Energy Exchange

Demand Response: A Key Component In Texas’ Electricity Market. Why Isn’t The State Taking Advantage Of It?

By / Published: January 12, 2012

On Monday, the Texas Senate Business and Commerce Committee took up the critical issue of the impact of extreme drought conditions on electric generation capacity and state officials’ plans to respond to those risks.   A number of important issues and policy solutions were raised, from on-bill financing of energy efficiency to renewable energy to send the right ‘market signals’ to incentivize the construction of new power plants.  Public Utility Commission (PUC) Chair Donna Nelson singled out, in particular, the state’s energy efficiency and renewable energy goals.  These policies have helped reduce pollution, saved customers money and have the added benefit of reducing our dependence on water for electricity production.

Another important part of the solution discussed was raised by a number of panelists: demand response (aka load management).  The ability of end-use customers to reduce their use of electricity in response to power grid needs or economic signals has helped the Electric Reliability Council of Texas (ERCOT) avoid rolling blackouts and, in other regions of the country, it has helped markets avoid the need for new capacity.  As ERCOT CEO Trip Doggett and PUC Chair Nelson pointed out in their testimony, demand response is a market competitive resource that uses no water and, as such, it may prove to be a valuable resource in view of the state’s record drought. 

The Texas Capacity Crunch – Obstacles and Opportunities
The historic drought of 2010-2011 has put Texas’ conventional power plants at risk, threatening a return of the rolling blackouts caused by extreme winter conditions just a year ago.  State Climatologist, Perry appointee John Nielsen-Gammon says, “Statistically we are more likely to see a third year of drought.” 

At the same time, ERCOT faces a challenging capacity crunch caused largely by “low natural gas prices, an influx of low marginal cost wind power, increased wholesale market efficiencies, low wholesale power prices, tight credit markets” and other issues according to TXU Energy.  With limited ability to invest new capital given the current market conditions, and over 11,000 MW of power dependent on water sources at historically low levels, Texas needs to tap into resources that can be deployed rapidly and require less capital and much less water.

Demand Response – Low Cost, Zero Water Resource
Fortunately Texas has ample resources to meet these needs with demand response.  If allowed to participate fully in Texas’ energy markets as it does in other regions, demand response can benefit customers and increase grid reliability.  Unfortunately Texas continues to lag behind other states and regions, which have seen market-competitive demand response grow rapidly as market barriers have been removed. 

    • The definition of “demand response” is “end-use customers reducing their use of electricity in response to power grid needs or economic signals from a competitive wholesale market.”
    • The potential for cost competitive demand response is tremendous – according to the Federal Energy Regulatory Commission (FERC) Texas could add as much as 19 GW in capacity by 2019 if we open up our electric market to allow customers to compete alongside generators.

Texas currently is among the lowest states in terms of load management, despite having the highest potential by far according to FERC and the Brattle Group. 

Source: FERC

Why Does Texas Lag the Nation in Demand Response?

  • In 2011, demand response amounted to 9% of the PJM’s (a grid operator in the Mid-Atlantic/Midwest) system peak demand, greatly benefitting customers and improving reliability. 
  • At ERCOT, despite great potential, demand response only amounted to just over 2% of peak demand, limited by unnecessary market barriers. 
  • Texas leads the nation in smart meter deployment, intended by the legislature to “facilitate demand response initiatives.”  Why is ERCOT so far behind?

Market Barriers Prevent Customers from Competing in ERCOT

  • ERCOT’s legacy demand response program is capped at 1150 MW and is effectively limited to large industrials within ancillary services markets.
  • ERCOT’s Emergency Reliability Service is the only program in the market that allows any customer to participate if they qualify.  The program is limited in scope (it can only be called on twice per year) and to date has been unable to reach the original goal of 500 MW.  Despite these limitations, the program helped avoid rolling blackouts last summer.

