Texas utility regulators with PUC could make grid history with first use of 675 kilovolt transmission lines in the ERCOT grid.
Texas is facing a $30 billion question about the future of its electric grid: Is it time to create a new, stronger backbone that can grow along with the booming demand for electricity? Or should it stick with the current system and run the risk of playing catch-up a short time later? Utility regulators this week could decide between expanding the grid with more of the 345,000-volt power lines that have crisscrossed Texas for 65 years or starting a new system that can carry more than twice as much voltage.
In simpler terms, they’ll be considering whether the grid should start moving more electricity across Texas on a new system of high-speed multi-lane superhighways or keep expanding its system of smaller, two-lane roads. RELATED: ERCOT calls new demand forecast a ‘sanity check’ amid Texas data center boom It’s a key question. Texas already is dealing with overcrowded transmission lines that pose risks to reliability and could even cause cascading blackouts from a single overtaxed circuit near San Antonio. It comes as data centers are flocking to the state in search of massive amounts of power — and as population growth and increasingly severe weather are already testing the grid’s limits. The latest estimates suggest demand will grow an unprecedented 75% by the end of the decade. Grid experts worry that without the new approach, the state risks seeing its grid falling further behind its pace of growth. “We’re at a pivotal point to decide,” Kristi Hobbs, a system planner with state grid operator the Electric Reliability Council of Texas, told regulators earlier this year. “Do we want to continue building the system the way we always did, or do we want to consider a higher voltage that will set us up for the future?” The data industry has weighed in. Representatives of data centers operated by Google parent Alphabet Inc. and OpenAI’s massive Stargate artificial intelligence center project under construction in Abilene have said they’d prefer Texas go the bigger 765,000-volt route to create a more robust network. A pricey plan Experts say the higher voltage plan would better support long-term growth and move bigger loads more efficiently as power generation and demand are poised to explode. Both plans are costly — more than $30 billion — with the higher-voltage lines costing at least $2.7 billion dollars more, according to the latest estimates. “We did see the 765 cost go up a little more,” ERCOT President and CEO Pablo Vegas said in a recent meeting with the San Antonio Express-News. “But I think the important differences are that the 765 plan gives you a lot more capability moving loads. It gives you more grid stability. And maybe the most important thing — that’s hard to quantify — is the flexibility that it gives you.” Under either plan, regular Texans would pick up the tab through their utility bills. ERCOT says that in the long run, they’d wind up paying less with the higher-voltage system, which reduces costs by increasing efficiency. READ NEXT: As data centers boom, CPS Energy works on $1.3B plan for transmission needs ERCOT came up with the two transmission plans that are now before its regulatory body, the Public Utility Commission. It has said it will decide this week about the first subset of the plan, which covers three east-to-west superhighways to the Permian Basin area of West Texas. The Permian-only updates would cost about $10 billion if the PUC votes in favor of using the higher voltage lines. The standard-line plan would cost about $8.3 billion. One plan uses only 345-kilovolt lines and the other uses a combination of 765- and 345-kilovolt lines. It starts in the Permian because the oil-rich region desperately needs more power as oil and gas companies electrify their operations. That reality is what spurred ERCOT to create the dueling voltage plans. Speed vs. capacity West Texas’ oil and gas industry has made its desire clear: It cares less about which voltage lines are used and more about how fast they are up and bringing the juice. “As Permian continues to electrify, we know that need is going to be there,” PUC Chair Thomas Gleeson told state senators during a recent hearing by the Committee on Business and Commerce. “The question is how do we best serve that?” High-voltage lines are already planned for the sliver of Texas that’s connected to the national grid. ERCOT controls most of Texas’ power, with its independent grid serving 90% of the state’s electricity demand. “We’ve just never done it here,” Vegas said of ERCOT using the 765,000-volt lines. “I think that gives some people some concern.” The neighboring