It’s a question Texas is being forced to address amidst a miserable month for wind generation, but the initial answer lends a promising prognosis to ratepayers. So far, electricity prices have remained stable despite nearly one-quarter of ERCOT’s generation profile being hampered by Mother Nature.

According to preliminary data from the U.S. Energy Information Administration (EIA), wind power in the contiguous United States produced only 302,615 megawatt hours (MWh) on Tuesday, July 23. That’s the lowest amount since… The day before, when wind power produced 335,753 MWh. Six of the 10 worst days for wind power this year have been this month (July), but previous to this week’s abysmal totals, there hadn’t been a comparably bad day since October 4, 2021.

Wind farms are on track to produce an average of just 4% of power generation this week, down from 7% last week and 12% so far in 2024, per the EIA.

So how are electricity prices fairing in ERCOT territory, which counts on wind for 28% of its fuel mix in Q2 2024? Well…

Is anyone else surprised that Texas (ERCOT) can now have very boring price days MID SUMMER when wind output is sub 200 MW

I shouldn't be, the solar obviously was going to compliment a wind profile, but this is a paradigm shift in terms of price forecasting. pic.twitter.com/SgcunfUo3b

— Andrew Gelston (@agelston) July 24, 2024

“A paradigm shift in terms of price forecasting” may sound strong, but “boring days” are far better than blackouts. Boring days are welcomed in any territory, especially during the heat of summer.

Of course, ERCOT isn’t relying entirely on renewables to keep electricity prices in check- far from it. In the lower 48, gas-fired power plants are producing an average of 48% of generation this week, up from 46% last week, according to the EIA. U.S. plants generated 6.9 million MWh of electricity from natural gas in the lower 48 states on July 9, 2024, probably the most on any day in history, says the EIA.

Texas has generally lingered between 30,000 and 40,000 MWh of natural gas generation over the last week.

The stable pricing is not just ERCOT passing gas, though (sorry, had to).

ERCOT’s commitment to diversifying its fuel mix deserves recognition, as energy research scientist Joshua D. Rhodes points out:

Updated (through Q2 2024) ERCOT fuel mix shows solar's rapid growth and that ERCOT has run on about 47% clean electricity for the first half of 2024!

Fun fact: it looks like solar is growing about twice as fast as wind did; wind: 2%->10% in 7 years, solar: 2%->10% in 4 years. pic.twitter.com/1HlTabNyDy

— Joshua D. Rhodes (@joshdr83) July 24, 2024

Rhodes’ graph makes it easy to see how rapidly solar and wind are driving coal (and to a lesser extent, natural gas) out of the fuel mix. The fact that solar is expanding nearly twice as quickly as wind generation did in Texas is likely a testament to the success of the IRA and to the staying power of the industry (and all that land fit for utility-scale installations) .

In totality, the data indicates we may have reached a tipping point- hopefully, one that keeps electricity prices stable.

June 20, 2024

Texas’ main electric grid operator has sharply increased its prediction for how much power demand will increase in coming years. If it’s accurate, the state would need to be able to provide nearly double the amount of power within six years.

Two factors led to the higher forecast: A new law allows officials to count companies’ requests for grid connections before they are finalized. And there has been a significant rise in requests from large users such as data centers, hydrogen production facilities and oil and gas companies that are electrifying their operations.

On top of that, the state’s population continues growing, Electric Reliability Council of Texas President and Chief Executive Officer Pablo Vegas told state lawmakers in a Senate Business and Commerce Committee hearing last week, repeating information he shared with the ERCOT board in April.

“All of that is putting together a picture of a very significant, different demand growth that is forcing us to really re-think how we’re looking at planning to make sure we can meet those needs and continue to deliver on the expectations of all Texans,” Vegas told lawmakers.

Demand on the power grid hit a record of 85 gigawatts last year, which was the hottest ever recorded in the state. ERCOT experts now say demand could reach around 150 gigawatts by 2030.

More than a third of the forecast growth is coming from the Permian Basin, where oil and gas operators are converting operations to run on electricity instead of gas or diesel. Much is also coming from large users such as data centers that are powering artificial intelligence and crypto currency mining. Some are requesting several times more power than what the city of Lubbock now uses, according to ERCOT.

The new estimates raise crucial questions, such as whether large power users that can ramp up and down need greater state oversight, the committee’s chair, state Sen. Charles Schwertner, R-Georgetown, said in an interview. One bitcoin mining company last year reported making millions of dollars in the electricity market by selling back pre-purchased power when grid conditions became tight, which provoked the ire of some Texans who saw their power bills rise.

“I think we need to rise to the challenge of getting the needed generation onto the grid,” Schwertner said. “But there is eventually a prioritization that could be discussed, and obviously Texans — their families, their homes, their businesses — are the most important individuals, the most important clients for electricity.”

In a post on X after the hearing, Lt. Gov. Dan Patrick said the Legislature needed to “take a close look” at data centers and crypto operations. “We want data centers, but it can’t be the Wild Wild West of data centers and crypto miners crashing our grid and turning the lights off,” he wrote.

Electricity experts said the projected growth also makes clear that the grid will need more transmission lines — which are paid for by customers and take more time to build than many of the facilities that want more power.

“There’s no question there’s going to be additional need for generation,” said Michael Lozano, a communications and government affairs officer for the Permian Basin Petroleum Association. “But I think the most important thing right now that we’re trying to address is the lack of transmission.”

Previously, to plan for future transmission needs, ERCOT could only count power users that signed agreements with a utility, said Mark Bell, president of the Association of Electric Companies of Texas. House Bill 5066 allowed grid operators to count potential users without a signed agreement if the utility considered it “a serious project and very likely to interconnect,” Bell said.

Judging whether data centers will actually be built in Texas is difficult, said Katie Coleman, energy counsel for the Texas Association of Manufacturers, which represents large power users. Companies that want to build data centers could be “shopping around for places to do business,” she said, by making requests in multiple places where they might build.

Cyrus Reed, conservation director of the Lone Star Chapter of the Sierra Club, said demand could be lower if some projects never materialize. ​​“There’s a lot of unknowns,” Reed said, “but it’s what they’re putting into their system for planning purposes.”

“If I were ERCOT, I’d rather over predict so that we have more capacity, so we don’t have a shortage,” said Michael Webber, an energy resources professor at the University of Texas at Austin. “It’s hard to say whether it’s hype or whether it’s real.”

The state’s grid has come under intense public and legislative scrutiny since a 2021 winter storm crippled its operations, causing power outages across the state for days amid freezing temperatures that left millions of Texans without lights or heat. Hundreds died.

Lawmakers responded by requiring power facilities to prepare better to operate in extreme weather. They put $5 billion into a fund to give low-interest loans to companies that planned to build gas-fueled power plants, which legislators prioritized because they can provide power quickly on demand. State regulators are accepting applications for that money now.

Sen. Nathan Johnson, D-Dallas, a member of the Senate committee, said the need to meet higher demand could push innovation with renewable energy; drive more programs for people to use less power by making their homes or businesses more efficient; and spur ways for people and small businesses to get paid for using less power in tight times.

