The U.S. Electric System Is Leaning on Customers to Avoid Blackouts

Such requests aren’t new, but they are becoming more urgent as weather patterns become more extreme and construction of new infrastructure for power generation and transmission isn’t keeping pace with a trend of electrifying everything from stove tops to transportation.

California and Texas called for power cuts during heat waves this past summer, a tactic that California officials say kept the lights on. In New England, grid operators have floated the idea that such measures could be necessary this winter in the region, where surging natural-gas demand abroad threatens to reduce fuel available to generate electricity during extreme cold snaps. 

Asking customers to voluntarily trim electricity use when the system is stressed and shift to using power at times when supplies are plentiful is called demand response. Varying electricity prices is another way to encourage power use at certain times, but grid operators and utilities also have programs that offer customers other financial incentives for voluntarily altering behavior.

In emergencies, pleas to slash power use become widespread to try to avoid rolling blackouts. Everyone gets asked to curtail power use, whether they’re part of a formal demand-response program or not.

“Extreme heat is straining the state energy grid,” California warned residents in a Hail Mary text message on Sept. 6, when much of the state was experiencing triple-digit temperatures. “Power interruptions may occur unless you take action.”

Californians seek relief at cooling centers during heat waves this past September, left, and in 2020, right. Frederic J. Brown/Agence France-Presse/Getty Images; Alex Edelman/Bloomberg News

Within minutes of the text, electricity demand plummeted by around 1,510 megawatts for about an hour, trimming electricity demand by about 3% from that day’s peak, according to data from the California grid operator, though it noted in a report that it’s impossible to assess the precise impact of the text message. California avoided the kind of rolling blackouts that had hit the state during previous heat waves, most recently in August 2020 when utilities twice had to cut power briefly to customers.  

This winter, all parts of the U.S. should have adequate electricity in normal conditions, but prolonged cold weather could pose a problem in some regions, according to an October report from the Federal Energy Regulatory Commission. The National Oceanic and Atmospheric Administration forecasts a mild winter.

“Extreme weather is not going away and across the country historically the system hasn’t been planned for the set of conditions we’re facing,” FERC Commissioner

Allison Clements

said at an October meeting.

In New England, extremely cold weather could strain the grid if more natural gas is burned to heat homes, reducing supplies available to generate electricity at power plants. The region has limited pipeline capacity and has struggled with supply for a decade. With its pipelines full, the region relies on natural-gas imports to bridge the gaps and competes with European countries for shipments of liquefied natural gas following Russia’s halt of most pipeline gas to the continent.

Governors and companies have been asking the federal government to allow for domestic LNG imports to the region, which would require waivers of the Jones Act, a law restricting the movement of ships between U.S. ports.

Utilities have been running drills in case the region’s grid operator orders them to roll outages among customers, said Joseph Nolan Jr., chief executive of

Eversource Energy,

which has electric, gas and water customers in Massachusetts, Connecticut and New Hampshire. 

Mr. Nolan said he thinks customers would respond to calls for conservation in an emergency, especially after the dramatic response California received from its text alert. “That showed me just what the American people will do, you know, in time of need,” Mr. Nolan said. “I’m heartened by that.”

Americans aren’t used to thinking about whether electricity is available, after years of relatively cheap and reliable energy. Conservation requests during critical times are becoming a new reality. Predicting participation in a voluntary program and depending on it in a crisis is tricky. Consumer interest can wane after a number of pleas, analysts and companies say. 

“It can definitely provide a lot of value, but there are times where it’s not going to be enough to save the day,” said

Molly Jerrard,

head of demand response in North America for European utility

Enel

SpA. 

During the Sept. 6 energy crunch in California, Enel cut 101 megawatts of power use, about equal to the output of a small power plant, from a group of commercial and industrial customers across the state that had agreed to participate in demand response. 

Under demand-response programs, businesses are commonly paid by their utility, aggregators or through a wholesale market program to be available for cuts year-round for a set number of hours and under certain conditions. It’s a system that provides them some planning certainty, compensates them for having to wind down operations and helps them reduce consumption when electricity costs the most. 

The downside is business interruption, especially for companies with complex manufacturing processes that can take time to start and stop. Residential customers are generally paid with bill credits, and can opt out at any time.

