BY KAREN GRAHAM
JUL 26, 2018
Homes and businesses in Texas last week experienced record high electricity use, but the grid held up without any major problems, a testament to good grid management and the increasing use of wind power.
ERCOT, the electrical grid that serves most of Texas hit a record all-time demand for electricity last Thursday, topping out at 73,259 megawatts between 4 p.m. and 5 p.m. The record may not stand for long, as hot conditions continue.
The Electric Reliability Council of Texas (ERCOT) says the electrical grid actually broke the record for power demand three times in the last week, and the state's electrical grid managed the heat without any major disruptions.
The success of the grid in coping with such high electrical demand is a story all by itself, but it is also a success story for the use of wind power, a renewable energy source, and a success story for good management of a well -run electrical grid.
Coal-fired power plants were not needed
Texas closed down three coal-fired power plants earlier this year, and many people worried about the grid's thinning power generation reserves. This is basically the backup power generation usually reserved for coal-fired power plants when generation margins are low due to peak demand.
Rolling blackouts during high demand heat waves are a problem and give coal-fired power plants the ammunition to make their case for keeping these fossil fuel facilities going, but the grid handled the heat just fine without the coal plants.
“Even if we did have blackouts, it doesn’t mean we ran out of power plants,” says Joshua Rhodes, a research fellow at the Energy Institute at UT Austin. “Most of the blackouts we have [are] actually [caused by] other infrastructure going down, like transformers and power lines.”
A deregulated power grid does work
The ERCOT grid is an energy-only market, which, unlike capacity markets, pays power plants only when they produce energy. They manage the grid for 24 million Texas customers, representing about 90 percent of the state’s electric load.
The biggest power utilities in Texas include units of Sempra Energy, CenterPoint Energy Inc and American Electric Power Co Inc. But with a smaller-than-normal reserve margin and the record demand during the heatwave last week, people expected their electrical costs to go through the roof. They didn't do that.
“Prices haven’t gotten as high as most energy analysts and market participants would like them,” Rhodes says. The deregulated Texas grid needs electricity to cost a certain amount to convince investors to build and operate power plants. If prices aren’t high enough, it could discourage that.
The ERCOT market is lean, and utilities are not guaranteed to make a fortune. But with natural gas prices staying low, and wind energy becoming a bigger part of the energy mix, "There still is the incentive to connect to the grid," Rhodes says.
Michael Webber is an engineering professor who is deputy director of the Energy Institute at the University of Texas at Austin. He says ERCOT and its planning for the heat can serve as a model. The council said in April that it expected record-breaking demand and laid out the steps it would use to keep the system running under high stress.
And one strategy grid operators use is to set a reserve margin. ERCOT set theirs at 11 percent. ERCOT’s power mix last month included the following: Natural gas was the leader with 47 percent (including combined-cycle gas plants and single-cycle ones), followed by coal with 23 percent, wind with 19 percent and nuclear with 9 percent. Solar was way down the list at 0.98 percent.
An argument for more renewable sources
If the state makes it through the summer without blackouts, then supporters of wind energy will have a reliability argument that they can make, in addition to the economic one that they already have, says Webber.
Basically, ERCOT is a great example of how to run a grid - Have a plan and contingency plans as a backup. Energy-only markets are designed to use power plants more efficiently, and that means that lower average prices can sometimes come at the cost of higher high prices, like during the heat wave last week. But it all evens out to cheaper electricity prices.