EnergyStatewide NewsGov. Abbott Issues Directives to PUC, ERCOT to Shore Up the Texas Power Grid

Those four tasks include:

• Restructuring market incentives to drive development and maintenance of more reliable power generation, most notably from thermal sources
• Footing renewable companies with bills for the costs incurred by the state for compensating for their lack of generation, especially during times of high demand
• Creating a maintenance schedule for thermal generators to “ensure that there is always an adequate supply of power on the grid” 
• Expediting transmission projects that move electricity to the point of generation to consumption

“The objective of these directives is to ensure that all Texans have access to reliable, safe, and affordable power, and that this task is achieved in the quickest possible way,” Abbott said in the letter.

“Through clear communication, transparency, and implementation of these critical changes, the PUC and ERCOT can regain the public’s trust, restore ERCOT’s status as a leader in innovation and reliability, and ensure Texans have the reliable electric power they expect and deserve.”

Texas’ tumultuous relationship with its power grid took a nose-dive last February when millions of Texans shivered through winter storm-induced power outages. The cold weather left tens-of-thousands of megawatts (MW) of generation unavailable for a nearly week-long stretch.

The legislature passed an electricity omnibus bill and regulatory overhaul as its response to the blackouts, which was signed by Abbott in early June. “Everything that needed to be done, was done to fix the power grid in Texas,” Abbott said during the bill signing.

While that was a legislative response, this is a more direct regulatory response — an order from the executive to the bureaucratic agency he oversees and the grid regulator it supervises.

But a week after that bill signing a heatwave stressed the state’s grid once again, causing ERCOT to issue an energy conservation alert. The situation deteriorated no further than that but caused a stir among the still-shaken populace wondering if their power grid could weather the summer heat.

Abbott sees these four tasks as the directives necessary to assuage those concerns and prevent outages down the road.

In recent years, Texas has bled thermal generation and added large amounts of renewable generation in both wind and solar. The first directive would, ideally, lead to a rejuvenation of lost thermal electricity generation whether it is coal or natural gas.

Coal, because it is a relatively high producer of emissions, has become the red-headed-step child of energy generation. It is also less efficient pound-for-pound than something like natural gas, but it tends to be more resilient to extreme temperatures than other forms of generation — however, all sources of generation in Texas failed to varying degrees during the February storm, including coal.

Abbott’s second task focuses on renewable energy’s affect on the ERCOT market — specifically the costs incurred by the state to compensate when the wind doesn’t blow and the sun doesn’t shine.

In both instances, February and the June heat scare, wind generation produced at an incredibly low rate compared with its over 30,000 MW installed capacity. When that happens, other sources, often deployed as ancillary services — a sort of break-in-case-of-emergency set of resources — must make up for the lack of generation.

Because of Texas’ market-based pricing system, costs fluctuate and during times of scarcity, fluctuate immensely. That leads to massive bills shouldered by power companies and then eventually passed onto consumers one way or another.

Wind is not the only source that creates a need for ancillary services. When thermal plants unexpectedly go down for maintenance, as they did during the June scare, ancillary service generation may be needed.

But times of unexpected maintenance occur less frequently than the wind not blowing.

Additionally, because of federal and local subsidies, renewable companies can often break even by selling generation at negative prices. Programs like the Renewable Tax Credit drove the $71.2 billion in subsidies doled out to wind and solar companies compared with the roughly $53 billion in subsidies handed out to oil and gas, nuclear, and coal companies combined.

Opponents of the subsidies say they lead to a “price distortion” in the ERCOT market — leaving non-renewable sources at a competitive disadvantage. Rep. Jared Patterson (R-Frisco) filed legislation to eliminate that distortion this session that never quite advanced. But Abbott’s directive is intended to accomplish much the same goal as Patterson’s.

The third item directs ERCOT to establish a maintenance schedule for thermal power plants to ensure enough generation to meet demand. Generally, ERCOT does already schedule maintenance and it usually occurs during the late winter and early spring when temperatures are generally mild enough to avoid days of inordinately high demand.

But when numerous plants unexpectedly went offline due to mechanical issues in June, the generation planning was thrown for a loop.

The final item pertains to transmission — the method of getting electricity from generation to consumption. Most often, this comes in the form of massive rows of powerlines stretching across rural Texas.

One of the problems during the perfect storm of setbacks from February was that some generation — especially “dispatchable” power, i.e. generation that does not rely on external factors to produce — could not reach population centers because it lacked the transmission necessary for transport. Abbott’s directive calls for transmission projects pending and in development be expedited to completion, closing the gap on dispatchable power that cannot reach consumers.

Because it is a regulatory body, the PUC must now map out specific actions to accomplish these goals, approve them, and aid in their implementation — but ultimately, it is incumbent upon the power industry to meet these benchmarks.