Source: NERC

Regulators are Focused on Building New Power Plants

  • Instead of looking to all possible solutions, regulators seem focused only on how to get new power plants built.
  • Other grid operators have successfully created programs for smaller commercial and residential customers to compete through aggregation.  In Texas, residential and small commercial customers have been put on the back burner.
  • Despite the PUC’s reluctance to act on other clean energy opportunities, such as the 500 MW non-wind RPS or increasing the energy efficiency standards, it is clear that these programs have been successful in creating clean, “water-proof” power.
  • In the midst of a capacity crunch caused by extreme drought and market structure problems, demand response provides an opportunity to address both by enabling cheaper, water-free capacity by simply opening markets to customers.
Also posted in Energy Efficiency, Grid Modernization, Renewable Energy / Tagged | Read 1 Response

Switch Is Flipped In Webberville, Texas: 30 MW Of Solar Now Online

By Marita Mirzatuny / Published: January 9, 2012

Driving through the bustle of downtown Austin, past the sleepy, revitalizing East Side, one reaches the pastures and prairie countryside of Travis County. It is on this thirteen mile trek, the smell of wood smoking BBQ wafting the air that you come to the village of Webberville.

While the settlement dates back to 1827, it is Webberville’s modern day activity that will put it on the map. Friday morning, SunEdison along with the mayor of Webberville, the City of Austin, and Austin Energy held the grand opening ceremony and ribbon cutting for the Webberville Solar Project. Webberville Mayor Hector Gonzales summed it up well, stating that today the “past shakes hands with the future.”

With its “rough reputation” dubbing it Hell’s Half Acre, Webberville now has 380 acres of solar generating power to add to its claim to fame. The 127, 728 panels will ultimately generate 30 MW of solar energy and will offset 1.6 billion pounds of carbon dioxide over the next 25 years.  The facility utilizes solar PV technology that is mounted on horizontal-axis trackers rotating in the East-West directions with the sun’s position in the sky to optimize electricity production.

All of this translates to producing enough electricity to power 5,000 average-size homes annually. The launch contributes to Austin Energy’s generation goal of 35% renewable energy by 2020 and creates green jobs for the area. “It is the largest active solar project of any public power utility in the country, the largest active project in Texas and among the largest of all operating solar projects in America.”

If there are two things in Texas that we have plenty of, besides oil and gas, it’s sunshine and pride and we are proud to have this solar farm on our soil.

Posted in Texas / Tagged | Comments are closed

ERCOT Reliability: “It’s Complicated”

By / Published: December 20, 2011

This commentary was originally posted on the EDF Texas Clean Air Matters Blog.

It seems like only yesterday that ERCOT was issuing dire warnings of rolling blackouts as a direct result of regulations required by the court system to ensure cleaner, healthy air for Texans and our neighboring states.  Well, maybe not yesterday, but at least as recently as this month.  Buried deep within the report was ERCOT’s tacit acknowledgement that they have allowed companies to idle more than 1,000 MW of power plants because those plants are not economic in today’s hyper-competitive market.

Source: Texas Tribune

Of course, no announcement made as much news as Luminant’s claim that they were shutting down two of their Monticello lignite power plant units in response to EPA regulations.  Those claims have been pretty well debunked over the last few months as people began to realize that market economics and poor planning were responsible for Luminant’s decision.  As we discussed in September, it was as convenient for Luminant to blame the EPA as it was reflexive of Texas politicians and regulators to threaten rolling blackouts as a result of Luminant’s decision.  ERCOT’s decision to let other power plants shut down for economic reasons calls those claims into serious question, and their recent decision (password required) that idling the Monticello units at the heart of this debate  does not threaten system reliability will hopefully end this cycle of unfounded recrimination and backtracking.

As ERCOT has made clear, the real threats to system reliability are of our own making: market failures have lead to a lack of proper signals to encourage the building of new power capacity; and this year’s record breaking drought, made more extreme by climate change, has threatened to shut down more than 11,000 MW of power plants.  What all of this means is that ERCOT’s reliability issues are far more complicated than a political slogan, and getting rid of sensible regulations that protect our children, elderly and general population from real health risks will do nothing to solve our problems. 

