Texas Clean Air Matters

Don’t Be Fooled By Recent Lows: The Texas Energy Crunch Is Still A Big Issue

This commentary originally appeared on EDF’s Energy Exchange blog.

This past month, we experienced refreshing, cool and somewhat wet weather in Texas.  However, those working on energy issues know all too well that this weather change doesn’t mean we have escaped the worst of the “energy crunch.”  As the farmers say: “If you don’t like the weather in Texas, wait ten minutes and it will change.”  Despite cooler temperatures, an unplanned power plant outage during a warm day late last month forced the Electric Reliability Council of Texas (ERCOT) to issue an advisory, demonstrating just how quickly things can change.

At the same time, recent ERCOT reports indicate that reserves will be tight this summer due to an anticipated record level of high energy demand and stunted growth in new electricity resources – thus making conservation notices likely and rolling outages probable.  All of this points to the important role conservation programs, like demand response, can play for ERCOT.  Some ERCOT staff and stakeholders have recognized the importance of demand response, which allow customers to voluntarily reduce electricity use in response to a signal from utilities.  Others have called explicitly for programs that pay customers for reducing energy the same way generators are paid for producing energy, an approach EDF has advocated for several years.

ERCOT and a few retail electric providers already have conservation programs, albeit limited, in pilot phases that compensate customers for their participation.  But in comparison to other regions, Texas lags far behind other states – despite having the highest potential for conservation and clean energy resources in the U.S.  That’s why the three remaining weeks of the legislative session are so important: two critical pieces of legislation that would open up demand response in Texas to meet our electricity reliability goals and drive further market competition are under review.

Senate Bill (SB) 1351 from Senate Business & Commerce Chairman John Carona would require ERCOT to allow customers to participate in all competitive energy markets; the bill passed the Senate earlier this week and is now on its way to the House of Representatives.  SB 1351 is an excellent piece of legislation to propel demand response in Texas, but alone it is not enough to ensure Texas can keep the lights on during the hottest summer days.  A separate bill from Senator Kirk Watson, Senate Bill (SB) 1280, would accomplish just that by requiring ERCOT to secure enough demand response to meet its reliability needs if existing resources fall short; the bill passed unanimously out of the Senate Business & Commerce committee.

These bills will make all the difference this summer and for many summers to come.  The Texas Legislature has the opportunity to ensure that ERCOT and the Public Utility Commission (PUC) have all the necessary tools to avoid rolling blackouts over the next several years as we wait for new energy resources to come online. Read More »

Also posted in Demand Response, Legislation / Comments are closed

Renewables BuyBack Bill Pays Good Money For Clean Energy

This commentary was originally posted on the EDF Energy Exchange blog.

Picture this: You live in Texas, the state with the most solar energy potential in the U.S. Knowing this, you decide to install solar panels on your home’s rooftop because, in Texas, you can lease – rather than buy – the entire solar energy system. The option to lease allows you to take advantage of a low monthly payment that will be offset by the savings on your energy bill, rather than face high upfront investment costs.

Now, while you are at work during the day, your panels are actually putting excess, unused energy back onto the grid, when electricity is most expensive. And, that surplus of energy isn’t just wasted; it is used by your electric company to serve other customers. In most states, electric companies buy this power back at a retail rate. But, in Texas it’s not quite that simple. In order to see any form of pay back, you have to be a lucky customer of one of only three retailers – TXU Energy, Reliant Energy and Green Mountain Energy – that offer “renewable buyback” rates in Texas. If you happen to buy electricity from one of the other 50 retailers serving residential providers across the state, though, you could always switch over to a renewable buyback program. But there is no guarantee that you will be paid a fair market value for the 25+ years your solar energy system is expected to last.