“This massive increase in load is going to provide greater momentum behind some very good trends,” Johnson said.

Disclosure: The Association of Electric Companies of Texas (AECT), Permian Basin Petroleum Association and University of Texas at Austin have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.

This article originally appeared in The Texas Tribune at https://www.texastribune.org/2024/06/20/texas-electricity-demand-forecast-ercot/.

The Texas Tribune is a member-supported, nonpartisan newsroom informing and engaging Texans on state politics and policy. Learn more at texastribune.org.

Additionally, coal’s market share in Texas fell below 10% for the first time, landing at 9%, the Institute for Energy Economics and Financial Analysis (IEEFA) noted. Coal’s share had been declining for more than a decade, the IEEFA said, but the trend accelerated in 2016-2017, when ERCOT’s data began to incorporate solar.

In 2017, solar accounted for 0.6% of ERCOT’s demand, the IEEFA said, at 2.26 million MWh. This year’s increase has pushed solar generation’s share to above 10% for the first time, and the growth is expected to continue throughout the year and beyond. Solar generation this March showed an increase of 1.17 million MWh compared to last March, a 56% increase, the IEEFA said. Additionally, while ERCOT currently has 22,710 MW of operational solar capacity, 7,168 MW is expected to be added by the end of the year, an increase of almost one-third.

Coal’s apparent decline in the ERCOT territory doesn’t seem to be an anomaly caused by a few months of low generation, IEEFA says. Even during the hot summer months, coal production never surpassed 20% in 2022, or 15% in 2023, and that trend is unlikely to change this year, IEEFA says.

Originally published in Renewable Energy World.

Editor’s note: “Bills aimed at adding more natural gas power to Texas grid clear Senate” was first published by The Texas Tribune, a nonprofit, nonpartisan media organization that informs Texans — and engages with them — about public policy, politics, government and statewide issues.

The Texas Senate on April 5 approved two major bills aimed at building more on-demand power generators such as natural gas-fueled plants in the state.

The goal of the bills, according to the sponsors, is to prevent another catastrophic power shortage like the one that killed more than 200 people in 2021 as freezing temperatures knocked power production offline and left millions of Texans shivering in the dark.

Lawmakers passed Senate Bill 6 and Senate Bill 7 by votes of 22-9 and 31-0, respectively. The bills represent a push toward funneling more money to natural gas energy production in the state, which supporters say will improve the electric grid because those generators can essentially come on with the flip of a switch. Lt. Gov. Dan Patrick named both bills as priorities earlier in the session.

(In a related development, Bloomberg reported that Texas grid operator ERCOT voted on April 10 to set price floors for power costs when reserves fall below a key threshold. The change would only come into play around 8% of the time based on current condition and could raise consumers’ costs by $500 million. Around 80% of that would go toward dispatchable resources such as natural gas, coal and nuclear.)

Sen. Phil King, R-Weatherford, reminded the other lawmakers on the floor that, keeping the 2021 tragedy in mind, they could “not go home without having come up with a deal, with a package of bills that makes sure that we’re on the path to never seeing something like that happen again.” Sen. Charles Schwertner, R-Georgetown, the lead author on both bills, moved to pass Senate Bill 6 “in memory of the hundreds of Texans that died and the millions of Texans that suffered.”

Critics, however, say that both bills could lead to untold billions in added costs to customers and minimal benefits while ignoring needed efforts at reducing electricity demand and eliminating greenhouse gas emissions that are driving climate change. All power generation types struggled during the 2021 storm, and gas-fueled plants were far from immune, with some failing to operate or to get enough natural gas supply during the storm.

SB 6 would direct state funds or electricity customer payments to hire one or several entities to build as much as 10 GW — enough to power 2 million homes during peak electricity demand — of what’s likely to be natural gas-fueled power plants that would come online and potentially run for days only in cases of emergency. Schwertner has referred to it as an insurance policy against disaster and argued it’s the only bill that “absolutely guarantees” new, on-demand power generation.

Sen. José Menéndez, D-San Antonio, has cautioned his Senate colleagues against overcorrecting in order to send a message to constituents that they fixed the problems from the horrific 2021 storm. Everyone from residents on fixed incomes to mom and pop business owners would be paying for this through tax dollars or rate increases, Menéndez has said.

“My concern is that sometimes it feels like we may be losing sight of the basic fundamentals,” Menéndez said to legislators before the floor vote. “If a lot of the power we generate is being lost, whether in our constituents’ homes due to lack of weatherization, in our plants due to the lack of efficiency … my concern is that we go out and build something that might be a little more than we needed if we had already put more efficiency in.”

Critics have questioned whether state-funded plants would truly stay offline until an emergency strikes or would instead be turned on more often and interfere with market competition. Opponents have also argued it would be inefficient to let a gas plant sit dormant, and consumer advocates have raised concerns about rising bills for consumers.

The Senate Finance Committee set aside $10 billion in its budget proposal to fund at least part of the cost to build the plants proposed in Senate Bill 6, but the House version of the budget does not have the same allocation.

“It represents a costly tax on consumers that does not improve reliability,” said Michele Richmond, executive director of the Texas Competitive Power Advocates, which represents natural gas power generators. “Unfortunately, it sends a clear message that Texas does not believe in the competitive market and will result in state-owned generation systemwide.”

In the competitive electricity market operated by the Electric Reliability Council of Texas, SB 7 would create a financial incentive to encourage the private development of energy generation resources that can come on within two hours and run for at least four hours, such as natural gas plants or batteries. The run time could be made longer in the future. The bill would also establish a complex way for power providers and power producers to pay for such incentives, based in part on how much they were producing and how reliably they were performing.

Schwertner likened this bill to a “slowly moving ocean liner that slowly changes the overall market structure.”

Payments for the new incentive would essentially be a tax, potentially pushing resources out of business, said Pablo Vegas, president and CEO of ERCOT, who spoke on the bill at a committee hearing. Vegas said the concept would probably slow renewable energy development and could force renewable energy producers out of the market in the short term.

Sen. Judith Zaffirini, D-Laredo, said Monday before a Senate committee passed the two bills that she worried SB 6 focused too much on electricity generation and not on solutions like reducing electricity demand. She was also concerned it would unnecessarily punish renewable energy generation. She voted “present” on SB 6 and for SB 7 in committee, as did the other two committee Democrats, saying she wanted to be part of the process. On Wednesday, she praised the final version of SB 7, saying “it shows what we can do when we work together.”

The Senate has already passed other components of the package of electricity-related bills that legislators laid out early in the session. These include Senate Bill 1287, which would require power generators in certain circumstances to pay for some of the transmission costs to connect to the grid, a bill that’s targeted at renewable energy developers who build far away from the grid, and Senate Bill 2014, which makes it voluntary for power providers to purchase renewable energy credits that were created decades ago to incentivize renewable energy development.

Also on April 5, they passed Senate Bill 2015, which aims conversely to incentivize on-demand power resources, which would not include wind or solar since the wind doesn’t constantly blow and the sun doesn’t shine at night, and Senate Bill 2012, which would establish guidelines for the electricity market redesign solution that the Public Utility Commission put forward earlier this year to create a financial reason for building more on-demand power generators.

