The latest directive by Texas Gov. Greg Abbott aimed at ensuring electric reliability appears to be once again pitting proponents of fossil fuels against those who see renewables as an integral part of the energy landscape.
In a letter sent to the Texas Public Utility Commission (PUC) last week, Abbott said the objective of the actions he outlined is to “ensure that all Texans have access to reliable, safe and affordable power, and that this task is achieved in the quickest possible way.”
The orders are the latest in a series of sweeping changes made by regulators to improve the troubled Texas power grid. The Electric Reliability Council of Texas (ERCOT) implemented widespread blackouts across the state amid an unprecedented deep freeze in February — and narrowly avoided them again in the spring — when demand soared to much higher levels than projected by the grid operator and power generation fell short of expectations. At the height of the winter storm, more than 52,000 MW of power generation was offline.
[Is the Current Natural Gas Price Spike Here to Stay? Tune in to NGI’s Hub & Flow podcast to listen to NGI’s Christopher Lenton speak with global energy expert Nikos Tsafos about the globalization of natural gas, soaring gas prices, geopolitical implications of LNG and how Mexico’s natural gas market must prepare for the volatility ahead. ]
However, Peter Kelly Detwiler, principal consultant at North Bridge Energy Consulting, told NGI that the governor’s directives, which include requiring power generators to pay up if they cannot guarantee their availability, is a “poorly conceived” approach.
A former senior executive at Constellation, an Exelon company, Detwiler said he agrees that some tweaking needs to be done to ensure the readiness of power supplies. However, renewable energy providers should not be penalized as a means for paying for reliability, especially as the lowest-cost provider of electricity.
“It doesn’t seem like a frank conversation about what’s happening on the ground,” Detwiler said.
A more reasonable approach could include more storage such as batteries, as well as more flexible natural gas resources. Taking another look at the current energy-only market design within the ERCOT also may be warranted.
There are “great aspects” of the current market, “but it’s still a work in progress. The facts on the ground change every day,” Detwiler said. The market should be responsive to those changes in a “technologically innovative way. It’s not about being wrong. It’s about being adaptive to change.”
To that end, Johanna Neumann, senior director at Environment America, said renewables have an important role in Texas’ energy future. Wind already does, coming in only 5 percentage points below combined cycle gas in energy production so far this year within the ERCOT territory, which encompasses all but about 10% of Texas. Coal rounds out the top three in energy production.
“Saddling renewable sources with reliability fees when they are adding much-needed power to the grid, often at times of peak demand when it’s needed most, will tether Texas to the flawed energy system of the past,” she said.
Instead of entertaining “misguided attacks” to make wind and solar more expensive for Texans, Neumann said regulators should commit themselves to the “much-needed work” of cutting energy waste. Regulators also should invest in demand response and “build a modern electric grid that takes advantage of the many benefits renewable energy technologies can bring to the Lone Star State.”
Nevertheless, the Texas Independent Producers & Royalty Owners Association (TIPRO) said accountability is important when it comes to reliability. The organization commended the governor for his “leadership and commitment” to addressing power supply adequacy in the state.
“Having a level playing field is important, which includes accountability from non-renewable and renewable energy generators,” said TIPRO President Ed Longanecker. “If minimum expectations are not met by some, it’s logical to hold those providers responsible. What that ultimately looks like is up to policymakers, and we look forward to being a part of that process.”
In addition to the allocation of reliability costs, Abbott ordered ERCOT to establish a maintenance schedule for natural gas, coal, nuclear and other non-renewable electricity generators to ensure that there is always an adequate supply of power on the grid to maintain reliable electric service. “This will help prevent an artificial shortage of power.”
The governor also directed the PUC to streamline incentives within ERCOT to foster the development and maintenance of adequate and reliable sources of power, like natural gas, coal and nuclear power. The goal of this strategy, he said, is to ensure that Texas has additional and more reliable power generation capacity.
Texas Oil & Gas Association President Todd Staples agreed that Texas should focus on ensuring reliable energy is available. It also should continue to evaluate the energy mix to ensure the right assets are in place to meet power needs throughout the year and during emergencies.
“Balancing reliability with cost-competitiveness for residential and industrial consumers is key to Texas’ future success,” he said.
Longanecker said data clearly suggests the need for more sources of reliable energy supply, including natural gas, to meet growing, and at times unexpected, demand. Noting that Texas consumes more energy than any other state, the increased use of “reliable, dispatchable sources of energy at all times” should be encouraged “to address some of the challenges we may experience with others, including intermittency issues.
“If we don’t get this right, the consequences could be severe.”
© 2021 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 | ISSN © 1532-1266 |