Load shedding
A deliberate, organized cut to part of the load by the grid operator, to avoid the collapse of the whole system when supply can no longer meet demand.
A power grid must balance generation and consumption every second; if generation falls short, frequency drops and power plants disconnect to protect themselves, which deepens the deficit until a total blackout. Load shedding breaks that spiral: the operator itself cuts blocks of customers, often in rotation, to save the rest. Sites deemed critical, such as hospitals or emergency services, are in principle spared, but a data center or a factory generally is not and must run on its backup generators. For insurance, the key question is characterization: a cut ordered by the authority is not physical damage, and many business interruption covers do not respond to it. The duration of the load shedding, not its mere occurrence, drives most of the cost.
On February 15, 2021, during the cold wave that struck Texas, the grid operator ERCOT ordered up to 20,000 megawatts of load shedding, cutting power to millions of homes for several days, to avoid a collapse that the drop in frequency had made imminent.
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