“There is no perfect bill,” Schwertner said before the Senate Business and Commerce Committee passed the two bills Monday. “It is not a single-shot fix to what we need to do as a state, but I do think that the package in totality answers the concerns of the people of Texas and provides a framework to move Texas forward regarding re-balancing dispatchable and interruptible generation resources and addressing the long-term needs of our grid.”

Uri resulted in widespread power outages as multiple fossil and renewable energy facilities either froze or were offline due to fuel supply issues. By some counts, hundreds died as a result of the power outages.

In comparison, December 2022 was no comparison: no widespread outages and few, if any, issues with generating units.

But a closer look by local news outlet Texas Monthly suggests that at least one issue remained troubling: natural gas supplies.

The news organization said that Texas had trouble delivering natural gas during the cold weather event. It said that over a five-day period in February 2021, the state’s gas processing capacity fell by 84%, keeping large amounts of gas out of the state’s network of pipelines. 

By contrast, over a two-day period in December, the state’s gas processing capacity fell by 34%, the news outlet said, quoting data from Wood Mackenzie.

On the residential side of things, Atmos Energy, which supplies gas to homes across the state, came up short as it worked to deliver gas to customers in suburban Dallas and Austin. Governor Greg Abbott has asked for an investigation into what happened, Texas Monthly said.

It also reported that power plants had trouble getting gas to burn. It said that officials at grid operator Electric Reliability Council of Texas (ERCOT) ordered several electric power generators to burn fuel oil because those plants didn’t have enough natural gas. The fuel was available as a backup because of a reform put in place after the 2021 blackouts. ERCOT reportedly paid more than $50 million this winter for 19 power plants to have backup fuel on hand.

During the December cold snap, ERCOT asked the U.S. Department of Energy for permission to exceed normal federal air quality restrictions to allow generators to burn otherwise noncompliant fuel oil. The federal agency granted the ERCOT request.

And at least 2,100 MW of natural gas–fired electrical generation had to shut down at some point during the December 22–24 cold weather because of a lack of gas. ERCOT said in recent days it was investigating why so many plants tripped off-line.  

One complicating factor may have been unexpected electricity demand. On the morning of December 23, demand topped 74,000 MW. That surpassed an ERCOT forecast that demand during the cold weather event would peak at just under 70,000 MW.

And demand was well above a seasonal forecast that ERCOT issued just weeks earlier. That forecast pegged expected peak winter demand–based on average weather conditions–at about 67,400 MW.

Texas is tackling an energy market redesign not seen in decades. The freeze and subsequent outages from Winter Storm Uri in 2021 left hundreds dead and millions without power. The storm’s aftermath also sparked a debate over how to make the ERCOT grid more resilient in the face of extreme weather events and a changing energy mix.

On Episode 1 of the Texas Power Podcast, host Doug Lewin is joined by Pat Wood, former chairman of both the Federal Energy Regulatory Commission and Public Utility Commission of Texas. He helped deliver former Texas Gov. George W. Bush’s deregulation agenda in the 1990s.

While Wood was the chair of the PUCT from 1995-2001, the Texas Legislature passed two major deregulatory bills: Senate Bill 373 in 1995, which restructured wholesale energy markets and Senate Bill 7, which restructured retail energy markets and established the Renewable Portfolio Standard and the Energy Efficiency Resource Standard.

Wood led FERC from 2001-05, during which time the U.S. experienced what is still the largest blackout ever in terms of customers affected in 2003.

Lewin’s conversation with Pat Wood covered the state’s market redesign efforts, the enabling technologies that can support grid resilience, and the moment when then-governor Bush was first drawn to renewables.

Lewin and Wood discussed, first and foremost, how Texas is dealing with the fallout from Uri and working to ensure it never happens again. They also explored issues and controversies surrounding the ERCOT market, deregulation (aka restructuring), renewables, storage, energy efficiency, transmission, nuclear power, demand flexibility, electric vehicles, and more.

Episode Highlights (quotes edited for clarity)

Pat Wood’s first interaction with George W. Bush (4:46)

“So when I was at FERC, I worked for Jerry Langdon, who is a Democrat Texan from Midland that was appointed by President Reagan to one of the spots on FERC. And FERC was required to be bipartisan, usually 3-2, whatever the ruling party was by the presidency. And then George H.W. Bush came in and appointed a close associate of his who was is actually his first campaign manager when he ran unsuccessfully for Congress out of Midland back in the sixties, I suppose.

“Martin Allday. He appointed Chairmen Allday to be chairman of FERC. So Jerry hired me shortly after that, after President Bush came into office, Jerry hired me to work for him as his legal counsel. So I got to know Jerry and Chairman Allday really well.

“Anyway, they wrote a nice letter on my behalf. I came back to work for… after (President Bill) Clinton was elected and I knew Chairmen Allday would be gone and Jerry would not be reappointed because Clinton wanted to put his own Democrats on the committee commission. And so Jerry and Chairman Allday and Jamie Baker, who’s the secretary of state son who was a partner at the Baker Botts Law Firm that I used to work at before I went for work as a staffer at FERC.

“And so I came back to Texas to look for a job, and I ended up getting suggested to interview with a young man who had just gotten elected to the Texas Railroad Commission. Barry Williamson and he was elected in the 1992 election.

“I went to interview him just honestly, to get those others off my back, because there was no way that I was going to: A) work in the government any longer than the two years I had already done it because of my poor private sector dad just had to keep his head up over the dashboard of this idea that his son was working for the public sector, and then also living in Austin, Texas. I mean, I’m an Aggie. I was driving a maroon car. It was just that hardcore. So needless to say, I interviewed this guy and I thought he was great.

“He was funny, he was bright. He was, you know, forward-leaning. He really was a good lawyer. I thought, you know, Austin wouldn’t be too bad for a single guy. That’d be a pretty awesome place for them because it really was that. And that’s where I met my wife and we had our first two kids there and all that kind of came, you know, a few years later.

“But yeah, I met Bush after that election Chairman Allday and Commissioner Langdon wrote a letter on my behalf to George W. and said: ‘You know, you ought to get Pat in your government because he’s worked two years for us. He’s worked two years at the Railroad Commission. He knows energy issues.

“I don’t think they identified where I should work. They just were introducing some people that they knew to the new governor and there wasn’t a big Republican farm team out there because even though he began what became a total realignment of the state. There wasn’t a real deep bench. I mean, you had Kay Hutchison, you had Barry (Williamson), and then you had Rick Perry across the street at the AG Department. Those people were the statewide elected Republican officeholders at that point. So the people working for them were the team, but everything else was still a pretty Democrat state.

“On his third day of office, Bush invited me to come in and I’d been vetted by his appointments office officer Margaret Lamontagne, who later became Margaret Spellings, the secretary of education for the country, wonderful gal. She picked on me and said, ‘Come talk to me.’ So I talked to her. And then two days later, I was talking to her boss and he had his cowboy boots up on the desk and he was to an omelet cigar and talking to me about kind of his philosophy of regulation and of energy and of course, telecoms was a big issue back then. It’s become largely competitive and deregulated since that time. But at the time, 1995, the telephone industry was extremely politically powerful.