Southwest Power Pool approved its own higher voltage transmission plan last year that calls for a 765-kilovolt line from the panhandle of Texas to southeastern New Mexico. MORE GRID NEWS: Bill limiting wind, solar energy sails through Senate despite grid worries Grid operators across the country have made similar plans or, like Texas, are considering them as demand from data centers, industry and population growth stresses the grid. Some parts of the U.S. have been powered by higher voltage lines for decades. “The plan has much bigger ramifications than the Permian Basin,” said grid expert Olivier Beaufils of Aurora Energy Research. “The Houston hub as well, Dallas and San Antonio, the Austin area — it’ll enable a lot more generation to essentially come online along those corridors and also unlock existing generation.” That’s a key point around San Antonio. When electricity demand peaks statewide, power generated in South Texas can be “locked up” south of San Antonio by a circuit in the city that’s unable to carry the load — a two-lane road clogged to gridlock by interstate-level traffic. Gleeson has said this week’s decision is specific to the Permian Basin, though, because the commission is more confident of growing demand there. Disagreement over ERCOT’s methodology have recently raised questions about the accuracy of its demand forecasts. Regulators eventually will have to vote on a plan for the rest of the state’s transmission core, and for the combination of line types it deems appropriate to meet the growing demand. The unknowns Because they’re more efficient, ERCOT says the higher voltage lines will reduce production costs by $28 million annually and generate $229 million in consumer energy savings. Still, the $2 billion-plus difference has been enough to give some decision-makers pause — but the costs are spread over several years for a system intended to last some 50 years more. “I don’t know that I’ve ever heard it said, ‘Oh, we built too big of a road, or we built too many,’” Craig Bennett, an attorney representing CPS Energy, said during a March workshop related to the plans. “In hindsight, we tend to wish we had done more.” Not everyone is won over. In the same workshop, Katie Coleman, speaking on behalf of the Texas Association of Manufacturers, said the idea of working with an unfamiliar system put her clients on edge. “We don’t know what we don’t know,” she said. “The Permian plan is on a very tight timeline and I think there’s going to be a lot of consequences for everybody if there’s substantial delay and cost overruns.” READ MORE: In AI arms race, San Antonio data centers wonder: Does CPS have the juice? Such fears prompted Georgetown Republican Sen. Charles Schwertner to file a bill in the Legislature that would require a third party study to confirm ERCOT’s data about the high voltage lines’ feasibility, cost estimates and construction timelines. “We see benefits to both,” attorney Meghan Griffiths, representing the Permian Basin Petroleum Association, said of the dueling voltage plans. “But we’re not agnostic to delays … and the Permian needed transmission 10 years ago.” Gleeson, in response to some of Sen. Schwertner’s concerns at a recent hearing, said he understood why ERCOT saw the transmission plan as the time to convert to higher-voltage transmission lines, but that commissioners were looking at all factors. “Our role at the PUC is to take all of that information and decide what is ultimately right,” he said. Supply network ready Commissioners have been doing their own due diligence, too. On a Friday morning in March, dozens of stakeholders packed into a hearing room at the PUC’s offices in Austin to wade into the intricacies and questions related to the grid’s supply network. For more than four hours, line part suppliers and transmission providers shared presentations and took questions. The same points emerged from most: The higher voltage plan isn’t riskier. Many preferred it, but several said they were neutral. The bulk of the costs, lead times for supplies and risks are similar for both plans, the companies said. “The risk profile is very similar because the supply chains are very similar and, in many cases, the same,” said Kenny Mercado, an executive with Quanta Services Inc., a transmission service provider. RELATED: Trump’s tariffs could hit Texas power grid hard, drive up energy costs Tariffs, for example, are affecting both line types nearly equally. The labor is available, ready for either project, with the appropriate training, presenters said. Mercado said he thought the 765-kilovolt plan could be brought to market more quickly than the standard plan, but was sure the timelines would at least be similar. “There’s a U.S. supply