San Antonio Express-News (Sunday)
Sunshine, heat and bitcoin mining will reshape electricity in Texas
No electricity grid in the U.S. has added more renewable power over the past decade than the one in Texas.
In 2012, both California and the Midwest generated more power from wind, solar and other renewables than the Lone Star State. But in 2022, Texas was the winner.
Now, the future of the state’s grid is a study in supply, demand and uncertainty.
One thing that is clear: Most of Texas’ renewable generation today is from wind. Last year, wind projects under the Electric Reliability Council of Texas, which operates the grid that covers most of the state, generated more than 107,000 gigawatt-hours of electricity; solar generated 24,000, less than a quarter of what wind produced. But solar is growing rapidly, and it generates most during the hottest months, when the grid is under the greatest strain to meet high demand.
Less certain, but still likely: ERCOT expects only a slight expansion of the wind power fleet from now to 2025, while solar is expected to surge. Solar capacity could double from 2023 to 2025, if all projects with an interconnection agreement are completed.
Still less certain: the weather. Texas had a punishingly hot summer last year. There were 61 days from the start of May to the end of September that were the hottest in the past five years. Hot weather started earlier than usual as well, during the months when plant operators typically perform scheduled maintenance. The grid set repeated peak demand records in the summer months of 2022, forcing ERCOT to issue a socalled conservation appeal on July 11 and 13. Another very hot
summer could push electricity demand up even further in 2023.
Research group BNEF reached another important finding about last summer: Demand was higher than what record temperatures alone would suggest. There were other factors contributing to it — in particular, bitcoin mining.
Bitcoin is the biggest element of uncertainty in the Texas grid. Thinking about cryptocurrency in Texas involves neither a forecast (of high certainty) nor a projection (of lower certainty), but rather a scenario — a whatif that spurs pondering about how new renewable power, weather and a novel source of demand will interact.
Cryptocurrency mines use
electricity in such quantities, and with such consistency, that we can express that in terms of electricity demand. Today there are 1.8 gigawatts of bitcoin mines operating in ERCOT, and BNEF tracks 10 gigawatts of potential projects. Not all of those will come online this year or next, but in BNEF’s basecase scenario, there will be 5.3 gigawatts of demand from cryptocurrency mining this year, and 5.9 gigawatts’ worth in 2024.
Last year’s question about all those new miners was, “Will they crash the grid?” Ask the miners themselves and they will say they’re helping the grid because their load is “interruptible” — that is, it can be turned on and off depending on demand.
Some miners have registered as a “controllable load resource” that can respond to electricity system signals instead of just running flat-out. The state has also established an interim program that pays bitcoin mines to reduce their peak power.
The answer is as complex as the question, and it hinges on an important idea: bitcoin mines will only operate when the economics are favorable to do so. So if temperatures are lower than last year, and wind and solar generation is higher, power prices could be relatively lower and then miners might operate even during peak demand. But if there is less wind and solar, or higher temperatures, then miners might suspend operations due to higher power prices, keeping total demand lower. And with bitcoin running consistently during off-peak periods, prices could be higher at times when they historically have been lower, such as at 11 p.m., when there is no solar to offset bitcoin mining.
One likely outcome for the Texas grid — factoring in renewables, weather and cryptocurrency mining — is a significant change in “net load” profile. In the past, low wind speeds in the late afternoon meant that power was scarce during the hottest times of day and months of the year. Now with solar generating significantly at that time of day, the grid’s net load — the amount it requires after renewable generation — is falling. Not only that, the peak net load will likely shift to evening hours.
But there is another possibility — the bear case. With lower temperatures, ample solar and less bitcoin mining, Texas peak power demand might be little different than it was in 2022. In that event, the net load tops out at 62 gigawatts, almost 12 percent lower than in it was in
2018.
Rules govern markets, but uncertainties shape them. The Texas power market today has multiple uncertainties, each of them meaningful for the future of the state’s electricity grid. The one thing that is certain? It is the U.S. market to watch, a new postcard from the future of U.S. electricity.