“Southwestern Bell was a dominant player in the state capital. And the Texas PUC was under Sunset Review at the time for restructuring that industry as well as the electric industry. So as much as my career subsequently focused on electricity, I would say for those six years in Austin, half my dance card was telecom issues, from new area codes to implementing the Federal Telecom Act, to interconnectivity issues with the Internet versus the public switch telephone network.

Texas Gov. George W. Bush takes on energy market deregulation in 1995 (11:30)

“But anyway, electricity is what we’re here to talk about today and that that really did start right off the bat. (In) 1995, that first bill, Senate Bill 373. I was appointed at the end of January, confirmed about a month later. It was kind of an interesting confirmation season.

“Right off the bat, Bush told me, ‘Pat, the utilities care more about what we think…” pointing to himself and the government, the Senate and the House on either side of him “…than what their customers think. And we’re going to change that because that’s wrong.” And so I had it kind of from the get-go, we were going straight to retail competition, which was just then largely kind of a concept being talked about at the federal level, but nothing had really been done in Texas.

“The large industrials just were so excited. I mean, that’s what they’ve been pushing for ten years, particularly the ones that lived here in Houston and lived on the ship channel and just wanted to move power around the different plants, not live in some huge competitive environment, but just to take advantage of their economies of scale and move power around rather than had to sell it back to the utility.

“Needless to say, that that did not go very far in ’95, but it did create an environment that, ‘Oh my God, this is really going to change and change big.’ And if Bush was really clear about where he stood on that deal and he, of course, came in with consistent for those six years, pretty powerful presence in Austin, unlike some governors.

“They knew that this was going to change, which was very helpful to me. (Bush) backed me up really through some really tight battles for six years in both industries. He constantly would say, do not come lobbying me. Take it to Pat and Judy. Judy was his other first appointee, Judy Walsh, the stellar woman who he appointed right in June of 1999.

“She and I were really twins for the next six years together and restructuring the industry. But it ended up being a really constructive six years. I’d like to think that we left our utilities in better shape than they started. I think we had some misadventures perhaps outside of Texas that wreaked some havoc on Reliant, which was the HL&P spin-off.

“The Oncor split out, the AEP, Central Southwest Companies all have maintained a pretty robust presence over the years in different forms. Obviously, TXU went through privatization with KKR and others, and then through bankruptcy and became Vistra and Oncor and TXU. All the utilities did what we wanted, which was to split into a competitive arena and maintain that regulated part in the middle that the PUC continued to oversee as they had in the past.

“Really the envisioned a platform for the creators and the entrepreneurs and the innovators to thrive on. And I mean, you and I both are reaping the benefits of that now in what we do today. But that really was the vision from the beginning, is let’s create a foundation that’s not skewed toward the historical utility, but puts them in the place of being the foundation and the enabler of everybody else’s hopes and dreams. First and foremost, the customer.

“Once Senator Armbrister, who was the Democrat from Victoria, I believe, who led the restructuring effort in ’95, Senate Bill 373, and he was my oversight chairman. He said, “I know you want retail just slow down and do it in order for him. You get a good wholesale bill, go implement it and make it work and then we’ll talk.”

ERCOT is formed (17:01)

“And so that’s what we did. So we got the IRC, got ISO, we were the first ISO. It was very rudimentary. It was not at all what ERCOT is today. It was really an enabler of wholesale transactions and the major beneficiaries of that were co-ops and munis who were trying to navigate this sea with these great big four or five vertically integrated investor-owned utilities.

“That was a small audience at first, but we made that work and we, and we broadened the membership of ERCOT to include marketers and independent power generators. And so then that became and that trust environment really was important. And I think that’s what I missed that first when I got to FERC later.

“In Texas everybody once they kind of realized that the game plan wasn’t going to get them anywhere because Bush wouldn’t put up with it, Bullock, and then Perry had no interest in stretching that out. They just wanted to get to Texas and really focus on the economic development attributes of what we were doing and make those primary.

“They started between ’97, which is when in response to a pretty harsh decision we had in a regulated case for Central Power Light, which was an AEP company. The commission came back with, we turned a 4% rate hike request into about a 4 to 6% rate cut. And and it made some really, I think, eye-opening decisions about what rate-making in the competitive Republican era would look like.

“It was not at all what they had planned. And so the utilities went immediately down to the governor, and lieutenant governor said, we need to put them in a box. And so Bush said, well, no, you’re not. You’re going to work with them and we’re going to build a new box. And so we honestly ran out of time that session.

“We took care of a lot of the utility issues with regard to their worries about stranded costs for their nukes and what have you. But there wasn’t much else in that bill that really brought everybody else along. And so the bill died, but it sat there on the shelf and we got the message to kind of keep pushing that world toward the wide open world of retail competition.

Don’t California my Texas energy market (19:50)

“Maybe the next session. But we’re going to start a study committee. So that study committee and it was Judy Walsh and I were on that, but there were also a number of others like Susan McClellan from the Public Utility Council and people from the industry, the utilities, and the competitors, and the large customers.

“We went out with about half dozen to sometimes ten legislators to different places we went to. We flew to San Francisco in January (1998) and we spent two or three days at the CAISO in Sacramento and then at the Public Utility Commission in San Francisco.

“And I totally remember Senator Nelson who was just a lot of fun to be around. She’s from Dallas area was with the group. She was just chewing gum while walking on the sidewalk and she was fretting about something. And we went into the Public Utility Commission. I remember her eyes across the room. She just her eyes were like big, like, ‘We are not doing this.’

“So we all got back in the plane. And I remember being so damned depressed because I knew that that was not what we wanted and that there was no freakin way that I was going to get what I wanted, which was that the open market where customers could be king.

“We looked at each other and Steve Woolens from Dallas was the state rep, had my oversight committee in the House, just looked at me and they just said, ‘Yeah, if that’s where we’re going, we ain’t going there” because we saw the everybody selling into the California Power Exchange and this was just very different market than the one we’d kind of been fantasizing about.

“And so honestly, where did I think it was going, for most 1998 I was depressed So, at the need of ’98 the group had gone to the UK. So the UK report came back actually very good and I remember people going, ‘Well, there’s something over there, we kind of like that.’

“We went in December to Harrisburg, Pennsylvania and talked to them about their restructuring Flying back from that, that’s when Sibley and Whelan’s and I looked at and did it on the quintessential cocktail napkin, just like Southwest Airline’s origin story, the restructuring of the Texas market was done on that. And that’s when that price-to-beat concept about how do you make competitive markets work while not basically blaming the customers, kind of taking them for granted or jacking up their rates.

“The (Renewable Portfolio Standard) and the (Energy Efficiency Resource Standard) came into the bill, customer protections came into the bill, although another batch came in in 2001. And that’s where Senator Nelson was really a key leader on that one. And oh, gosh, I mean, the restructuring of the market and the separation of utilities in the regulated and unregulated, all that kind of vision was built around… the core of it was that that price to beat in that retail market structure feature that you would hold the price where it was 6% lower than the last rate. So there was kind of that political rate cut, which I hate.