Making a long-term investment to protect against highly-fluctuating, unpredictable electric rates is a difficult decision, and making that decision without knowing whether you are guaranteed fair compensation is nearly impossible. This is one of the key reasons why Texas lags behind the nation in solar adoption. Fortunately, there is a solution in the works. Senate Bill 1239 from state Senator Jose Rodriguez seeks to guarantee homeowners, schools and religious facilities at least a minimum buyback rate based on wholesale market energy prices, which were about 50 percent lower than retail rates in 2011, on average. The bill has a similar impact for rural electric co-operative, municipal and independently-owned utility customers, ensuring that any homeowner, school or religious entity that installs a properly-sized solar energy system will be compensated comparable to the way a fossil fuel power plant is compensated in the wholesale market. Read More »

Also posted in Renewable Energy, Solar / Tagged | Comments are closed

New Thinking Is Critical To Better Manage Water And Electricity Resources In Texas

Central Texas Workshop Discusses Opportunities For Resiliency During Extreme Weather Events

Last week, I attended a regional workshop that focused on adapting to extreme events, sponsored by the U.S. Environmental Protection Agency (EPA), the National Oceanic and Atmospheric Administration, the Water Environment Research Foundation, the Water Research Foundation, Concurrent Technologies Corporation, and NOBLIS. This workshop was the sixth in a series organized around the country to determine what is needed to increase the resilience of water utilities and communities in the face of extreme weather events. While the focus was on water, time and again, electricity was brought into the conversation—the two are closely linked, and in Texas, a state facing shortages of both water and power, this will require some creative thinking on our part.

This workshop focused on Central Texas, in particular our drought. But as the two-day workshop went on, it became clear to the organizers when local water utilities and other stakeholders spoke, that drought was only one extreme event that Texas has had to deal with…and continues to deal with. We are a state of extremes—weather, politics, personalities—and we not only have drought to handle, but also hurricanes, floods, tornadoes, wildfires, and just generally scorching heat. One of the first speakers was John Nielson-Gammon, the State Climatologist based out of Texas A&M University. He confirmed that while these natural phenomena are not new to Texas, we are experiencing more intense weather events. Last year was one of the hottest in Texas since we started recording temperatures, and we are heading into the third year of a pretty gruesome drought. Not being prepared for extreme events to get worse seems pretty foolhardy.

During the workshop, we heard from a variety of speakers from around the Central Texas region, including from the Barton Springs/Edwards Aquifer Conservation District, the Lower Colorado River Authority, rice growers, the University of Texas, the high tech industry, and individuals from Austin, San Antonio, and Bastrop. These people are dealing first hand with the impacts of the extreme events we’ve had in the past few years. They are simultaneously trying to manage the current situation while planning for what the changing climate means in the coming years. It’s a difficult balancing act.

As an outsider to the planning process, I was asked to report on the proceedings of a meeting at the end and to give an overview of my impressions of the workshop. My impressions were as follows:

It is crucial to balance short-term preparedness with long-term resiliency, and neither should be sacrificed at the expense of the other. Planners in Central Texas know how to handle floods, fires, and drought, but the intensity of these natural phenomena will likely increase with the effects of climate change. It’s also essential to ensure that we are protecting our water and electricity needs for the long-term.

There is tension between urban and rural needs. This is not a new concept, and it is particularly tense with regards to water needs. Often the decisions about water and electric needs are made in cities, and city dwellers may think of rural needs only in the abstract. But protecting the quantity of water available for farmers and ranchers is how we feed our urban populations. Some cities in Central Texas are, out of necessity, dealing with this issue. In the wake of the wildfires in Bastrop, planners in that area are taking a closer look at how homes are constructed and how the urban/rural interface affects the ability to provide water for its population and prevent future wildfires. Controlled burns are one way that wildfires are prevented, but you can’t do controlled burns in a subdivision built into a forest. Thinking about developing our communities in more thoughtful ways is critical.