chain to manufacture, to maintain and service this equipment,” said Jason Neal, an executive with HICO America, a company that provides transmission equipment. “This ERCOT decision is very important. Already, manufacturers, including ourselves, have invested to increase capacity significantly for 765. This decision would even further that.” Better for blackouts? Higher voltage lines wouldn’t just benefit data centers. Experts say they would probably position the grid to better manage outages during an emergency caused by extreme heat, cold or hurricanes. That’s a vivid concern for Texans who remember the deadly statewide blackouts of February 2021, when a deep freeze led to multiple issues that crashed parts of the grid. The 2003 Northeast blackout also was a domino effect of errors that led to power outages for 50 million people across eight states and part of Canada during the August heat. As 345-kilovolt lines like those now in Texas tripped offline, the next one would overload. That caused cascading outages all the way up to New York and New England — until the extra capacity of a 765-kilovolt system was able to act as a shock absorber, said Evan Wilcox, American Electric Power Co. Inc.’s director of transmission studies. The high-voltage network, Wilcox said, helped keep the blackout from spreading further. His company already manages 765-kilovolt lines in the U.S. and would be one of the companies leading installation of the new transmission system in Texas. “That extra capacity … the greater efficiency, the reduced losses, the higher performance, the better reliability,” said AEP Texas executive Chad Burnette, ticking off the reasons for such a change. “All of those are worth a lot more for our customers in the state.” ERCOT recently highlighted an example of concerns the current 345-kilovolt system is already presenting across Texas: Utilities sometimes ask the grid operator if they can de-energize power lines while they do upgrades. ERCOT has increasingly denied such requests out of fear surrounding lines could become overcrowded and cause outages. “This illustrates the urgent need for additional transmission capacity on the system to facilitate continued maintenance and outages needed to support the state’s growth,” Hobbs, the ERCOT planner, wrote in a recent PUC filing. From 2014 to 2020, ERCOT denied such requests fewer than 20 times a year. In 2021, the total of denials shot up to 80. Last year, it was just under 100. ERCOT’s ‘superhighway’ Schwertner’s bill to require more studies could put planners in a tough spot if passed into law. It would require the third-party studies and other vetting before construction of the new higher voltage lines could begin. So far, the bill hasn’t received a committee hearing. Beaufils, the grid expert and researcher, said lawmakers historically “just kick the can” to the already bogged-down PUC. More studies, after ERCOT has already done its own, risks delays. ERCOT’s higher voltage plan ultimately calls for 2,468 miles of new 765 kilovolt lines and 649 miles of new 345 kilovolt lines and other upgrades. The alternative is 2,673 miles of new 345 kilovolt lines and 1,913 miles of existing line upgrades and other updates. Hobbs has been pitching the voltage step-up during public remarks every chance she gets. She and Vegas, the ERCOT president, call the proposed core a “superhighway” for the grid. The lower voltage system plan would meet the needs for today — but probably not the future, Hobbs has said. So, if the PUC tells ERCOT to go that way, it could mean a piecemeal high-voltage expansion in five to 10 years. “It’s just like the toll road they built at two lanes,” she told state regulators. “Wouldn’t it have been great to have built at three when they started so we didn’t have to sit in traffic and wait for them to build the third lane?” Ask anyone stuck on I-35 during rush hour. Claire Hao contributed to this report.
ERCOT Public Utility Commission Of Texas CPS Energy Grid Alphabet Inc. HICO America San Antonio Express-News Committee On Business And Commerce AEP Texas Openai Google Quanta Services Inc. Senate Texas Association Of Manufacturers Permian Legislature Republican Permian Basin Petroleum Association Northeast American Electric Power Co. Inc. Kristi Hobbs Texans Pablo Vegas Olivier Beaufils Thomas Gleeson Katie Coleman Charles Schwertner Craig Bennett Permian Meghan Griffiths Evan Wilcox Chad Burnette Bill Kenny Mercado Jason Neal Claire Hao Trump West Texas Permian Basin San Antonio U.S. South Texas Austin Abilene New Mexico Houston Dallas Southwest Power Pool Georgetown Canada New York New England Vegas I-35 Aurora Energy Research Stargate
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