Across the U.S., grid management is becoming more complex. Utilities and power generators are trying to balance plans to meet rising energy demands while investors and policies in some states push them to cut carbon emissions. Older coal and natural-gas plants have been closing. Renewables like wind and solar, which are intermittent unless paired with large batteries, may not be sufficient to offset the closures of traditional plants, grid operators have warned.

Power lines in California, left, where heat waves in recent years have led to widespread blackouts. Melissa Bryson, right, usually makes about $400 a summer in reward points and cash for participating in a demand-response program. Carlos Jaramillo for The Wall Street Journal

Some companies are bringing in residential consumers to demand-response programs, creating pools of thousands of households that together can deliver firm drops in demand. Customers might receive bill credits, gift cards or, in at least one instance, an invitation to a happy hour, as when an aggregator in Texas offered free drinks in the summer of 2021 to customers who arrived at a bar with a photo of thermostats turned to 80 degrees.

In Bakersfield, Calif., Melissa Bryson has been participating in a program of demand-response aggregator OhmConnect Inc. for four years and usually makes about $400 a summer in reward points and cash. During the heat wave in September, she also earned gift cards to

Starbucks,

Cold Stone Creamery and

Amazon

for slashing her energy use. Demand response is paid for by grid operators or utilities with funding ultimately coming from all users. The idea is that paying for occasional conservation is cheaper than spending billions to add plants that would be used only during demand crunches.

Not everyone is as motivated as Mrs. Bryson, though. Extended demand-response events eventually see participants opting out, said

Travis Kavulla,

vice president of regulatory affairs at

NRG Energy Inc.,

which generates electricity and sells it to retail customers, largely in Texas and the Northeast.

Relatively few U.S. customers have devices like smart thermostats that can be automatically powered down during times of peak power demand. Ideally, voluntary demand-response programs would be automated and include things like pool pumps, electric vehicles and air conditioners. Brief shut-offs, timed use and measures like precooling a house before a demand spike could happen in the background so customers aren’t inconvenienced and don’t need to pay much attention to what’s happening with the electric grid, said Mr. Kavulla, adding that giving people the ability to override and opt out is key.

When retail customers are monitoring the grid and worried about outages, he said, “something has probably gone wrong.” 

In Texas, the worst-case scenario unfolded when a bitter winter storm in February 2021 led to a massive failure of the electricity system, with power generation including coal, natural gas, nuclear and wind shutting down. Millions of residents were without power for days in freezing temperatures and businesses from chip makers to chemical plants were asked to go idle.

Texas grid officials see demand-response programs, which have been around for years, as one tool to help avoid that scenario again and see an opportunity with one of the most energy-intensive industries: cryptocurrency mining.

Bitcoin miners have flocked to the state because of low-cost power and business-friendly regulations. They consume vast amounts of electricity when operating warehouses of computer servers.

Miners say they benefit the grid in ways that might not be obvious. When supplies are abundant,

Lee Bratcher,

president of the Texas Blockchain Council, said the industry soaks up excess wind or solar power, encouraging more development of renewables. When supplies are scarce, they can quickly power down, he said.

Grid officials created a task force in April to study how to integrate miners into the system. Miners have to agree to participate in the voluntary demand-response program for it to work. Around 38,000 megawatts of bitcoin projects have applied to connect to the grid, nearly half of the electricity demand for the entire state on the hottest summer days.

At times, Texas cryptocurrency miners can bring in more money from reducing power use than they do from mining.

Riot Blockchain Inc.,

which has a mining facility in central Texas, said it received $9.5 million in power credits in July and had net bitcoin sales of $5.6 million. 

Riot Blockchain said that it benefits the grid and that by locating within the Texas grid, 30% of its fuel mix comes from renewable resources. “Our ability to shut down our operations at a moment’s notice contributes to grid stability by ensuring a supply of electricity during times of unusually high demand,” it said.

Barbara Clemenhagen,

vice president at Customized Energy Solutions and a former board member at the state’s grid operator, said miners could help balance the grid when there is cheap excess electricity.

“There are a lot of times when we don’t have a lot of excess energy,” Ms. Clemenhagen said. “How do we manage around that?”

