The Texas Power Grid Explained: Why Your Lights Go Out (And Keep Going Out)

Texas runs its own electrical grid. It's called ERCOT. It's not connected to the rest of the United States (well, barely — there are a couple of tiny DC ties, but they're like connecting a garden hose to a fire hydrant).

When demand for power exceeds supply, most states borrow electricity from their neighbors through massive interconnected grids. Texas can't. There's nowhere to borrow from.

When ERCOT can't balance supply and demand, the only option is to reduce demand. That means cutting power to homes and businesses. Your lights go out so the whole grid doesn't collapse.

That's the entire story. Everything else is detail. Important detail — but the fundamental issue is that Texas is an electrical island, and islands are on their own during a storm.

ERCOT stands for the Electric Reliability Council of Texas. Despite having "reliability" right there in the name, ERCOT has become synonymous with the opposite for a lot of Texans. That's a bit unfair, but also a bit earned.

Here's what ERCOT actually does:

• Manages the flow of electricity to 26 million Texas customers — about 90% of the state's electric load.
• Operates the wholesale electricity market where generators sell power and retail providers buy it.
• Balances supply and demand in real time, every second of every day. This is the hard part. Electricity can't be stored easily at grid scale (though battery storage is changing this). So ERCOT has to match generation to consumption continuously.
• Tells generators when to turn on and off. When demand is rising — say, a 105-degree afternoon when every AC in Texas is running flat out — ERCOT signals generators to increase output. When demand drops at 3 AM, generators throttle back.

ERCOT is not a power company. It doesn't generate electricity. It doesn't own power plants. It doesn't send you a bill. Think of it as an air traffic controller for electrons. It manages the flow, but it doesn't fly the planes.

Your actual electric bill comes from a retail electric provider (REP) like TXU, Reliant, Green Mountain, or one of dozens of others. They buy wholesale power through the ERCOT market and sell it to you. ERCOT operates behind the scenes.

This is the part that most people find either fascinating or infuriating, depending on their politics. We're going to stick to the facts and skip the editorial.

The United States has three major electrical grids: the Eastern Interconnection (everything east of the Rockies), the Western Interconnection (Pacific states and mountain west), and the Texas Interconnection (Texas, plus tiny bits of the Texas panhandle in the Eastern grid).

Texas deliberately kept its grid separate starting in the 1930s and 1940s. The reason was federal regulation. Under the Federal Power Act of 1935, any electrical utility that transmits power across state lines falls under the jurisdiction of the Federal Power Commission (now FERC — the Federal Energy Regulatory Commission). Texas utilities didn't want federal oversight. By keeping all generation, transmission, and distribution within state borders, Texas avoided federal jurisdiction.

This was a deliberate choice. Texas wanted to regulate its own electricity market. It got what it wanted. For decades, it worked fine. The grid grew. Deregulation in 2002 opened up the retail market. Competition brought options. The wholesale market attracted investment in new generation.

The trade-off was always there, though, lurking in the engineering. An isolated grid can't import power during emergencies. Every other state in the lower 48 — every single one — can pull emergency power from neighboring states when they need it. Texas can't. The connection capacity is roughly 1,000 MW of DC ties. Total ERCOT peak demand is around 85,000 MW. Those ties are a rounding error.

Being an electrical island is fine 99% of the time. ERCOT manages supply and demand within Texas 365 days a year, and most of those days, it works. Power plants generate. Transmission lines carry. Substations distribute. Your lights stay on. Nobody thinks about ERCOT.

The 1% is the problem.

When demand spikes and supply drops at the same time — which is exactly what happens during extreme weather events — every grid operator in America has the same challenge. The difference is that when PJM (the mid-Atlantic grid operator) is short on power, it can pull from MISO (the Midwest). When the California ISO needs help, the Western Interconnection delivers. It's a mutual aid network baked into the physics of the grid.

Texas has no mutual aid. When ERCOT is short, ERCOT is short. The only tool left is demand reduction — which means shutting off power to customers. Your power. That's what "rolling blackouts" means: ERCOT telling utilities to cut load so the grid doesn't collapse entirely.

And when the shortfall is big enough — as it was during Uri — the blackouts stop rolling and start staying. Four and a half million homes. Multiple days. In freezing temperatures.

This isn't a maintenance issue or a management issue. It's a physics issue. An island grid has no backup plan except "build more than you'll ever need" — and Texas hasn't done that, either.

