Texas Governor Greg Abbott said his state will need to grow its power supply capacity by as much as 15% annually to keep up with rising demand from homes and businesses.
And he’s way underestimating the need.
“For every business relocating here, there is an increased demand from our power grid,” Abbott, a Republican, said at the NAPE Summit energy conference in Houston on Wednesday (February 7). “We need to be prepared to increase our power supply capability by 10-15% per year.”
Or maybe more like 100-150% per year.
If you want a fun 48 minutes, listen to Peter Zeihan’s presentation at the 2023 Manufacturing Insights Conference. He talks about how China’s manufacturing days are numbered due to demographics and their impending property speculation-driven financial collapse. Texas has enormous energy reserves and Houston is the world’s second leading producer of machinery.
As Zeihan puts it:
We basically need to double the size of the industrial plant on the continent. Now, chemicals being the base material that goes into everything else that we need to do, that is in our back pocket. We’ve already done that. Machinery. Where are my Houstonians? There’s got to be some people from Houston. Houston is the second largest producer of machinery in the world. Think of machinery as the stuff that builds other stuff.
Oh, my God, get to it already. You need to double at least. Quadruple would be better, and you need to do it by Tuesday.
That’s the volume that we need here. But electrical steel, I think, is the single biggest limiting factor. Doubling the industrial plant, adding in the processing capacity for a lot of the stuff that the Chinese do, we need to increase the grid’s capacity by roughly 50%. That means the amount of electrical steel we’re going to consume is going to go up by at least a factor of 30. We haven’t had to do this since the 50s when we first electrified.
The Fortune 500 is Stampeding into Texas
The Fortune 500 is Stampeding into TexasCompanies have been relocating to Texas fast and furious, mainly from expensive, business-hostile states like California. Here are some big names that have made the move:
- NRG Energy – moved from Princeton, New Jersey, to Houston
- Tesla – moved from Palo Alto, California, to Austin
- Hewlett Packard Enterprise – moved from San Jose, California, to Spring
- Oracle – moved from Redwood City, California, to Austin
- Charles Schwab – moved from San Francisco, California, to Westlake
- Caterpillar – moved from Deerfield, Illinois, to Irving
- AECOM – moved from Los Angeles, California, to Dallas
- CBRE – moved from Los Angeles, California, to Dallas
And those are just the big names. For every Fortune 500, there’s probably a hundred mid-sized and small businesses.
Future Plans
The second-most populous state has been battling to strengthen its electricity grid since a 2021 winter storm brought about extensive blackouts that left the state immobilized for days and led to more than 200 deaths. Power usage in Texas has skyrocketed to unprecedented levels in recent years due to an influx of people relocating to the state, flourishing economy, and escalating power requirement from oil rigs to data centers. Electricity utilization hit a record high at 85.5 gigawatts in August, an increase of 14% from 2019.
The Electric Reliability Council of Texas, known as Ercot, which is responsible for managing the grid servicing most of the state, had approximately 147 gigawatts of installed capacity in the previous summer. Wind and solar contributed to roughly 36% of this. Although renewable power has seen a swift expansion in recent years, the grid has been grappling to attract new gas generation that can provide backup for the inconsistent nature of wind and solar.
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