Write to Jennifer Hiller at [email protected]

Such requests aren’t new, but they are becoming more urgent as weather patterns become more extreme and construction of new infrastructure for power generation and transmission isn’t keeping pace with a trend of electrifying everything from stove tops to transportation.

California and Texas called for power cuts during heat waves this past summer, a tactic that California officials say kept the lights on. In New England, grid operators have floated the idea that such measures could be necessary this winter in the region, where surging natural-gas demand abroad threatens to reduce fuel available to generate electricity during extreme cold snaps. 

Asking customers to voluntarily trim electricity use when the system is stressed and shift to using power at times when supplies are plentiful is called demand response. Varying electricity prices is another way to encourage power use at certain times, but grid operators and utilities also have programs that offer customers other financial incentives for voluntarily altering behavior.

In emergencies, pleas to slash power use become widespread to try to avoid rolling blackouts. Everyone gets asked to curtail power use, whether they’re part of a formal demand-response program or not.

“Extreme heat is straining the state energy grid,” California warned residents in a Hail Mary text message on Sept. 6, when much of the state was experiencing triple-digit temperatures. “Power interruptions may occur unless you take action.”

Californians seek relief at cooling centers during heat waves this past September, left, and in 2020, right. Frederic J. Brown/Agence France-Presse/Getty Images; Alex Edelman/Bloomberg News

Within minutes of the text, electricity demand plummeted by around 1,510 megawatts for about an hour, trimming electricity demand by about 3% from that day’s peak, according to data from the California grid operator, though it noted in a report that it’s impossible to assess the precise impact of the text message. California avoided the kind of rolling blackouts that had hit the state during previous heat waves, most recently in August 2020 when utilities twice had to cut power briefly to customers.  

This winter, all parts of the U.S. should have adequate electricity in normal conditions, but prolonged cold weather could pose a problem in some regions, according to an October report from the Federal Energy Regulatory Commission. The National Oceanic and Atmospheric Administration forecasts a mild winter.

“Extreme weather is not going away and across the country historically the system hasn’t been planned for the set of conditions we’re facing,” FERC Commissioner

Allison Clements

said at an October meeting.

In New England, extremely cold weather could strain the grid if more natural gas is burned to heat homes, reducing supplies available to generate electricity at power plants. The region has limited pipeline capacity and has struggled with supply for a decade. With its pipelines full, the region relies on natural-gas imports to bridge the gaps and competes with European countries for shipments of liquefied natural gas following Russia’s halt of most pipeline gas to the continent.

Governors and companies have been asking the federal government to allow for domestic LNG imports to the region, which would require waivers of the Jones Act, a law restricting the movement of ships between U.S. ports.

Utilities have been running drills in case the region’s grid operator orders them to roll outages among customers, said Joseph Nolan Jr., chief executive of

Eversource Energy,

which has electric, gas and water customers in Massachusetts, Connecticut and New Hampshire. 

Mr. Nolan said he thinks customers would respond to calls for conservation in an emergency, especially after the dramatic response California received from its text alert. “That showed me just what the American people will do, you know, in time of need,” Mr. Nolan said. “I’m heartened by that.”

Americans aren’t used to thinking about whether electricity is available, after years of relatively cheap and reliable energy. Conservation requests during critical times are becoming a new reality. Predicting participation in a voluntary program and depending on it in a crisis is tricky. Consumer interest can wane after a number of pleas, analysts and companies say. 

“It can definitely provide a lot of value, but there are times where it’s not going to be enough to save the day,” said

Molly Jerrard,

head of demand response in North America for European utility

Enel

SpA. 

During the Sept. 6 energy crunch in California, Enel cut 101 megawatts of power use, about equal to the output of a small power plant, from a group of commercial and industrial customers across the state that had agreed to participate in demand response. 

Under demand-response programs, businesses are commonly paid by their utility, aggregators or through a wholesale market program to be available for cuts year-round for a set number of hours and under certain conditions. It’s a system that provides them some planning certainty, compensates them for having to wind down operations and helps them reduce consumption when electricity costs the most. 

The downside is business interruption, especially for companies with complex manufacturing processes that can take time to start and stop. Residential customers are generally paid with bill credits, and can opt out at any time.

