EnergyStatewide NewsPower Grid Reports Forecast Fall Expectations, Lay Out Electricity Market Recommendations

The state expects the fall to be used to make up for power plant maintenance postponed during the summer heatwave.
September 7, 2022
Texas officials expect a much lighter load for the state’s largest power grid in the coming months, and are planning to use the fall for generator maintenance postponed during the summer heatwave.

In its Fall 2022 Seasonal Assessment, a report issued previewing the coming seasonal change, the Electric Reliability Council of Texas (ERCOT) expects the fall peak demand to reach 64,928 megawatts (MW) during October and November. One MW can power about 200 homes during peak demand hours.

That projection is 16 percent below the peak demand projection made by ERCOT for this summer and 20 percent below the actual peak demand record set on July 20.

ERCOT expects to have 93,492 MW of capacity available during peak demand periods this fall, a slight increase from what they projected to have available at peak demand during the summer. That expected peak capacity is 68 percent of the total installed generation capacity. Much of this increase comes from additional battery storage capacity, the electricity for which is generally generated by renewable sources.

By source, 68 percent of the capacity of 93,492 MW is from thermal generation (natural gas, coal, and nuclear), while 15 is from wind and 9 is from solar.

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In these reports, the grid operator lays out three different scenarios to assess risk during unexpected changes in available generation. Only one of these elevated risk scenarios, which accounts for low renewable output, would result in the need for rotating blackouts.

This is only one possible scenario and is not expected to come true by the grid operator. Texas has a slew of renewable generators, mostly solar, coming online in the next few years, and is expected to lose natural gas and coal capacity as some aged plants retire.

“As our record-setting summer winds down, now is no time to rest,” Public Utility Commission (PUC) Chairman Peter Lake said in a release. “We will continue to ensure the grid is reliable using all the tools we have, including closely managing outages generators need to take for maintenance.”

The ERCOT grid has been tested this summer due to the unrelenting heat, but it withstood all tests and only issued two conservation alerts in mid-July. But during the heatwave, which began very early in May, plants that were supposed to come offline for maintenance were kept in tow to ensure the maximum available generation.

“ERCOT is coordinating with generators to schedule necessary maintenance outages this fall and for appropriate weatherization,” an ERCOT official told The Texan. The grid operator also said that a new scheduling rule allows 30 percent more planned outages to complete these maintenance projects.

The grid operator expects this fall window to provide time for those plants to undergo the maintenance they’ve so far put off.

“Going into the fall, we have sufficient resources to meet demand for power, and we’re very excited to welcome ERCOT’s new president and CEO, Pablo Vegas back to Texas in October,” Lake added.

Vegas, an Ohio utility executive, was announced last month as the permanent CEO for the ERCOT grid and will start on October 1. He will be paid a $990,000 salary, along with a medley of other payments and performance-based bonuses, to oversee the state’s largest power grid.

The other significant news on the power grid front occurred on September 1, when the state’s Energy Plan Advisory Committee released its final report on the power grid and energy industry. The report is a review of the grid and surrounding energy industry ordered by the Texas Legislature as part of its post-2021 blackout reforms.

“[A] key problem the committee identified,” wrote the committee in its executive summary, “is how Texas can best adapt to the changing electric generation resource mix and support market-based incentives to ensure that the generation resource supply is adequate, resilient, and poised to support the continued economic growth in this state and the Texans who rely on reliable electric power in their homes and businesses.”

The state is facing a substantial shift in its energy and electricity industry. The influx of renewable generation spurred on by substantial federal tax incentives has created an increasing reliance on those intermittent sources.

Texas is an energy-only market, the parameters of which were set up before wind and solar generation really took off. The market pays generators for energy produced rather than having supply negotiated up front like in other parts of the country.

On the market side of things, that “distortion” caused by the federal and local incentives is the foremost consideration by the PUC, which is currently considering its post-blackout market reforms.

Among the items considered is a reliability standard, also known as a “firming” requirement, that levies financial rewards and penalties for generators based on their ability to consistently provide power during times of high demand.

To achieve this, the committee recommended renewable generators be required to supplement with dispatchable backup generation in case the wind doesn’t blow nor the sun shine.

“The committee does not support a market design that favors new or subsidized generation over existing resources, as doing so could create regulatory inefficiencies and raise capital costs for Texas ratepayers,” the committee stated.

The second part of that dilemma is how to bring on new thermal generation, something that has been nonexistent over the last few years. Developers have found little financial justification for building new natural gas generators while at a financial disadvantage due to the subsidies renewables receive.

The committee also recommended that the state evaluate “demand response” protocols, mechanisms that allow utility companies or regulators to automatically reduce electricity use by consumers which is usually accompanied by financial incentives.

For example, a consumer could be paid, or have their bill reduced, for constraining their usage during times of high electricity demand.

On the physical side, the committee called on state agencies to complete the issuance of weatherization standards and the process of designating critical infrastructure — a process by which certain users are designated exempt from load-shedding during a time of emergency. During the blackouts, some natural gas producers and pipelines were cut off from power because of what was essentially a paperwork oversight failing to designate them as critical infrastructure.

This spurred a problematic spiral of cutting off power to entities crucial to getting the lights back on. Where to draw the critical infrastructure line is something the Texas Railroad Commission (RRC) and PUC are currently hashing out, but the RRC approved its final rule on that last week.

After the blackouts, Texas officials turned their priority sharply toward reliability at the cost of affordability. Electricity costs are up substantially after the post-blackout directives, which altered the system that led to low prices for most of the ERCOT grid’s lifespan — savings virtually wiped out by the massive costs incurred during the winter storm. The increased caution with which the state now operates costs money, and ultimately that cost falls onto ratepayers.

The power grid’s Independent Market Monitor estimated that through May, the operational changes cost an additional $1.3 billion.

The committee also highlighted transmission upgrades as a necessity for the state’s grid — the lines that transmit electricity from the point of generation to consumers. “Transmission line planning and construction timelines often serve as a bottleneck; these processes, requirements, and timelines should be re-evaluated,” the report states.

As Texas’ power grid enters an expected point of ease relative to the last few months, the state has time to finalize the rest of its post-blackout reforms it hopes will prevent any such calamity from occurring again. California is facing its own current power issues with forced blackouts implemented in certain areas of the state. Conservation alerts have been in place since last week.

The two biggest states with dramatically different power grids are often used as measuring sticks against one another. Much of this Texas report focused on stemming the state’s reliance on intermittent generation, something California has leaned into over the past couple decades.

Read the full report below.

Editor’s Note: This article has been updated to include a response from ERCOT on plant maintenance.


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Brad Johnson

Brad Johnson is a senior reporter for The Texan and an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.