT. "ERCOT Organization Backgrounder." Accessed Nov. 11, 2021.

  2. Texas Comptroller of Public Accounts. "Winter Storm Uri 2021: The Economic Impact of the Storm." Accessed Nov. 11, 2021.

  3. The University of Texas at Austin Energy Institute. "The Timeline and Events of the February 2021 Texas Electric Grid Blackouts," Pages 75, 101. Accessed Nov. 11, 2021.