OUR ELECTRIC GRID SYSTEM
Electricity Use Booms in Texas, a Harbinger for the Country
Power demand is climbing across the nation as industrial users connect to the grid, populations grow and weather gets more extreme
Updated Nov. 13, 2023 7:18 am ET
EXCERPT FROM THIS ARTICLE: The U.S. is also making a historic transition from conventional power plants fueled by coal and natural gas to cleaner forms of energy such as wind and solar power. Grid operators across the U.S. have been warning that power-generating capacity is struggling to keep up with demand, and that gaps could lead to rolling blackouts during hot or cold weather extremes.
Everything is bigger in Texas, including its electricity use, which is increasing at historic rates in a sign of what is to come for much of the U.S.
The country’s largest electricity producer and user saw sales grow at five times the national rate for the past decade, roughly like adding Louisiana. A crushing heat wave this summer broke 10 peak demand records for the main Texas grid operator, which narrowly avoided blackouts one hot evening.
Texas is an extreme example with a big population that needs a lot of air conditioning, but it is also at the center of trends pushing electricity use higher in pockets of the country: the reshoring of manufacturing, the growth of power-hungry data centers and a push to electrification.
Some analysts say they are concerned the U.S. grid isn’t ready for accelerated growth in industries that want to plug in or the concentrated nature of the new demand in certain states. While there is room for more customers on the grid, planning is complex, and it is hard for the system to absorb if everyone tries to connect at the same place and time.
Texas is among a handful of states seeing dramatic upswings in demand.
Growth in semiconductor manufacturing has helped push electricity use higher in Oregon. States like Virginia and Iowa are seeing the addition of more large-scale data centers. Oil fields in North Dakota and New Mexico are hooking up to the grid and driving some of the nation’s biggest upswings in electricity use.
Electricity demand typically inches higher slowly with economic and population growth, canceled out by efficiency gains. Nationally, sales grew just 5% in the past decade. Texas electricity demand grew by 25% during that period, according to government data.
New customers that have connected to the Texas grid in recent years include the
gigafactory outside of Austin, a liquefied natural gas export facility on the Gulf Coast touted as the world’s largest all-electric plant and bitcoin miners.
Texas is experiencing new demand on the electric grid that hasn’t been seen since the 1950s, ’60s and ’70s, said Michael Skelly, chief executive of transmission developer Grid United.
“Are we on the brink of such a moment now with electrification of transportation, with more extreme weather?” Skelly asked, noting that Texas companies are pursuing carbon capture and hydrogen projects that will tap grid power. “And we’re going to do AI,” he added.
Many utilities and grid operators across the U.S. are adjusting demand forecasts higher.
In coming years, computing power for artificial intelligence and wider adoption of electric vehicles will add to the demand. In addition, more manufacturing is relocating to the U.S. because of incentives in last year’s Inflation Reduction Act.
The U.S. is also making a historic transition from conventional power plants fueled by coal and natural gas to cleaner forms of energy such as wind and solar power. Grid operators across the U.S. have been warning that power-generating capacity is struggling to keep up with demand, and that gaps could lead to rolling blackouts during hot or cold weather extremes.
Data centers are one of the biggest new power consumers, and demand from them could double by 2030. Some new data centers requesting grid connections are as large as 500 megawatts, as much as it takes to power hundreds of thousands of homes, said Rob Chapman, senior vice president of energy delivery and customer solutions at the Electric Power Research Institute, a nonprofit researcher and advisory.
In Virginia, the state’s largest utility,
, has connected 75 new data centers since 2019, much of it fueled by streaming and work-from-home trends. Statewide electricity sales are up 7% year-to-date since then, according to government data. The utility expects electric demand to grow by about 85% over the next 15 years, spokesman Aaron Ruby said.
In the Pacific Northwest, electricity demand is expected to increase 20% in the next five years, much of it because of industrial growth, according to the Pacific Northwest Utilities Conference Committee, a trade association. That new demand is like adding four Seattles to the grid.
In New Mexico, electricity sales have jumped largely because of the Permian Basin shale patch in the southeastern corner of the state, said Commissioner Gabriel Aguilera of the New Mexico Public Regulation Commission. Producers there are connecting pumps, compressors and other equipment to the grid as they try to reduce greenhouse gas emissions.
The utility serving a large slice of the oil field, which straddles New Mexico and Texas, has seen its industrial sales increase an average of 15% for the past five years, a rate Aguilera called “astounding.”
Likewise, North Dakota has seen oil-field electrification while also courting both bitcoin miners and data centers, causing electricity sales to jump more than 58% in the past decade, the biggest increase in the country.
In Texas, electricity demand soared this summer as users cranked their air conditioning, but heat alone doesn’t explain it, said Barbara Clemenhagen, vice president of market intelligence at Customized Energy Solutions and a former board member of the Texas grid operator.
“There’s a ton of relatively cheap and available land in Texas, with relatively easy access to energy, and relatively low-cost energy compared to other parts of the country,” Clemenhagen said.
As a result, a range of industries has been expanding and electrifying operations in Texas, from EV makers to oil-and-gas companies to bitcoin miners. While Texas’ pro-business climate has spurred significant economic development, some say it has also made the grid more precarious.
Texas politicians have rolled out the welcome mat for bitcoin miners, though their enormous energy use is controversial. Miners typically operate warehouses of computer servers that unlock new bitcoin by solving mathematical puzzles that become increasingly complex and require more computing power—and more electricity.
Bitcoin miners argue they benefit the grid with their flexibility to turn on and off. Critics say they make electricity more expensive for household users.
Meanwhile, Texas added nearly 9.1 million residents between 2000 and 2022, according to the U.S. Census Bureau, more than any other state. San Antonio municipal utility CPS Energy connects around 30,000 new electric customers each year and “every utility in the state can give you a similar statistic” said Rudy Garza, president and chief executive.
“You’ve got to have every megawatt of power that can be produced whether it is wind or solar or batteries or new thermal generation,” Garza said. “Beggars can’t be choosers in an environment where the conditions in the market are tight.”
Write to Jennifer Hiller at jennifer.hiller@wsj.com
