The Texas power grid chief this week laid the groundwork for improving electric reliability following the unprecedented freeze and subsequent blackouts in February during Winter Storm Uri.
Electric Reliability Council of Texas (ERCOT) interim CEO Brad Jones sent the “Roadmap to Improving Grid Reliability” to Gov. Greg Abbott, state legislators and the Public Utility Commission (PUC).
The initiatives are to be used by ERCOT as a “foundation” to enhance the reliability and adequacy of the power grid. Adjustments are to be made as necessary to keep up with “regulatory requirements and the needs of a fast-changing electric grid.”
In response to the report, Abbott said, “The strategies ERCOT has taken, combined with the enhanced enforcement tools provided by the Texas Legislature, will ensure greater stability and reliability of the Texas electric grid.”
Among the 60 actions included in the roadmap, one-third already have been checked off the list. Some of these are market rules changes for power generators aimed at improving outage communications. More than 30 GW of generation went offline during the weeklong February freeze. Other operational changes are set to take place.
ERCOT said it plans to be more “aggressive” in managing the grid. Though details were scarce, the report indicated that outages approvals, resource commitments and various communications measures would be impacted by the changes.
The grid operator also has begun working with the PUC to account for reliability impacts and make necessary adjustments to ensure proper price formation. The PUC came under fire for allowing ERCOT’s systemwide price cap to remain in place for longer than recommended by the independent market monitor. In addition to sky high electricity bills for some Texas residents, multiple bankruptcies and lawsuits followed.
The fallout continues. Cailip Gas Marketing LLC filed a lawsuit earlier this month against Chevron Corp. for nearly $85 million. The lawsuit alleges Chevron was in breach of contract when it either missed gas deliveries or delivered less than what was contractually agreed upon.
Work In Progress
ERCOT still has a lot of work to do. Forty initiatives remain a work in progress to “restore trust and confidence” in the market following the disorder that transpired. For example, ERCOT wants to require all market participants that own or operate generation resources and/or transmission/distribution power lines to verify winter and summer weatherization is in place. Spot-checks already are being conducted at more than 30 power plants before the summer and winter seasons, versus checks that were previously carried out ahead of winter only.
Improvements to ancillary or reliability services also are to be undertaken, while some changes to the market structure also are to be examined.
A final analysis of the generation outages that contributed to the February blackouts is also expected to be completed. An initial draft was completed in April.
The full list of initiatives was based on feedback gathered by ERCOT from Texas electricity customers, city leaders, state leaders, current and former regulators, environmental advocates and market participants.
What Went Wrong?
Also this week, faculty and researchers at the University of Texas at Austin (UT) released what they said could provide “a common basis of fact” related to the impacts experienced across the state’s grid in February. The study, funded in part by the PUC using public and confidential data, was released on Tuesday.
Among the chief findings, UT researchers said failures within the state’s natural gas system, which began in the Permian Basin days prior to ERCOT calling for blackouts, exacerbated electricity issues. While natural gas delivery reached record highs, natural gas production, storage and delivery infrastructure in Texas was stressed to such unprecedented levels that delivery was still well short of the total demand for heating and power generation.
“The natural gas system relies on electricity, and the electrical system relies on gas. Thus, constrained gas limits the ability to generate electricity and constrained electricity limits the ability to supply gas, which in turn further limits the ability to generate power in a vicious circle,” researchers said.
They pointed out that while wind generation provides more than 20% of the state’s electricity needs over the course of the year, grid operators use seasonal expectations for wind’s contribution to generation capacity in reliability planning. As such, ERCOT was expecting wind to provide only about 7% of the state’s power demand during that historic February week. However, it too fell short of expectations.
There were some surprising findings in the study. Researchers found that dozens of facilities, including some deemed as critical, were part of a program whereby power would be cut when called upon.
“It seems inconsistent that critical infrastructure should also voluntarily allow themselves to be turned off when they are needed most,” said report co-author Joshua D. Rhodes, a research associate in mechanical engineering.
Meanwhile, a significant number of facilities did not fill out a short form requesting that they be identified as critical infrastructure, and electricity providers unwittingly shut power off to some gas production and processing facilities.
As for the highly contested price cap, researchers estimated that wholesale electricity costs could have been $5 billion higher on Feb. 18 and 19 if the PUC had not set the cap at $9,000/MWh. However, many producers had trouble reacting to these price incentives given that their operations were not adequately weatherized and gas supplies were curtailed. “In other words, those power plants were not available at any price,” researchers said.
UT researchers acknowledged that ERCOT’s energy-only market design has its advantages, mostly related to lower average costs. However, the February storm “suggests a need to rethink the state’s resilience to avoid future such outcomes.
“Supply and demand-side weatherization, demand response and expanded interstate interconnections are potential solutions Texas should consider to avoid generation losses, reduce demand and tap neighboring states’ capacity,” they said.
About 6% of wells produce 60% of Texas’ gas output, so the number of wells, pipelines and equipment that require winterization to protect systemwide robustness is “relatively small,” according to the report.
But that’s not enough.
The researchers said ERCOT should explore demand-side strategies and investments in energy efficiency, as well as additional regional interconnections. At the same time, the threat of climate change and the clean energy transition underway comes with new issues of grid integration and the need for firm baseload power, storage or demand response.
“While Texas had largely succeeded with that integration of wind in previous years with intelligent forecasting, the Texas freeze revealed that assumptions about the reliability of firm baseload power fueled by natural gas were too optimistic.”
© 2021 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 | ISSN © 1532-1266 |