N .P .R. This is The Indicator from Planet Money.
I'm Darion Woods. And I'm Waylon Wong.
On a hot September day in 2023, the operators of Texas's power grid were getting nervous.
The warmth from an unusually hot summer was pushing later into the year.
air. That meant more air conditioners, more fans, and more staying inside.
But keeping up with that thirst for electricity was a scramble.
The sun was setting earlier as the summer gave way to fall, and that meant less solar power in the evening.
That day, the wind was forecast to be low, so not much wind power, just when people got home and turned on their ACs and TVs and ovens.
Also, a few power plants are out of commission.
Watching all of this was Stephanie Smith.
She's the chief operating officer of Eolian, which is a company that, among other things, builds battery plants in Texas.
It was just one of those perfect storms of events where a few went offline at the same time in the DFW area.
For Texans, the deadly winter blackouts from a couple years earlier were front of mind.
And the question that evening in September was could Texas' grid batteries save the day this time.
So today in the second show from our Grid Battery trilogy we're going to Texas.
Yesterday we looked at how the state of California was boosting batteries to encourage more wind and solar and today we go to an entirely different electricity market that is much less California control and much more with our new app, Free Market Rody.
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Texas' approach to the power grid is rather different than the one in California.
California takes more of a longer -term planning approach.
which project approval is finalized after more assessment of how generators might fit into these plans.
And the state offers long term contracts to give electricity generators certainty before they invest in, say, a new grid -scale battery project.
Texas, on the other hand, is a more boisterous free market.
It's not that Texas has NO regulation or government intervention whatsoever.
It's just comparatively hands -off, and that can put companies wanting to install batteries is at the whim of the invisible hand.
But to Stephanie Smith, the Chief Operating Officer for E .Oleon, that's the way her battery building company likes it.
We'll have more risk in some cases but, yeah, that's the idea, more risk, more reward.
In Texas, if the price goes very low, well then maybe some operators need to stop producing power.
If there's a spike in the price of electricity, great, that gives operators like E .0Lon the incentive to put more electricity onto the grid.
One opportunity for reward that Stephanie's company saw was in helping top up the grid for short periods of time when a lot of people wanted electricity but there wasn't enough being generated.
The company sees that opportunity by building giant battery plants.
Picture a football field full of shipping containers and you know what a battery project looks like, at the scale that we're building.
Imagine rows and rows of those shipping containers filled with like hundreds of electric car batteries.
The easiest use case to imagine is overnight, when the sun's not shining on solar panels.
The price of electricity can be high and Eolian then releases some of its batteries.
And then, when the sun is shining the next day and electricity is cheap, it tops back up those batteries.
But actually a big part of what Eolian does is what's called ancillary services.
This is kind of like top up and maintenance to ensure a steady stream of electricity through the wires.
regardless of whether it was originally generated by renewable or fossil fuel sources.
By putting a little juice into the wires when it's running low and taking it out when it could get overloaded, the overall grid becomes more stable.
You don't want excitement on a grid, you don't want surprises, and batteries are amazing at doing all of those things and reacting within microseconds of whenever their need is.
And that day in September 2022, please, was the ultimate test of whether Texas's free market batteries, like the ones that Stephanie's company owns, could stabilize the grid and avoid blackouts.
And you remember these moments because for anyone in the company working on this stuff, it gives you a heart attack every time it happens.
Demand was high. Generation was low, at least in the places that needed it.
The power grid operators pleaded with Texans to limit their power use.
They just issued another notice to conserve energy.
As evening came, Texas's power reserves dwindled.
A bunch of wind electricity was being produced in the South, but was overloading the wires, taking them to the North where a lot of the demand was.
This was a dangerous situation of congestion.
At one point, people in Stephanie's company noticed the signs of a huge gap in electricity needs.
The grid operator sounded an elevated emergency alert, the alert just below the level of potential rolling blackouts.
And beyond just alerts, the electricity market was going ballistic.
A megawatt hour of electricity usually goes for a little over $100.
It was now hitting $5 ,000.
If there was ever an incentive for companies to discharge their batteries, it was now.
It was unexpected and went really fast and because batteries can react within microseconds, a bunch of batteries jumped in including ours and Stopped that frequency fall and brought the grid back into balance and kept the lights on So that was a fun experience very stressful Stephanie's got some threshold
for fun..... Yeah, living on the edge of the grid.
Oh That should be their new company tagline.
Iolian's batteries drew down their electricity.
Given that high electricity price of $5 ,000, they were presumably rewarded handsomely for doing so.
As the night progressed, Texans turned off their washing machines and microwaves and went to bed.
Partly thanks to batteries, there had been no blackouts in Texas.
It's like the duck pedaling, you guys are the feet pedaling very fast and the duck just cruises along the pond.
ietn on in diving. That's exactly right.
If we're doing our jobs, nobody knows.
I nearly had a heart attack, but you kept your AC on.
So is this a story about the beauty of prices and visibly guiding company behavior all around Texas?
Is this a free market fable?
Starring a duck and a battery?
Maybe call it Friedrich Heikwach?
Augh, Darian, someone get you a book deal?
know. Well, the debate isn't settled.
Critics argue that Texas shouldn't have been that close to a blackout in the first place, that a little more central planning like in California might have been helpful.
What's more, batteries in Texas are agnostic about whether they're helping smooth out renewable or fossil fuel generators.
More planning could ensure the batteries are specifically focused on helping wind and solar generators, speeding up the energy transition to a low carbon grid.
Whatever the case, the Texas system is encouraging companies to build a lot of grid scale batteries.
From basically nothing in 2020, by 2024 the state had enough batteries to power an entire small city for a day.
In the battery race of California, Texas is coming second.
But it is catching up fast.
Sounds like the tortoise and the hare.
Yeah which one's the tortoise and which one's the hare.
Ooh, stay tuned! This episode was produced by Cooper Cats run with engineering by Jimmy Kathy Kiely withigeyyy was fact checked by Sierra Juarezagging as Cotton edits the show and the indicator is a production of NPR This message comes from Schwab, at Schwab how you invest is your choice not theirs That's
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