Freezing, Scorching, or Not, Texas Needs More Demand Response

This commentary originally appeared on our Texas Clean Air Matters blog.Final Images EDF-6524

As we thaw out this week from our most recent arctic blast, Texas’ inexperience with ice and snow has been met with Internet memes and jokes. But dealing with extreme temperatures causes serious strain on our current energy system and exacerbates our “energy crunch,” signifying that the available supply of electricity barely meets the demand for that power.

However, as is typical of Texas, last week our weather was quite pleasant – in the 70s – and strains on the system due to weather events weren’t too much of a concern. Yet the Electric Reliability Council of Texas (ERCOT), the state agency charged with managing the flow of electricity for most of Texas, alerted an emergency situation despite mild temperatures. To avert disaster, ERCOT initiated demand response, “ask[ing] customers to raise thermostat settings to 78 degrees, typically a summer response intended to reduce demand from air conditioners.” A single malfunctioning power plant caused the problem. ERCOT declined to identify the plant involved.

Much of this uncertainty and drama can be alleviated with demand response (DR), a novel approach to managing the grid system. Using smart power technology like smart thermostats, utilities can moderately adjust their customers’ energy use in real-time for a brief amount of time to meet the energy needs of all Texans. When energy demand is high, electric utilities can ask customers to voluntarily conserve energy in exchange for cost-savings and even payments. During the polar vortex earlier this month, CPS Energy, San Antonio’s municipal utility, saved about 77 megawatts (MW) of power through demand response programs – enough to power 32,725 homes.  Texas isn’t the only place where demand response is taking hold.

DR plays a critical role in PJM, the grid operator that includes 13 states in the Midwest and Northeast. Customers were paid a total of $330 million in 2012, while bringing more competitive resources into the market lowered overall energy system costs. During the summer of 2012, PJM estimates this effect saved all customers around $650 million. Contrasting that with the fact that during our polar vortex a few weeks ago, Texas’ power prices actually jumped higher than any other state, even the ones buried under feet of snow, reaching the cap of $5000 per megawatt-hour compared with PJM’s $1800.

Source: North America Power Partners

Texans deserve to have an electric grid that is secure and reliable – not one that faces rolling blackouts during the hottest and coldest days of the year or because one fossil fuel plant goes down. This is why Texas’ Public Utility Commission (PUC), the state agency that regulates electricity, is deliberating whether to reform the state’s current energy-only market structure, which pays power plants to provide electricity, to a capacity market, which pays generators and DR providers to be on standby. EDF sees a securer, cleaner path forward.

Demand-side resources – like DR, renewable energy, efficiency, and energy storage – give the consumer flexibility and leverage in their energy usage and generation, playing a key role to ensuring grid reliability, affordability, customer choice and environmental sustainability. According to the Brattle Group, Texans could achieve as much as 13,000 MW of demand response by 2019, with the majority (7,661 MW) coming from residential customers, a group that accounts for “more than 70 percent of peak load.” Enabling DR technologies gives Texans, already active participants in grid reliability, more choice and freedom over their electricity than ever before.

So far 2014 has given DR a chance to prove itself in the Texas energy market. It has. It is time to expand its availability by encouraging new business models and becoming engaged prosumers.



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