Texas Electric Grid

The fuel mix in Texas has shifted faster than in any other state, and whether the electric grid can handle a tough summer could have a big influence on electricity policies far beyond the state’s borders.  Natural gas and renewables provide an ever-larger share of the power managed by the Electric Reliability Council of Texas. But many of the biggest markets in the U.S., including the PJM Interconnection, are heading in the same direction, with cleaner sources of electricity eroding coal’s dominance. … Coal-fired power generators contributed nearly 40 percent of Texas’ power mix a decade ago, but that share has shrunk to 17 percent this year as a spate of money-losing plants retired, squeezed out by cheap, abundant natural gas and one of the nation’s fastest-growing green energy sectors. The retirement of 5,000 MW of power plants in the past year has left the ERCOT power market with a razor-thin reserve margin — less than 11 percent above the expected peak demand — and experts are watching to see if the state that led the nation in power market deregulation can handle the strain of a Texas summer.”

“Unlike other markets around the country, ERCOT offers no long-term capacity market to pay power plants to remain on standby, and NERC warned earlier this year that the power plant retirements there could lead to rolling brownouts when the peak August demand hits the state.

For the state’s power companies, this summer will be a test case of whether the ERCOT market structure is sufficient to ensure a stable and reliable grid. ERCOT is firmly committed to its ‘energy only’ market, which primarily pays generators for only the electricity they can put on the grid at the ever-changing market price. So far the market is holding up. During three days of record demand in June and another in July, ERCOT did not have to invoke even the first of its three-level emergency alert system. … If ERCOT emerges from the summer unscathed it could undercut Energy Secretary Rick Perry’s argument that reliance on gas power poses a risk to national security and grid resilience and that the federal government should bail out struggling coal plants.

John Walley

John Walley

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