By Avi Salzman
Dangerously cold weather is spreading across the U.S. and could bring much of the country to a standstill over the next several days. The deep freeze could be the biggest test for the electric grid since Winter Storm Uri in 2021, which killed hundreds of Americans and knocked out power to millions.
More than 120 million Americans are under a winter storm watch, and 48 million are facing extreme cold conditions, according to the National Weather Service. It warns of "crippling ice and sleet to portions of the Southern Plains and Lower Mississippi Valley Friday."
Like the 2021 storm, this one is expected to have a particularly large impact on Texas. Other parts of the South and upper Midwest could get hit particularly hard, too. In Chicago, the wind chill could fall to negative 35 degrees Fahrenheit overnight on Thursday.
For utilities and power plant owners, storms of this magnitude can lead to large financial losses, notes Jefferies analyst Julien Dumoulin-Smith. Data centers are making the power crunch even more acute in certain areas, given just how much electricity they consume.
Data centers have helped push peak demand up 2.5% in the past year, equivalent to the power generated by about 20 nuclear reactors, according to the North American Electric Reliability Corporation, or NERC, a not-for-profit that monitors grid reliability. NERC sees an elevated risk of outages this winter in Texas, and parts of the Southeast, Northwest, and New England.
Historically, electricity demand is highest in the summer in most regions because people use air conditioners. But data centers operate year-round and 24 hours a day -- they're changing the cadence of electricity demand, causing it to rise in winter.
In addition, most new electricity generation in the U.S. is coming from renewables, which don't produce as much electricity in the winter. Usually that doesn't matter, because electricity grids have more than enough excess power. But in extreme conditions, a lack of 24/7 power can test the grid.
Winter storms challenge the electricity system in other ways. Natural gas wells and power plants sometimes stop working in the cold, reducing production and causing an electricity supply shock. Already natural gas prices are rising at a record pace. Natural gas is America's largest source of electricity generation.
Owners of power plants such as Vistra, NRG, and Exelon (whose generation assets are now owned by Constellation Energy) cumulatively suffered billions of dollars in losses from Winter Storm Uri. The storm knocked out natural gas generation, processing, and transportation facilities in states like Texas and Oklahoma.
Many power plants had agreed in advance to sell power at specific prices, but were unable to generate their own power. So they had to buy power or natural gas on the spot market just as prices soared -- electricity spiked to a capped price of $9,000 per megawatt-hour, way above normal power prices of around $40. Vistra disclosed a $1.6 billion loss to its adjusted earnings from Uri.
Officials in states like Texas have tried to fix some of the problems that have plagued their electric grids in the past. That includes mandating that natural gas well operators and power plants weatherize their equipment. Producers are expected to add antifreeze into the gas stream, for instance. But some production has still been knocked out in subsequent storms.
This storm could also test utilities that transport power. Among the big utilities in Texas are Centerpoint Energy and Oncor, a division of Sempra Energy. Texas' electricity grid operator, known as ERCOT, issued a winter weather watch but said it expects the grid to operate normally.
In the event that things don't go according to plan, however, the utilities and some of their customers could be at risk -- both their balance sheets and their reputations. Data centers are already under fire for helping spur electricity inflation.
"High profile power outages in data center markets like Texas would lead to further stakeholder push-back on data center demand outpacing supply additions," Dumoulin-Smith wrote.
Write to Avi Salzman at avi.salzman@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 22, 2026 12:27 ET (17:27 GMT)
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