Adapting to our changing climate necessarily includes water, but it also goes beyond water. Emergency preparedness must include ensuring adequate water supplies and electricity. We can envision extreme events in Austin because we’ve had them in the past: fatal flooding, tornadoes, wildfires, drought, and heat waves. These extreme events will likely intensify as climate change advances, and we need to be comprehensive in our planning. We know that we’re facing potential electricity shortages within the next three years, and water supplies are already stressed. We also have to take into consideration whether our current infrastructure can maintain our growing population, especially in the face of future extreme events, and what those events mean in terms of health impacts. Many evacuees from Hurricanes Katrina, Rita and Ike were dehydrated and fell sick, and healthcare workers across the state responded heroically. We should anticipate more vulnerable populations in the wake of extreme events in the future. Read More »

Also posted in Climate Change, Drought, Environmental Protection Agency, Extreme Weather / Comments are closed

Energy Crunch: Saving Energy In Texas Schools Is A Win-Win

The Texas Legislature is back in session, and there will be, as always, a lot of discussion about how to fund schools. The school system in our state seems to be chronically short of funds to meet the demands of our growing state and its children.

But while the state-level politicians discuss, some school districts are taking matters into their own hands where they can. In the summer 2012, the Houston Independent School District (HISD), the seventh largest school district in the U.S. and the state’s largest, hosted a student through the EDF Climate Corps program. The program trains graduate students to find energy savings in their host institutions or companies. The Climate Corps fellow at HISD found several potential projects to help save the district money. For example, HISD has approximately 1,000 temporary buildings. The fellow found that if all the trailer-type temporary buildings’ lighting and wall air conditioning units and box heaters were upgraded and had insulation installed, at an upfront cost of $453,000, the district would realize over $62,000 in annual savings, nearly 700 kilowatt hours in annual electricity savings, and an annual reduction of approximately 400 metric tons of carbon dioxide. And that’s just one project!

The student’s work built on the findings of an audit funded through the State Energy Conservation Office (SECO) in 2007, which estimated that with recommended upgrades, HISD could cut its annual energy costs by $15 million!

Since the 2007 audit was performed, Houston voters have approved two bonds to help upgrade their school district, including one in November 2012. In the last bond vote, they approved, by a margin of nearly 2:1, a $1.89 billion bond to replace and repair 40 schools in HISD. In recent years, HISD has committed to ensuring all new and future buildings meet Leadership in Energy and Environment Design (LEED) standards for green building.

In 2009, the Texas Legislature passed Senate Bill 300, which was signed by Governor Perry. It requires school districts to develop long-term energy plans. It leaves it up to the boards of trustees of the individual school districts to determine if they want to submit the plan to SECO to help finance measures for plan compliance. There is no way to determine which school districts have developed plans or are implementing them. This Legislature could require school districts to report to SECO or could establish some minimum standards for building new school facilities or renovating existing ones.

Nationwide, schools spend more than $6 billion on energy costs, and the US Department of Energy National Renewable Energy Lab estimates that most schools could save about 25 percent of that by implementing smart energy measures.  Those savings could pay 40 million new textbooks, 30,000 new teachers or 1.5 million new computers every year.

Some relatively simple measures such as daylighting (using windows and skylights to bring in natural light) have a double benefit—in addition to saving the average middle school tens of thousands of dollars in energy costs, daylighting technologies are also proven to improve students’ academic performance. One study in North Carolina showed that students who attended daylight schools scored up to 14 percent better on tests than the equivalent non- daylight school students. Smarter energy technologies and conservation measures lead to lower electricity costs, but also to lower maintenance costs, better indoor air quality, and free up money that can be used on other necessities, such as hiring teachers or buying more computers.

There is often an upfront cost to installing these energy efficiency technologies (although many conservation measures, such as turning off vending machine lights require no cost and only save money), but in most cases, school districts are in a good position to take advantage of several financing options. SECO operates the LoanSTAR program, which uses a revolving loan mechanism to fund energy efficiency projects for public buildings, including those in school districts. SECO also operates the Texas Cool Schools grant program, which helps Texas schools lower their operating costs by purchasing new and more energy-efficient heating, ventilation and air conditioning (HVAC) systems.

Performance contracting is another way to finance upfront costs for schools. Under performance contracts, contractors pay the upfront costs, which are recouped through a portion of the resulting savings, and even guarantee net savings for the building owner.