“We had held those rates up from ’97-99 and we started booking the costs that the utilities earned in excess of their regulated rate of return. What you generally do, if you were allowed to earn 10% return on equity, you just pick a number. I think they were a little higher than that at that time. We took you normally common for rate case and dropped the rate because what was happening in is all those coal and gas plant nuclear plants that were put in in the eighties brought the rates up to a high point and then they were depreciating down and there weren’t a lot of new plants being added because we’d also made that pronouncement back in ’95 when I got on the commission, no more rate based plants.

“So that was a problem later when nobody built anything because they knew people weren’t allowed in and old people weren’t building. So that kind of had an almost a little daze, I believe, what was happening this summer that we’re living through. But people are building stuff when you need it. But at that time, people were waiting to see where this was all going.

“So nobody built the plants. But at that, so the rate that you would set if we’re doing it the old style way of the vertically integrated utility look at all their cost snapshot. The rates would drop. So what we did is we held the rates even, but we took that triangle which was growing each year, each month, and we book those dollars as an offset to future claims on stranded costs.

“But we were able to claim that money and and use it for customers’ benefit on down the road so it wasn’t a giveaway.”

Behind the deliberative polling process (27:00)

“Oh, my, oh my gosh. All I can say on that one. Central Southwest who we later made an example of with that rate case but to their perpetual credit they came in with the new law that was passed in ’95 was setting up this process called Integrated Resource Planning, where Karl Rabago, who was my predecessor, I took Karl’s spot when he went to the Department of Energy under President Clinton. That opened up a spot on the PUC. And Karl was this Wonderkid kind of left the center, but very kind of new energy person that still is. Just smart and clever but had put in this process assuming that the world would stay vertically integrated for a while, that the world was going to stay vertically integrated, then Bob then we were going to make sure that utilities didn’t just make these decisions in a smoke-filled room about what they were doing to bring on the resources that are to meet the growing load of taxes. But we’re going to involve the people.

“And so there’s this kind of open-ended requirement that required cost. I think it was customer consultation or something in that mindset. And so we weren’t sure how to interpret that. We just put that in our rule that customer consultations should be shown and the commission will entertain whatever you bring forward and we’ll look at it. The first utility to come in was Central. And so they brought in this idea from this University of Texas professor that had been used by Ross Perot in his unsuccessful run for president in ’92 where he would use the deliberative polling process to ask people their ideas about things. They would stop people in the shopping mall and ask ‘What do you think about A, B, C?’ But the wrinkle was then they would have a day or two of a small group, big group kind of accordion discussions about the issues and delve deep into the issues in a way that was engaging to the layman. And then at the end re-poll them. So they did the equivalent of this 16, maybe 15 cities including Shreveport, Louisiana, where it was first SWEPCO.

“Across Texas, we just made the deliberative poll the process to engage with the public. It was great PR, but it was even more important than that. It changed minds, including my own. So the big four questions were: 1) Do we build new gas or coal plants? 2)Do we use transportation to move excess power from across the state to where you need it? 3) Do you use energy conservation and energy efficiency or 4) Do you use renewables? So it wasn’t nature exclusive, but those were kind of the four areas where we spent most of these two days.

“The people of Texas not the cognizant and the chattering class, but the real bill-paying public really liked the idea of energy efficiency. They understood how it worked. And they wanted to have more empowerment and more information to be able to do that meaningfully. And then close second runner up was we cared a lot about renewable energy. My favorite one still as I walked outside at the Beaumont because I’m from Port Arthur and we have one for Entergy over in Beaumont and an older guy out there was outside having a cigaret and he I said, ‘Mr. Jones, a Johnson or Jones’ or something like that. I said, ‘What do you think about everything? He took a deep drag out of that Marlboro and he blew it out, kind of out of my face. And he said, ‘I’m just goddamn sick of all this pollution. I think we need some more clean energy and I’m ready for that. And I just thought, ain’t that rich? That is the best.”

“I walked back into then-Governor Bush because he had told me at the front end of this one day I was in his office and he said, ‘Hey, Pat, by the way, we like wind.’ And of course, I was like, kind of this Reagan Republican type with my little yellow suspenders and my red power tie and all the all that. And I just leaned back in the door and I said, ‘What?’ ‘You heard me. Now go get smart on it.’ So I went back, told Judy Walsh about that, and she said, ‘Well, Pat, we’re just going to have to get smart on it.’

“I leaned into him and I said, ‘Hey, by the way, I got a report back on this, these deliberative polls.’ And he said, ‘What you learn?’ And he knew exactly what I was going to say, I said, ‘Well, I think Texans like wind, too. He says: ‘I told you!’ And he leaned forward with that laugh that we all know so well, that I’ll tell you what, when you’re the recipient of it, it’s a cringe. But, you know, it was hilarious. And people are very interested in energy efficiency, too. We got to work on that. He goes, ‘Well, those two need to be part of our bill, don’t they?’ I said, ‘Yes, sir.’

“We worked throughout that whole ’99 session. EDF (Environmental Defense Fund) came in with proposals on RFPs that were very market-centered which addressed Bush’s need because he knew from the New York experience, do not set a cents per kilowatt target like they did for co-gens in New York. Just let it be set by the market. He was familiar with kind of how the emissions trading programs had gone at the EPA under his father and the Clean Air Act amendment of ’90 that EPA introduced pretty quickly under then-President Bush. And he was familiar with the difference in how to do market-based. So he said to get the authority in the law to do something like that. So where do you would let the market set the subsidy and not lock in the price. So that’s what we did do with our RFPs.

“We were able to make the case pretty clear to the legislature that there were some things at this stage of development that were market failures. And so it was not un-Republican or un-Texan the kind of way in there and tip the scales. So the RPS was certainly a political compromise, I mean there were purists there who didn’t want to subsidize or do a preference for anything. But I said preferences baked into everything. So we just got to be clear about what we’re doing it and set the set a target and then hit the target and then the energy efficiency thing had a bit different constituency. I’ve always said the root word of conservative is conserve and there were in that day there a good batch of people that got that and understood that the utilities were incentivized just to keep selling kilowatt hours because they got paid every time a new kilowatt hour got done.

“Even under the new construct with the wires only company, you still only got money for your wires investment. If people were flowing kilowatt hours over it. And people understood that, that this is more complicated than most bills that come through the legislature. But there was a lot of trust that both Dems and Repubs had in David Sibley and Steve Wall. And that again, it was a magical moment for me and made me such an optimist on government that in these days when it’s really easy to be cynical, I just hearken back to that because it did work and it worked for the right reason. It wasn’t a court order or crisis or something that was done. It was done because we knew this would make Texas better.

Should we ask Texans (again) what they want out of their energy system? (37:00)

“I think it’s a stellar idea. I think the deliberative poll part to ask people what they want because what we’ve got, we’ve got a lot of different answers this time. We had this very unusual event last year when after the storm, the entire PUC was turned over, as well as ERCOT. So a lot of the institutional knowledge was gone. And so I went in to visit the new commissioners, not really with my Hunt Energy Network hat on, but just as a member of the of the club of formers, and, I said, ‘It’s been a quarter century since we did this and I just want to say from the old guard have at it. We should look at it fresh and new. What we’re going to is a different world.

