{"id":2148,"date":"2012-01-12T22:48:15","date_gmt":"2012-01-12T22:48:15","guid":{"rendered":"http:\/\/blogs.edf.org\/energyexchange\/?p=2148"},"modified":"2015-12-21T12:46:11","modified_gmt":"2015-12-21T18:46:11","slug":"demand-response-a-key-component-in-texas-electricity-market-why-arent-we-taking-advantage-of-it","status":"publish","type":"post","link":"https:\/\/blogs.edf.org\/energyexchange\/2012\/01\/12\/demand-response-a-key-component-in-texas-electricity-market-why-arent-we-taking-advantage-of-it\/","title":{"rendered":"Demand Response: A Key Component In Texas\u2019 Electricity Market. Why Isn’t The State Taking Advantage Of It?"},"content":{"rendered":"
\n

On Monday, the Texas Senate Business and Commerce Committee took up the critical issue<\/a> of the impact of extreme drought conditions on electric generation capacity and state officials\u2019 plans to respond to those risks. \u00a0\u00a0A number of important issues and policy solutions were raised, from on-bill financing of energy efficiency<\/a> to renewable energy to send the right \u2018market signals\u2019 to incentivize the construction of new power plants.\u00a0 Public Utility Commission (PUC) Chair Donna Nelson singled out, in particular, the state\u2019s energy efficiency and renewable energy goals.\u00a0 These policies have helped reduce pollution, saved customers money and have the added benefit of reducing our dependence on water for electricity production.<\/p>\n

Another important part of the solution discussed was raised by a number of panelists: demand response (aka load management).\u00a0 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.\u00a0 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.\u00a0<\/p>\n

The Texas Capacity Crunch \u2013 Obstacles and Opportunities
\n<\/strong>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.\u00a0 State Climatologist, Perry appointee John Nielsen-Gammon says, \u201cStatistically we are more likely to see a third year of drought.\u201d\u00a0<\/p>\n<\/div>\n

At the same time, ERCOT faces a challenging capacity crunch caused largely by \u201clow natural gas prices, an influx of low marginal cost wind power, increased wholesale market efficiencies, low wholesale power prices, tight credit markets\u201d and other issues according to TXU Energy<\/a>.\u00a0 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.<\/p>\n

Demand Response \u2013 Low Cost, Zero Water Resource
\n<\/strong>Fortunately Texas has ample resources to meet these needs with demand response.\u00a0 If allowed to participate fully in Texas\u2019 energy markets as it does in other regions, demand response can benefit customers and increase grid reliability.\u00a0 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.\u00a0<\/p>\n