The Texas Freeze of February 2021: Event and Winterization Analysis Using Cost and Pricing Data

On February 2021, the winter storm Uri caused massive damages and economic losses upwards of ${\$}$130 billion in Texas, worsened due to a combination of multiple power grid-related events. Severe winter weather conditions caused several generation sources to fail, with a significant underperformance of natural gas-based generation, and eventually causing the overall state electric grid to reach under-frequency levels that could have resulted in catastrophic blackouts. During these few trying days, the natural gas price spiked to exceed ${\$}$400/MMBTU with a few delivery points reaching ${\$}$1,250/MMBTU before falling back to the normal price levels of under ${\$}$4/MMBTU. Real-time settlement point price for electricity spiked and hovered at ${\$}$9,000/MWh price point for several days. The extreme price surges of these resources eventually caused large-scale financial fallouts in the event’s aftermath. In the wake of the February event, conclusions have primarily been drawn towards to need for winterization of the Texas grid, improved scope for information sharing between state regulatory agencies, and an overall expansion of demand response resources. Alongside, the need to rethink the scarcity pricing mechanism, the methods and cost of winterization of the state’s electric grid/ natural gas infrastructures, and the necessity to improve the emergency response service program at the Energy Reliability Council of Texas (ERCOT) form the primary components of discussion in this paper.