“The legislature did put a very forceful piece of authority in that Senate Bill 3, Section 18, which told the Public Utility Commission to figure out what is it about dispatchable capacity that we should do. They might have kind of leaned toward what they wanted the answer to be, but nonetheless, they gave the commission sufficient authority to really plan not just for the fixes that didn’t work during URI, but for the world, we’re moving to, which is where we’ve got now probably supercharged with another ten years of subsidies, which I’m honestly not a big fan of on wind and solar, and supercharged by a real hot bogey price set by $8 gas instead of $3 gas.

“So I sense that if there were incentives for renewables to come to Texas before Uri, they’re actually much higher now because just the economics of subsidy coming in on the supply side and then the price being on the demand side, it will be very profitable to do renewables in Texas. It is time to think about what kind of world we’re moving into. And I think that’s a world that’s much more decentralized, that’s going to have a lot more technology involved in it. How customers can get a price signal on their demand and then even more importantly, get paid for it.

Don’t forget about demand-side management (41:00)

“So two prongs. One is kind of a government-centered one, which is where you go in and actually subsidize people for the simplest one that’s been around the longest is getting better insulation in kind of particularly in the southern part of the state where you just haven’t had to worry about it too much. But this whole drive toward electrification of everything which will be on steroids is when you start putting all the cars on there. We started long ago with electrifying gas heat. I mean, I’ve got gas heating this house. But, you know, two-thirds of the houses in Texas almost are heated by electricity. And you pointed out to my internal lament is we are using these glorified hairdryers called resistance heating to keep people warm in the winter. Well, you know, you stand ten feet from a hairdryer, you aren’t that warm, but it uses a hell of a lot of electricity in a very spiky, peaky way. But those are things I wish we had done in a different order. I wish we had decarbonized our grid first and then electrified everything because if we had the wind and solar on there, then the things you point about do matter.

“Like for me, the wind’s going to blow at night. Well, that’s when I’m going to charge my car. I mean, I was on the Griddy plan before that. That business was banned by the legislature, which we’ve got to undo that. So the government route is route one, but the more promising route is route two, which is where Griddy, I think had at least a touch of the right answer, which is let people see the price signals of what they’re putting on the grid, the stress or the benefit they’re putting on the grid in real-time and let them react to that.

Last February, Winter Storm Uri rolled through Texas and triggered controlled outages effecting more than four million customers, leaving some without power for days. Considered to be one of the biggest power outages in U.S. history, Uri spurred leadership changes at the Public Utility Commission of Texas (PUCT) and ERCOT, along with several adjustments within the ERCOT market.

So, when Winter Storm Landon hit Texas almost exactly a year after Uri, all eyes were on how the ERCOT grid would hold up under the new changes.

Major changes implemented following Winter Storm Uri

Winter Storm Uri brought sustained, record-low temperatures, and widespread freezing and icing. Frozen instrumentation and wind turbine blade icing were some of the biggest contributors to power outages during Uri. As such, weatherization was a top priority post-Uri.

New weatherization rules put in place by the PUCT and ERCOT now require electric generation and transmission owners to protect their cold weather critical components that are susceptible to freezing and icing. ERCOT released its Final Winterization Report in January, which found 98.3% of the total ERCOT generation fleet inspected had met the new weatherization standards.

The other big contributor to power outages during Uri stemmed from natural gas supply issues.  Some natural gas facilities had frozen equipment or were not designated as critical loads, which led to an inability to deliver fuel. Additionally, some natural gas providers participated in ERCOT’s Emergency Response Service (ERS) program, which pays qualified loads and generators to curtail electricity use when the grid needs more power during an emergency. When these natural gas facilities were ordered to go offline, fuel supply and pressures decreased and some power plants couldn’t get enough high pressure natural gas to produce electricity, compounding the energy shortage issue. Under recent changes, natural gas providers are no longer allowed to participate in the curtailment program.

There’s also been an overall shift in the market to move toward a command-and-control approach to enhance reliability. ERCOT has taken a much more conservative approach in recent months, operating with added reserves to avoid a repeat of Uri. As part of this, ERCOT is bringing more generation online sooner as insurance to protect the grid.

Changes were also made that allow for the ERS program to be deployed before an emergency occurs, and for earlier price signals via the Operating Reserve Demand Curve (ORDC) formula to incentivize additional generation to come online and for large consumers to adjust their demand.

During Uri, ancillary service prices skyrocketed to over $25,000 in some instances, leaving generators, energy companies, consumers, and others with billions of dollars in costs. Since then, the system wide offer cap has been lowered from $9,000 to $5,000 for both energy and ancillary services, reducing market participants’ risk of exposure to high prices.

ERCOT is also introducing new products to add new revenue streams opportunities for generators through incentives and will help keep the grid running smoothly. The first is a firm fuel product, which will pay generators for having onsite fuel storage. Another, which is being fast tracked, is the ERCOT contingency reserve service that will allow ERCOT to procure reserves on a market basis, rather than relying on out-of-market deployments.

Additionally, ERCOT will compensate generators for voltage support service. While the development of this product is still on-going, once it does come to fruition, generators will be compensated for the reliability benefit that they provide to the grid.

These market adjustments helped prepare the grid for future extreme winter conditions, such as Winter Storm Landon, though there are still some vulnerabilities.

Why Winter Storm Landon was different and what vulnerabilities remain

In Texas, Winter Storm Landon ran about 20 degrees warmer than Uri’s deep freeze last year, so much of the weatherization that was enacted was not fully tested.

Although almost all of the natural gas infrastructure is designated as critical load under new rules, the new weatherization standards for electrical power plants do not apply to natural gas entities. Given that natural gas fuels a large share of the electricity generation in Texas (52% in February 2020), this leaves a big vulnerability in the grid.

If this vulnerability does not get addressed through future regulatory changes, it could be resolved contractually in the commercial market. For example, power plants may begin stipulating contractual requirements and noncompliance penalties for fuel delivery during extreme weather to ensure deliverability.

During Winter Storm Landon, ERCOT increased the amount of reserves in the market. At peak points, ERCOT had over 10,000 MWs of reserves compared to ERCOT’s minimum contingency level of 3,000 MW.  This conservatism comes at a high price and ERCOT will need to find a healthy balance between market costs and reliability.

This conservative approach impacts generators’ bottom line as the plants are holding reserves, or online but unloaded and not actually contributing energy to the market. End-consumers are also absorbing the costs of having this much reserve energy idling. The end result is suppressing market prices and not reflecting true market conditions because so much capacity is available.

Everyone agrees Winter Storm Uri was a wake-up call. While the ERCOT grid operated successfully through Winter Storm Landon, some work remains to ensure the grid doesn’t snooze during the next major winter weather event.

Barbara Clemenhagen is an expert in regulatory advocacy and market design, with a focus on energy markets. During her extensive career, she has taken on projects that range from strategic to operational, and include strategy and business planning, market design, regulatory, project finance, acquisitions and divestitures. Barbara currently serves as Vice President of Market Intelligence at Customized Energy Solutions.

