In Game of Thrones, it’s a warning of peril. In Texas…it’s a reminder of the harsh effects of Winter Storm Uri in 2021.
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By Thad Warren
Winter is coming…
In Game of Thrones, it’s a warning of peril. In Texas…it’s a reminder of the harsh effects of Winter Storm Uri in 2021.
Statewide power outages, broken pipes, flooded homes, and overall angst for the energy grid undeniably failed Texans when they needed it the most. Back then I dubbed the event a dumpster fire.
Since then, ERCOT and Austin lawmakers have vowed never to let that happen again. You have probably heard or seen headlines about how much money legislators are throwing at the problem—$1 billion here, $2 billion there. It’s an outrageous amount of money.
But, what are they actually doing with that money?
I did some quick Google searches and to my surprise (insert sarcasm), it wasn’t clear. So I did my own deep dive. Here’s what I found.
The Texas Legislature alone has allocated over $10 billion to upgrade infrastructure, winterize facilities, and create programs designed to improve overall grid reliability. And that doesn’t even include private investments made by energy providers to stay compliant with state mandates.
Between legislative initiatives, private sector investments, and fines levied against non-compliant operators, Texas has funneled billions into patching up its fragile energy grid.
So yes, it’s a lot of money. But the real story is where that money is going. Let’s break it down.
Recently you may have seen a headline like “Texas to double $5 billion state fund aimed at expanding the power grid.”
Logically, my first thought was that Texas is directly investing money to build new power plants and infrastructure. And, that isn’t wrong, but it’s not exactly cut and dry.
Texas set up something called the Texas Energy Fund. This program essentially offers low-interest (~3%) loans to companies so that they can invest in power plants and the like.
Thanks to SB3, energy providers and grid operators are required to prepare their infrastructure for extreme weather. Think insulated pipelines, reinforced power plants, and even defrosting drones for wind turbines.
It’s difficult to get an exact dollar figure on how much money has been spent on winterization specifically. But, the Federal Reserve in Dallas has some estimates.
Here’s what that would like in total:
We used the higher end of the estimates for this calculation, so these numbers are on the high end of the spectrum.
But, one thing is for sure - creating a power grid that can withstand a winter storm ain’t cheap.
Not only does Texas need to improve the current grid and power plants - the grid needs more power, especially the kind that can be turned on quickly during high demand (a.k.a. dispatchable power).
Texas is booming. In 2023 alone the state gained 473,453 new residents. Not to mention all the new businesses and manufacturing facilities that are now calling Texas home.
SB2627, or the "Powering Texas Forward Act," has allocated funds to build or upgrade facilities with a focus on dispatchable generation. Loans and grants are being offered to projects that add at least 100 MW of capacity.
Here’s ERCOT’s forecast for energy demand growth in Texas:
This chart makes one thing very clear, more people are using more electricity and to keep up Texas will need to increase supply dramatically.
This includes upgrading transmission lines, clearing vegetation that threatens power lines, and ensuring critical infrastructure like hospitals and water treatment plants are protected. For instance, $1 billion is being spent specifically on projects outside of ERCOT to shore up regional grids.
While ERCOT oversees most of the grid in Texas there are portions of the state that are not part of ERCOT. For example El Paso, portions of the Panhandle and far East Texas.
SB2627 also created funding for something called “Texas Backup Power Packages” for facilities like hospitals and emergency shelters. These systems can provide 48 hours of standalone power during an outage, using a mix of natural gas and renewable energy.
If you have ever been behind a hospital and noticed large generators these are the types of systems this portion of SB2627 is helping to fund. They have two benefits when the grid is under stress. Firstly, they can power the critical equipment in a hospital or shelter, but secondly, they can temporarily relieve the load on the grid for facilities that require a large amount of electricity to operate.
The short answer? It’s a work in progress.
So, while there are tangible improvements, we’re not in the clear yet.
Texas isn’t just big - it’s getting bigger. The state has been the poster child for population and economic growth in the U.S. Over 470,000 people moved to Texas in 2023 alone, and that’s on top of a steady stream of businesses, from Tesla to Samsung, setting up shop in the Lone Star State.
With every new resident comes increased energy usage, air conditioners, electric vehicles, and expanding industrial operations all demand electricity. ERCOT projects electricity demand will grow by 3% annually, which might not sound like much, but in grid terms, it’s massive.
Put simply, the current grid wasn’t built for this level of growth. If Texas doesn’t expand its energy supply and upgrade its infrastructure, it risks repeating the disastrous blackouts of 2021, not just in the winter, but during blazing Texas summers, too.
Winter Storm Uri proved that Texas’ grid wasn’t ready for an extreme polar vortex. One issue snowballed (pun intended) into a full-blown crisis as generation facilities froze, natural gas supplies stalled, and demand soared.
To be fair, this was an extremely abnormal event. And just like anything else there are tradeoffs. Texas has historically had relatively low electricity prices, in part because power plants didn’t need the expense of winterization.
Many people would have raised an eyebrow if Texas had invested billions of dollars of taxpayer money “just in case” of a storm like this. “That never happens in Texas?!”
Modernizing and weatherizing infrastructure doesn’t just prevent another Uri; it also helps mitigate risks from Texas’ unpredictable weather, including hurricanes, heat waves, and, yes, ice storms.
Reliability improvements also include efforts to ensure energy flows to critical infrastructure like hospitals, fire stations, and water facilities during emergencies. Programs like the Texas Backup Power Packages funded through SB2627 directly support these goals by creating independent, standalone power systems for these essential services.
Dubbed the “Winterization Bill,” SB3 is the cornerstone of Texas’ grid reforms. Passed in 2021, it requires energy providers to prepare their infrastructure for extreme weather. It also introduced steep fines (up to $1 million per day) for companies failing to meet weatherization standards.
SB3 also established the Texas Energy Reliability Council (TERC) to improve coordination between natural gas and electricity providers during emergencies. Add to that mandatory blackout alerts to keep Texans informed, and you have a sweeping set of changes aimed at ensuring reliability when it matters most.
Where SB3 sets the rules, SB2627 provides the funding. Known as the “Powering Texas Forward Act,” this bill created the Texas Energy Fund to support new and upgraded power generation projects.
Here’s how the money works:
Together, these two bills are driving the largest investment in Texas’ grid since deregulation in 2002.
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