As we start this new Legislative Session in Texas, and parallel debates happen about our impending energy crunch and how to fund schools, doesn’t it make sense to merge these two issues? Help our school districts reduce energy costs (and in the process improve indoor air quality, student performance, and water efficiency) and enable them to spend their money on improving education, and reduce stress on the grid. Don’t the schoolchildren of Texas deserve that?

Also posted in Energy Efficiency, Houston / Comments are closed

NERC Demands Action From ERCOT To Keep The Lights On In Texas

Last week was a busy one in Texas, with the beginning of the 83rd Legislative session attention was focused on incoming lawmakers, both seasoned and freshmen, and the opportunity that only happens every two years to address serious issues in Texas including water scarcity, education, tax issues, and of course energy issues.

So it’s understandable that no one seems to have noticed a strongly worded letter to the Electric Reliability Council of Texas (ERCOT) from the North American Electric Reliability Corporation (NERC) last Monday demanding more action to ensure electric reliability in Texas, and asking ERCOT to report back to NERC by April 30 on additional actions taken.  NERC isn’t some federal boogey man either; it’s a corporation founded by the electric industry to create commonly accepted standards for electric reliability across North America, usually through voluntary compliance.  President Bush’s Energy Policy Act of 2005 gave the corporation “the authority to create and enforce compliance with Reliability Standards,” which is where this letter comes into play.

In their 2012 report, NERC highlighted ERCOT as the only region in North America that was not maintaining adequate electric reserves to meet demand, and with this letter they made it very clear that the actions taken to date have not done enough to mitigate that risk.  In the letter, NERC President Gerry Cauley notes that the PUC and ERCOT are continuing to address energy reliability issues, but finds that “solutions have not yet sufficiently materialized to address NERC’s reserve margin concern.”

Cauley goes on to say that “it is still unclear to us how ERCOT intends to mitigate issues that may arise on the current trajectory and when new resources may be available to meet growing demand.”  So according to the corporation whose membership consists mostly of utilities, grid operators, large and small customers, and electric regulators, the actions that the PUC and ERCOT have taken at this point are not enough to ensure we’ll have reliable electric supply, risking blackouts as soon as this summer.

As lawmakers settle into Austin for the next few months they’ll certainly be paying close attention to this issue, though many have indicated they would prefer that ERCOT and the PUC develop the solutions to this problem.  Cauley’s letter serves as notice that the PUC and ERCOT need to be more aggressive if they want to ensure a reliable supply of power in Texas.  Certainly both agencies are putting serious time and effort into keeping the lights on in Texas, including effort so expand existing demand response programs, but NERC clearly thinks they need to be doing more.

All of this reminds me of the Texas drought: a year ago it was a huge looming crises, but a break in the weather took everyone’s mind off of the drying rivers and lakes, even though they never really recovered.  Lately the drought has been back in the news as Texans realize that we’re basically in the same place that we were in 2011.

No one could accuse ERCOT or the PUC of sitting idly by or pretending this risk isn’t real. However, they have yet to send a strong enough signal to the market to spur investors in demand response or any other resources to develop new projects.  About the only thing that has been done is the extension of the federal production tax credit for wind energy, which has wind developers racing to build new projects in Texas.  The concern is that the solutions they’ve begun work on to date may not get us to where we need to be by this summer.

This letter is a reminder that the energy crunch hasn’t gone away, things are not likely to change in the near term if serious action isn’t taken soon. That is a risk we can’t afford to take given a looming drought, a growing economy and a stagnant electric market.  NERC has asked ERCOT to report to them on their progress by April 30, near the end of our biennial legislative session, and one in which the critical PUC/ERCOT sunset legislation is expected to pass, maybe legislators should consider a similar request.

Also posted in Demand Response, ERCOT / Read 2 Responses

Wind Update: The PTC And A Christmas Day Record

Source: Houston Chronicle

Good news came out of the fiscal cliff ordeal last week when Congress voted to extend the Production Tax Credit (PTC) for renewables, which had expired on January 1. While the 2.2 cent-per-kilowatt-hour credit has only been extended through 2013, it provides some certainty to an industry that was holding its breath. As we’ve discussed previously, while the tax breaks for the oil and gas industry are written into the permanent tax code, the credits for wind and other renewables are not. Created under the Energy Policy Act of 1992, the PTC income tax credit is allowed for the production of electricity from utility-scale wind turbines, geothermal, solar, hydropower, biomass and marine and hydrokinetic renewable energy plants.