February 2021. Most people know the headlines. Here's what actually happened, mechanically, in the order it happened.

The polar vortex split. A mass of arctic air that normally stays near the North Pole broke apart and pushed south. Temperatures across Texas dropped to levels not seen in decades. Dallas hit 2°F. Houston hit 13°F. San Antonio hit 9°F. Austin hit 6°F. These aren't normal. Texas infrastructure isn't built for them.

Natural gas supply collapsed. Natural gas provides about 40-50% of Texas electricity. Gas wells froze. Gas processing plants froze. Compressor stations that push gas through pipelines froze. Gas couldn't reach power plants that needed it to generate electricity. The gas system and the electrical system are deeply interdependent — many gas facilities need electricity to operate, and power plants need gas to generate. When both fail simultaneously, you get a cascading collapse.

Other generation fell too. Wind turbines froze — this got the most media coverage but was a relatively small fraction of the total shortfall. Coal plants had frozen conveyors and equipment. A nuclear plant at the South Texas Project went offline. The generation losses were across every fuel type.

Demand spiked. Every home and business in Texas was running heat at maximum. Electric heater sales spiked. Demand hit levels ERCOT hadn't planned for in February.

ERCOT ordered load shed. With generation dropping and demand spiking, ERCOT had to cut load to prevent total grid collapse. They ordered utilities to shed load — turn off power to blocks of customers. The blackouts were supposed to be "rolling" — 15-45 minutes at a time, rotating between neighborhoods. They weren't. Many areas lost power for 3-4 days straight.

The near-miss. At 1:51 AM on February 15, ERCOT was 4 minutes and 37 seconds from a complete grid collapse. If frequency had dropped below a critical threshold, protective systems would have tripped the remaining generators offline to prevent physical damage. Restarting the entire Texas grid from a cold black start could have taken weeks or months. They caught it. Barely.

The toll. 4.5 million homes and businesses lost power. 246 people died — from hypothermia, carbon monoxide poisoning (from running cars and generators indoors), and medical emergencies during the blackout. Estimated economic damage: $295 billion. Burst pipes alone caused billions in property damage across the state.

Texas didn't do nothing after Uri. Here's what changed:

• SB 3 — weatherization requirements. The Texas Legislature passed Senate Bill 3 in 2021, requiring power generators and natural gas facilities to weatherize against extreme cold. The Public Utility Commission (PUC) and the Railroad Commission developed specific standards. Facilities must report weatherization status.
• New generation capacity. Several new natural gas plants have come online or are under construction. Texas has also seen massive growth in battery storage — from roughly 200-300 MW pre-Uri to over 14,000 MW of installed battery capacity by late 2024. Batteries can't run for days, but they can fill gaps during peak demand hours.
• Improved forecasting. ERCOT upgraded its demand and supply forecasting models, particularly for winter scenarios. The goal is earlier warning and earlier action.
• Higher reserve margin targets. ERCOT now targets a higher reserve margin — the buffer between expected peak demand and available supply.
• New transmission projects. Proposed transmission lines to bring power from West Texas wind and solar resources to the population centers in DFW, Houston, Austin, and San Antonio.

What the critics say:

• Weatherization compliance is inconsistent. Enforcement has been questioned. Some facilities have received waivers.
• Reserve margins are still below the 15% target that grid reliability experts recommend. ERCOT's winter reserve margin has been around 10-11%.
• Texas still doesn't have a capacity market — a mechanism to pay generators to be available even when they're not running. Most other grid operators have them. Texas relies on "energy-only" pricing signals, which means generators only get paid when they actually produce power. Critics argue this doesn't incentivize enough spare capacity.
• The grid is still an island. No new interconnections to the Eastern or Western grids are planned. The fundamental vulnerability remains.

Uri was a winter crisis. But Texas summers are becoming the more frequent worry.

Record demand. ERCOT set peak demand records in both 2023 and 2024 as summer temperatures pushed AC systems across the state to their limits. Conservation alerts — those "reduce your electricity use" texts from your provider — went out multiple times each summer.

Rolling blackouts narrowly avoided. In multiple instances, ERCOT activated emergency procedures, called on backup reserves, and barely avoided ordering load shed. The margin between "the lights stay on" and "rolling blackouts" has been uncomfortably thin.

EV adoption. Texas is the second-largest EV market in the US. Every EV that plugs in at 6 PM on a July evening adds load to an already strained grid. The individual load is small, but the cumulative effect is growing.