One grid independent system operator’s (ISO) evaluation of the COVID-19 impact on electric load patterns, however, is that it is not too dramatic on that level so far.

The Electric Reliability Council of Texas, which oversees transmission for most of that state, is putting out a weekly update on load pattern changes during this immediate era of the sickness which has already killed more than 11,000 Americans since February.

The ERCOT data shows little impact to daily peaks, although the morning load from 6 a.m. to 10 a.m. dropped six to 10 percent lower than what the forecast model would predict typically. That margin from normality to the pandemic period is narrowing considerably when all time periods are factored in.

 “The overall load reduction for the ERCOT region has leveled off over the past two weeks,” said ERCOT Manager of Load Forecasting and Analysis Calvin Opheim in a statement. “Based on the data analyzed from the weeks of March 22 and 29, weekly energy use is down by approximately two percent.”

Any changes to the summer peak load forecast will be announced in mid-May when ERCOT releases its final summer Seasonal Assessment of Resource Adequacy and the Capacity, Demand and Reserves Report. A specific release date has not yet been set. 

On March 31, ERCOT put out its own pandemic planning actions document focused on protecting its staff and enacting best practices. ERCOT manages the flow of electricity to more than 26 million Texas customers, nearly 90 percent of the state’s load.

Other ISOs or regional transmission organizations in the U.S. include Southwest Power Pool, Midcontinent System Operator, PJM Interconnection, ISO-New England, California ISO and New York ISO.

Surging demand for solar photovoltaic (PV) systems is being met with innovative initiatives to harness the trend.

Austin Energy is in the final proving stages of a project supported by the U.S. Department of Energy (DOE) to improve the generation, delivery, and consumption of energy through scalable, cost-effective solar technology integration and storage. Its success may establish a path to accelerate grid modernization nationwide.

The rapid influx of residential, commercial, and industrial PV is forcing the industry to confront the complexities of integrating rooftop solar systems and other distributed energy resources (DERs) to the electric grid.

PV penetration on Austin Energy’s distribution network was increasing and the utility wanted to get ahead of it before grid problems arose. The DOE’s Sustainable and Holistic Integration of Energy Storage and Solar PV (SHINES) program presented a timely solution funding opportunity.

Based on earlier work together, Austin Energy chose Doosan GridTech to help conceptualize the Austin SHINES DER integration and energy storage strategy and present it to the DOE. The proposal was a success. Austin SHINES was one of six SHINES projects awarded a grant as part of the DOE’s Grid Modernization Initiative.

In addition to the $4.3 million from the DOE, the project received $1 million from the Texas Commission on Environmental Quality (TCEQ) and more than $5 million in matching funds from Austin Energy.

With funding secured, additional partners were brought onboard. Austin Energy, Doosan GridTech, Pecan Street, Stem, ConnectDER, and others helped to assemble the Austin SHINES solution and are currently demonstrating it in a field study. While the preliminary findings are promising, the industry as a whole has hurdles to overcome.

Pioneering Project

The Austin SHINES project aims to demonstrate the technical feasibility and economic value of DER asset integration and control to deliver a clean, affordable, safe, and reliable supply of energy to its customers. Overcoming solar power’s most enduring challenge — the intermittent, variable nature of sunlight — meant incorporating energy storage and intelligent controls to maximize the penetration and reliability of distributed PV.

The Austin SHINES resources collectively include:

• Two utility-scale energy storage systems (ESS)
• Multiple customer-sited ESSs at residential and commercial properties
• Smart inverters
• Real-time data feeds
• A distributed energy resource management system (DERMS)
• A vehicle-to-grid component

Through integration, optimization, and modeling, the project team has come to understand the steps required to prepare a grid for surging solar generation as well as the economics of relentless grid reconfiguration.

They are also learning how changes to the way Austin Energy’s systems operate can increase reliability while reducing energy costs. Strategies being explored include demand charge reduction, congestion management, voltage support, real-time price dispatch, day-ahead energy arbitrage, utility peak load reduction, and value stacking of the various strategies.

Furthermore, because Austin SHINES is designed for adaptability to any region and market structure, it supports the broader SHINES goal of strengthening the resiliency, reliability, safety, and security of the nation’s electric grid.

Bold Goals

Austin Energy, the third largest municipal energy utility in the U.S., is already meeting about 40 percent of its customer energy needs with renewable resources. It actively experiments with and explores new ways to maximize the use of renewables and meet its ambitious goals:

• By 2025:
  • Offset at least 55 percent of customer load with renewable resources.
  • Integrate 10 MW battery storage and 20 MW thermal energy storage.
  • Deploy 750 MW utility-scale solar and 200 MW local solar, including 100 MW customer-sited PV.
  • By 2027:
    • Offset 65 percent of customer load with renewable resources.
    • Integrate 30 MW thermal energy storage.
    • Record 1000 MW of savings from energy efficiency and demand response.
  • By 2050:
    • Achieve net-zero community-wide greenhouse gases.

The above goals are also subject to meeting Austin Energy’s affordability goals: keeping rate increases to less than 2 percent a year and utility rates in the lower 50^th percentile in the state.

Strategic Configuration

The Austin SHINES program comprises more than 5 MW of utility-owned ESS, solar PV, and distributed residential and commercial storage, configured as follows:

• Utility-scale energy storage plus PV:
  • 2.6-MW community solar farm
  • Two ESSs, one each at the Kingsbery and Mueller locations, each approximately             1.5-MW/3-MWh Li-ion
• Commercial energy storage plus PV:
  • Aggregated storage installations at three sites; one with 18-kW/36-kWh Li-ion battery storage and two with 72-kW/144-kWh Li-ion battery storage
  • Each commercial participant has rooftop solar
• Residential energy storage plus PV:
  • Aggregated storage installations at six homes (10 kWh each)
  • One electric vehicle connected in vehicle-to-grid fashion (28 kWh available for grid dispatch)
  • An additional 12 homes with utility-controlled solar PV (through smart inverters)
  • Six homes with autonomous settings on their solar PV smart inverters.

Seeking to optimize the value of DERs holistically, Austin Energy chose Doosan GridTech’s Distributed Energy Resource Optimizer (DG-DERO) and the Doosan GridTech Intelligent Controller (DG-IC) as the project’s primary software control platform.

DG-DERO is a DERMS platform that enables automatic dispatch and scheduling of the DER fleet from a central interface. It allows for economic value optimization of the fleet based on inputs such as grid data, market data, and forecasts. It also interfaces with the site-level controller or aggregator for each installation.

DG-IC units intelligently manage the distributed resources and provide data back to facilitate decisions in central operations. They support real-time monitoring and control for utilities to maintain cost-effective power quality and safe, reliable operations.

Austin Energy also selected Smart ConnectDER interconnection technology for the residential solar installations. The 18 residential PVs are either autonomous (fixed power factor settings) or under direct utility control. For residential and commercial storage, aggregator platforms are being used. All local control systems used at the grid edge communicate using open standards and are capable of managing DER assets in real time.