While this extension through the year does not appear to provide a great deal of long-term certainty, my colleague Colin Meehan points out that “an important distinction with this extension is that prior to 2013, the tax credits were awarded to facilities operational by the end of 2012. The extension now applies to facilities for which construction begins by the end of 2013.  As a result, this is more like a two-year extension.” Cameron Fredkin, director of project development at Cross Texas, further emphasizes the point by highlighting that “the key provision in the extension is the requirement to begin construction in 2013 versus previous one-year extensions that required wind developers to complete construction and begin operations in 2013. Wind developers in the Panhandle region in the interconnection study process would have had difficulty achieving commercial operations in 2013.”

According to the American Wind Energy Association, “America’s 75,000 workers in wind energy are celebrating over the continuation of policies expected to save up to 37,000 jobs and create far more over time, and to revive business at nearly 500 manufacturing facilities across the country. Half the American jobs in wind energy – 37,000 out of 75,000 – and hundreds of U.S. factories in the supply chain would have been at stake had the PTC been allowed to expire, according to a study by Navigant Consulting.”

As I wrote back in November, many of those projects and jobs that were on the line while Congress delayed are here in Texas. In Amarillo, Walt Hornaday, president of Ceilo Wind Energy, said the tax credit helped “dust off projects [they] had put on the shelf.” Hornaday says he is “impressed wind was in the bill with big-ticket items like Medicaid and the Farm Bill. It used to be wind wouldn’t have a chance to be included. I thought we’d be left out in the cold.” According to The Hill, “The wind industry has floated a phase-out plan for the credit as a way to cement some stability and avoid annual battles to extend the credit. Securing the extension now sets the table for those discussions.”

Andy Geissbuehler, head of Alstom’s North American wind business, a manufacturer of wind turbine equipment, believes that “the extension of the Production Tax Credit for wind power is a positive development for our company, our customers, and the many workers across the country employed directly and indirectly by the wind power industry. As an equipment supplier, we stand ready to provide the equipment that can be manufactured in our Amarillo facility to project developers across North America. We remain optimistic about the long-term market for wind power market in North America, especially now that the U.S. Production Tax Credit has been extended another year.”

One possible casualty of Congress’ stalling is the $5 million, 80,000-square-foot facility left behind by Zarges Aluminum Systems. The German company planned to produce wind tower components, such as ladders and platforms. A spokesman at the time blamed the recession and uncertainty regarding the tax credits as well as low natural gas prices for putting pressure on its customers and the company itself.

This extension comes at a time when wind set a new record in 2012 by installing 44 percent of all new electrical generating capacity in America, according to the Energy Information Administration, leading the electric sector compared with 30 percent for natural gas, and lesser amounts for coal and other sources. Here in Texas, wind set another record, providing 8,638 megawatts (MW) of power on Christmas Day, with 6,600 MW coming from West Texas wind farms and 1,600 MW coming from the Texas coast. This adds up to nearly 26 percent of the system load, which is 117 MW higher than the previous record set in November 2012.

As Kent Saathoff, vice president of grid operations and system planning at the Electric Reliability Grid of Texas (ERCOT), points out, “Unlike traditional power plants, wind power output can vary dramatically over the course of a single day, and even more so over time. With new tools and experience, our operators have learned how to harness every megawatt of power they can when the wind is blowing at high levels like this.

Those new tools and experience are exactly why the PTC is an important component of this emerging energy sector’s ability to grow and innovate, especially as ERCOT reviews an additional 20,000 MW of wind power capacity. This is in addition to the more than 10,000 MW it already has installed, which is the highest amount in the nation.

Also posted in ERCOT, Wind / Comments are closed