Data centers. This is the big one. Tech companies are building data centers across Texas, drawn by cheap land, low regulation, and proximity to fiber networks. ERCOT reported 164,000+ MW of new interconnection requests from large-scale consumers — mostly data centers, Bitcoin mining, and AI facilities. For context, ERCOT's current total capacity is about 90,000 MW. They can't build generation fast enough to keep up if even a fraction of those requests materialize.

Bitcoin mining. Texas became a Bitcoin mining hub for the same reasons data centers like it. Mining operations can consume hundreds of megawatts each. On the positive side, many mining operations have agreements with ERCOT to curtail — shut down — during peak demand events, which effectively acts as a demand response resource. On the negative side, they're consuming power that might otherwise build the reserve margin.

The bottom line: summer demand is growing faster than new supply is being built. That gap is where blackouts live.

Reserve margin is the most boring phrase that determines whether your house has power or doesn't. Here's what it means.

Reserve margin = available supply minus expected peak demand, divided by expected peak demand. It's the buffer. The cushion. The extra generation capacity sitting there in case something goes wrong.

Grid reliability experts generally recommend a 15% reserve margin as the minimum for reliable operation. That means if you expect peak demand of 85,000 MW, you want at least 97,750 MW of available supply. The extra 12,750 MW covers generator outages, forecast errors, and unexpected demand spikes.

ERCOT's current numbers:

• Winter reserve margin: ~10.1%. Below the 15% target. In a Uri-repeat scenario, ERCOT's own modeling shows peak demand of 85.3 GW against available supply of 69.7 GW — a shortfall of over 15 GW. That's not a thin margin. That's no margin at all.
• Summer reserve margin: ~12-15% depending on the year and the assumptions. Better than winter, but still tight during extreme heat events. And "extreme heat" in Texas is getting more extreme and more frequent.

Here's the thing about reserve margins: they sound abstract until they're not. A 10% reserve margin means the grid can handle a bad day. It can't handle a really bad day. And the really bad days are the ones that matter — because those are the days you lose power, your house heats up to 95 degrees, and your frozen groceries become a puddle.

"Reserve margin" is the distance between your family's comfort and a week of misery. And that distance, in Texas, is thinner than it should be.

Let's be straight about where things stand.

The Texas grid IS more reliable than it was in February 2021. More generation. Better weatherization. Massively more battery storage. Improved forecasting. These are real improvements, and they matter.

But "more reliable" doesn't mean "reliable enough."

ERCOT's own planning documents show they can't meet a severe winter scenario — the kind of event that happens every 10-20 years in Texas. Summer margins are tightening as demand grows from data centers, EVs, and population growth. The grid is still an island with no meaningful ability to import power during emergencies.

For a home worth $400,000 to $5,000,000 — which describes most of the homes in DFW suburbs, Houston's inner loop, Austin's west side, and San Antonio's north side — the question isn't whether you can afford backup power. The question is whether you can afford to bet on ERCOT getting it right every single time.

A standby generator costs $8,000-$15,000. A battery system costs $10,000-$35,000. A hybrid system costs $18,000-$60,000. Any of these is a fraction of the cost of one bad outage — and a rounding error on the value of the home they're protecting.

We're not fear-mongering. The grid works most of the time. But "most of the time" is a weird thing to bet your family's comfort, safety, and finances on when a permanent solution exists.

You can't fix the grid. You're not going to lay new transmission lines or build a power plant in your backyard. The grid is what it is, and it's going to be what it's going to be for the foreseeable future. Improvements are coming, but slowly, and not fast enough to eliminate the risk in the next few years.

What you can do is fix your house.

A backup power system — generator, battery, or hybrid — turns your home from grid-dependent to grid-optional. The grid goes down, your house stays up. You're watching the news coverage of the outage from your air-conditioned living room instead of living it.

Here's where to start:

• Know your options. Visit our services comparison page to see the full breakdown of generators, batteries, solar integration, and hybrid systems.
• Get sized correctly. Every home is different. Your AC tonnage, your panel capacity, your electrical load — these determine what system you need. A free assessment takes 5 minutes and gives you specifics, not generalities.
• Get quotes before you need them. We've said it before: the worst time to shop for backup power is after an outage. The best time is now, before the next storm season, when installers have capacity and equipment is available.

Request your free assessment here. We'll match you with vetted installers in your area who know the local permitting, the local codes, and the right systems for Texas conditions. No obligation. No pressure. Just information you can act on when you're ready.