 Modern Economics

A key differentiator of the Austin SHINES project is how it measures the cost of energy. Rather than the customary levelized cost of electricity (LCOE), the Austin SHINES proposal suggests a system-wide LCOE (or SLCOE) metric to better evaluate and optimize the grid’s mix of resources.

LCOE represents the cost of individual asset’s energy generation over its lifetime, including the initial investment, operations, maintenance, cost of fuel, and cost of capital, divided by the amount of energy produced by the asset. It is expressed in $/MWh or cents/kWh and can be compared across assets.

SLCOE, on the other hand, recognizes that DER assets are paired or grouped to serve the load, and therefore deliver synergistic value. Use of SLCOE was approved by the DOE to assess Austin SHINES DER costs and performance holistically, including all assets working together within a defined distribution circuit or “boundary.”

Translating Learnings into Practice

Preliminary lessons from Austin SHINES demonstrate the potential, challenges, and realities of implementing holistic DER integration and storage. What follows is a sample of the lessons learned so far.

Ensure DERs provide value to the broader utility system, from the grid to the customer. A utility, customer, aggregator, or transmission system operator might try to get value out of the same DER asset differently. For example, the customer peak and Electric Reliability Council of Texas (ERCOT) peak may or may not happen at the same time, so tight coordination is required to manage the complexity and provide value where it is due.

The commercial aggregator uses algorithms to monitor load, forecast peaks, and discharge the battery to offset customer demand and reduce customer bills. It was discovered through testing that exchanging availability information between the aggregator and DERO was critical to stacking value for the customer and utility.

Configure utility-integrated ESSs with open standards, distributed controls, and coordinated applications. Interoperability improves communication, knowledge sharing, and productivity while reducing costs and avoiding vendor lock-in. For Austin SHINES, Austin Energy required open-standard communication to promote interoperability. Although DER communication and integration standards are considered open, the project revealed that some required some degree of customization to accommodate the needs at both end points.

The utility also recommends intelligent, distributed controls along with a holistic DERMS coordinating platform to balance DER dispatch and grid support and drive economic optimization.

Use SLCOE metrics to ensure DERs contribute to grid reliability and economics.

SLCOE supports DER asset optimization through modeling, simulations, and the current realities of field demonstration data. For instance, multiple DER assets can be measured and optimized at the circuit or system level, making it easier to understand how DERMS controls benefit the distribution utility. SLCOE also enables comparison of a current DER state to alternative future scenarios to understand the effects of increasing solar penetration and adding additional storage assets to the circuit.

Economic modeling helps utilities understand financial tipping points whereas reliability modeling helps utilities to determine at what point solar penetration will create operational problems. Austin Energy determined that the current penetration of renewable energy resources on Austin Energy’s distribution grid is 6%, and the tipping point for voltage issues will occur when penetration approaches 40%.

Don’t overlook communication. How the system communicates with residential PV assets may be expensive but beware of sacrificing reliability for lower costs. Also, determine whether the extra complexity of adding a communication signal to an asset is worthwhile, or if the asset can be controlled autonomously for similar value. 

The choice of cellular communication for Austin SHINES residential PV assets was intentional, despite the team knowing it was not scalable. The project team explored a more scalable alternative, radio mesh, but did not get results early enough to implement it in the field.

Minimize DER downtime. Whenever storage assets go offline and out of DG-DERO’s control, Austin Energy risks losing project value. Outages due to software fine-tuning, a warranty claim, a heat wave, and a precautionary measure occurred during the Austin SHINES 2019 project demonstration period.

The precautionary incident followed a 2019 fire at another U.S. utility’s energy storage installation, which prompted a closer look at some fires abroad. Out of an abundance of caution, Kingsbery ESS operations were suspended and Mueller ESS development was delayed while waiting for the final incident reports. Austin Energy used that time to review its safety protocols and storage safety systems.

Regulators and policymakers have work to do. DER technology advancements are outpacing building codes, permitting process, rules, and regulations. For instance, it can take time for a fire department to decide how to permit new technologies being installed inside a building.

Another example is ERCOT’s utility peak load reduction rules. No asset over 1 MW is currently allowed to participate in its Four Coincident Peak (4CP) program and get credit for it, which rules out the project’s largest assets—Kingsbery and Mueller. Without a rule change, only the smaller Austin SHINES assets will be eligible for the savings.

More to Come

Though still in the demonstration phase, the initial Austin SHINES results indicate that DER integration should remain a critical strategic initiative for Austin Energy. Findings from this groundbreaking, industry-leading field study will help to mold the future of distributed energy and customer engagement at the grid edge. Upon the project’s completion in mid-2020, the final Austin SHINES report will be published.

About the author: Troy Nergaard is senior director of product management and analytics at Doosan GridTech and also serves as Austin SHINES controls lead.

Paul Hinnenkamp, chief operating officer of Entergy Corp., and NRG Energy’s Chris Moser, who is operations chief, offered insights into how their very different companies operate in the power generation mix.

Peabody Energy also named its Clean Coal Awards winners during the Wednesday POWEERGEN kickoff in the Ernest N. Morial Convention Center. Winners include Mitsubishi Heavy Industries, the Electric Power Research Institute, the Carbon Utilization Research Council and Richard Axelbaum, professor at Washington University in St. Louis, Mo.

Entergy is host utility for POWERGEN and even allowed some attendees to take a tour of its gas-fired and solar facilities this week. Hinnenkamp’s speech underlined the utility’s plan to focus on increasing those resources in its generation mix.

Entergy plans to complete two other gas-fired plants identical to the 980-MW St. Charles Power Station over the next two years. The company also has about 1.5 MW of utility-scale solar either in service or under development.

Solar projects include installation of rooftop panels in New Orleans and an 81-MW site in Arkansas.

Click here to see video of POWERGEN backstage followup with Paul Hinnenkamp.

Hinnenkamp noted that utilities need to think more like Uber and Amazon do in transportation and retail sales, proactively partnering with customers on their energy needs while helping them to use less of it.

“Too often we’ve looked at the grid as (only) up to the meter,” he said. “We need to be on that (customer’s) side of the meter in a way we’ve not been before.”

Moser, who is executive vice president of operations for NRG Energy, gave an overview of his company’s role as a generator working in competitive markets outside of the usual utility, base-rate model. NRG, which has headquarters in both Houston and New Jersey, works both in the Electric Reliability Council of Texas system and in the eastern U.S.

In the former, he counted how a historically hot stretch of Texas weather in August drove pricing from around $42 per MWh to more than $1,500. ERCOT is an energy only market, which doesn’t pay generators simply to have capacity on-hand, but only if they can meet the competitive pricing aims of the system and truly obey the laws of supply and demand.

“ERCOT worked like it was supposed to work,” he said.

Click here to see a video of POWERGEN backstage followup with Chris Moser.

Moser took some time to call out certain states in the eastern U.S. which are subsidizing nuclear power plants simply to exist. Nuclear is a carbon-free generation resource, but he contended that markets should be agnostic about the resource while making their focus clear.

“The way I see it they are subsidizing the last century’s technologies,” he said. “If the goal is carbon reduction, then create a clean energy market. Make it source agnostic, whether it’s wind, solar or nuclear.”

POWERGEN International continues through Thursday.