Instead of focusing on the easy political score, our leaders should be looking for real solutions that don’t pose risks to human health or to our water supply.  The solutions are out there: dry-cooled power plants, energy efficiency programs like demand response, as well as wind, solar and other non-water consuming renewable energy. 

The most recent decision by ERCOT that idling Luminant’s power plants poses no threat to grid reliability should end the cycle of unfounded accusations for political gain.  It should focus our state leadership on solutions that will work instead of distractions that only delay solving the problem.  It should also serve as a signal to those who are all too ready to accept unfounded claims for the sake of a good story or a convenient target. When it comes to ERCOT and reliability, the issues are complicated, but the solutions are out there and it will take real focus and effort to prevent Texas from experiencing the same rolling blackouts we had last winter.  It’s winter again (even if it’s just barely starting to feel like it), and next summer looks to be another scorcher. We don’t have a lot of time, so let’s get to work.

Also posted in Grid Modernization / Tagged | Comments are closed

Pecan Street Named #1 Electric Vehicle Initiative Of The Year

By Marita Mirzatuny / Published: December 13, 2011

Since this blog post was published, Pecan Street was also named one of Smart Grid News’ Smart Grid Winners of 2011.

Source: Pecan Street

As the Christmas season revs up and a New Year fast approaches, you may have noticed the sentimental commercials of couples giving each other new cars amidst snowy scenes and jolly music or well-choreographed salespeople urging you to shop the dealership as eager car companies showcase their new model year offerings. This happens every year around this time, some obviously more ridiculous than others. But with each year as more hybrid and electric vehicles join the marketplace, these companies are touting their environmental acumen as much as their sleek body styles and luxurious interiors. While there are still hurdles to overcome, the age of electric vehicles (EV) is beginning.

2012 will see the 100% gas-free Ford Focus, now taking reservations, Mitsubishi’s MiEV’s as the cheapest offering in the EV market, and the all electric Honda Fit, released initially as lease only until 2013. With a limited supply of Fits coming to the US, Engadget even suggests “you may want to add your local Honda dealer to the holiday card list — it certainly can’t hurt your chances of getting Fit next summer.” One analyst believes by “model year 2015, the new car market will have 108 electric-drive models.” And a University of California at Berkeley study predicts that by 2030, 64% of light vehicle sales in the US will be EV. Read More »

Also posted in Grid Modernization / Comments are closed

EDF Releases Ten Recommendations For The First Offshore CCS Projects In Texas

By Tim O'Connor / Published: December 12, 2011

On December 2nd, Environmental Defense Fund (EDF) completed a 2-year long research project funded by the U.S. Department of Energy (DOE) to support a University of Texas (UT) project to find suitable sites to sequester carbon dioxide below ground in Texas’ offshore state waters.   The research report, which directs site selection, anticipates environmental risks and provides recommendations during project siting and development, was generated to safely and efficiently guide offshore carbon capture and geologic sequestration (CCS) projects to minimize risks to human health and the environment.

Source: Southeast Regional Carbon Sequestration Partnership Region

Given that a CCS project off the coast of Texas would likely be the first of its kind in U.S. history, the report offers valuable insight to help guide a future demonstration project which may open the door to a potentially huge CCS industry.  In 2010, the U.S. DOE evaluated the gulf coast region and found vast potential for storing CO2 in deep saline formations (underground salt-water deposits) as well as in depleted oil and gas fields throughout the area.  Similarly, in 2006 the University of Texas evaluated geologic formations across the coastal region, finding exceptional geology for engaging in CCS projects.