Across the U.S., grid management is becoming more complex. Utilities and power generators are trying to balance plans to meet rising energy demands while investors and policies in some states push them to cut carbon emissions. Older coal and natural-gas plants have been closing. Renewables like wind and solar, which are intermittent unless paired with large batteries, may not be sufficient to offset the closures of traditional plants, grid operators have warned.

Power lines in California, left, where heat waves in recent years have led to widespread blackouts. Melissa Bryson, right, usually makes about $400 a summer in reward points and cash for participating in a demand-response program. Carlos Jaramillo for The Wall Street Journal

Some companies are bringing in residential consumers to demand-response programs, creating pools of thousands of households that together can deliver firm drops in demand. Customers might receive bill credits, gift cards or, in at least one instance, an invitation to a happy hour, as when an aggregator in Texas offered free drinks in the summer of 2021 to customers who arrived at a bar with a photo of thermostats turned to 80 degrees.

In Bakersfield, Calif., Melissa Bryson has been participating in a program of demand-response aggregator OhmConnect Inc. for four years and usually makes about $400 a summer in reward points and cash. During the heat wave in September, she also earned gift cards to

Starbucks,

Cold Stone Creamery and

Amazon

for slashing her energy use. Demand response is paid for by grid operators or utilities with funding ultimately coming from all users. The idea is that paying for occasional conservation is cheaper than spending billions to add plants that would be used only during demand crunches.

Not everyone is as motivated as Mrs. Bryson, though. Extended demand-response events eventually see participants opting out, said

Travis Kavulla,

vice president of regulatory affairs at

NRG Energy Inc.,

which generates electricity and sells it to retail customers, largely in Texas and the Northeast.

Relatively few U.S. customers have devices like smart thermostats that can be automatically powered down during times of peak power demand. Ideally, voluntary demand-response programs would be automated and include things like pool pumps, electric vehicles and air conditioners. Brief shut-offs, timed use and measures like precooling a house before a demand spike could happen in the background so customers aren’t inconvenienced and don’t need to pay much attention to what’s happening with the electric grid, said Mr. Kavulla, adding that giving people the ability to override and opt out is key.

When retail customers are monitoring the grid and worried about outages, he said, “something has probably gone wrong.” 

In Texas, the worst-case scenario unfolded when a bitter winter storm in February 2021 led to a massive failure of the electricity system, with power generation including coal, natural gas, nuclear and wind shutting down. Millions of residents were without power for days in freezing temperatures and businesses from chip makers to chemical plants were asked to go idle.

Texas grid officials see demand-response programs, which have been around for years, as one tool to help avoid that scenario again and see an opportunity with one of the most energy-intensive industries: cryptocurrency mining.

Bitcoin miners have flocked to the state because of low-cost power and business-friendly regulations. They consume vast amounts of electricity when operating warehouses of computer servers.

Miners say they benefit the grid in ways that might not be obvious. When supplies are abundant,

Lee Bratcher,

president of the Texas Blockchain Council, said the industry soaks up excess wind or solar power, encouraging more development of renewables. When supplies are scarce, they can quickly power down, he said.

Grid officials created a task force in April to study how to integrate miners into the system. Miners have to agree to participate in the voluntary demand-response program for it to work. Around 38,000 megawatts of bitcoin projects have applied to connect to the grid, nearly half of the electricity demand for the entire state on the hottest summer days.

At times, Texas cryptocurrency miners can bring in more money from reducing power use than they do from mining.

Riot Blockchain Inc.,

which has a mining facility in central Texas, said it received $9.5 million in power credits in July and had net bitcoin sales of $5.6 million. 

Riot Blockchain said that it benefits the grid and that by locating within the Texas grid, 30% of its fuel mix comes from renewable resources. “Our ability to shut down our operations at a moment’s notice contributes to grid stability by ensuring a supply of electricity during times of unusually high demand,” it said.

Barbara Clemenhagen,

vice president at Customized Energy Solutions and a former board member at the state’s grid operator, said miners could help balance the grid when there is cheap excess electricity.

“There are a lot of times when we don’t have a lot of excess energy,” Ms. Clemenhagen said. “How do we manage around that?”

Write to Jennifer Hiller at [email protected]