EDF’s recommendations, included in Section VII or the report, provide guidelines for use in site selection and development for offshore CCS projects in Texas, including:

  • Following threshold standards to avoid negative effects on human health or coastal natural resources;
  • Taking an overall precautionary approach wherever possible;
  • Performing site-specific evaluations within the full zone of potential impact, even if not required by law;
  • Choosing sites with the least potential for leakage;
  • Applying recently adopted U.S. EPA rules for groundwater protection even if not required by law;
  • Locating sites as far from shorelines and existing aquifers as feasible;
  • Reusing or collocating equipment new project footprints;
  • Selecting back-up sites where possible;
  • Developing site specific monitoring, verification, accounting, and reporting plan; and
  • Evaluating feasible mitigation measure prior to site operation.

To complete the research project, EDF energy and oceans experts performed an in-depth look into the current state of the Texas gulf coast environment and extrapolated lessons learned from operations analogous to CCS to analyze the potential for impact and recommend ways to mitigate overall risk.   EDF used examples and best management practices developed for offshore oil drilling, onshore enhanced oil recovery, acid gas and wastewater injection, and offshore CCS projects in other countries to make its suite of recommendations.

Posted in Texas / Tagged | Comments are closed

Pecan Street Advances: Next Phase in Smart Grid Project Gets Underway

By Marita Mirzatuny / Published: September 30, 2011

Pecan Street Inc. announced this morning the selected group of companies chosen to participate in testing and constructing the utility grid of the future – a “consumer-focused smart grid built around home applications and consumer electronics” in the Mueller neighborhood of Austin, Texas. My colleague Colin Meehan and I attended the annual Pecan Street retreat earlier this week, where these companies, such as Chevy, Best Buy, Freescale, Intel, Landis+Gyr, LG Electronics, Oncor, Oracle, Sony, SunEdison, Texas Gas Service and Whirlpool Corporation, and researchers from the University of Texas came together to report the latest data and findings and to present what technologies will move us all forward. Very fascinating information has already come to light which pose interesting challenges and unlimited opportunities that we will see play out over the course of this project. This includes home energy monitoring of new and old houses across Austin, a home research lab, and installations of smart meters, smart appliances, electric vehicles, solar panels, and home energy management systems in hundreds of homes.

Pike Powers Home Research Lab in Austin, Texas. Photo Courtesy of Pecan Street Inc.

This smart grid consortium is positioned in a unique way to achieve huge innovative feats in reinventing America’s electric system. Having the involvement of the technology industry, the Greater Austin Chamber of Commerce, the University of Texas Schools of Engineering, Architecture, and Computer Science, a progressive, municipally-owned utility such as Austin Energy, and EDF, Pecan Street is aligned in a very collaborative way. EDF will be working to ensure that consumers have the information to know what their real-time energy consumption looks like and have the power to change their behavior to reduce their personal costs and the societal costs of pollution.

Participants of Pecan Street Inc.’s smart grid demonstration project joined Pecan Street staff, University of Texas researchers and members of Pecan Street’s Industry Advisory Council to announce an agreement with Chevrolet that will make 100 Chevy Volts available to participants in Pecan Street Inc.’s research. The deployment of 100 Volts in the 1 square mile area will be among the densest concentration of plug-in vehicles in the country. Photo Courtesy of Pecan Street Inc.

We at EDF have been involved in this project from the beginning as board members and continue to ensure that a newly realized grid is, not only smart, but green as well. In order to facilitate demand response, increased renewable energy, and electric vehicle consumption, a smart grid is essential. In order to achieve home efficiencies as well as determine where energy loss is occurring and where consumption can be reduced during peak times, a smart grid is essential. In order to reduce greenhouse gases and other pollution from power plants, a smart grid is essential. Therefore, EDF is proud to welcome this next phase of Pecan Street and focus on ensuring that the promises of the smart grid include environmental benefits.

As Pecan Street Inc. Technology Director Bert Haskell noted, there are times when industries need to consort in order to change the world, and now is the time for the clean energy industry to do just that.

Also posted in Grid Modernization / Comments are closed