Ed’s note: A new power dynamic for Texas


For those of us over a certain age, the name Texas conjures up images of Stetsons, Dallas (the TV show, not the city) and oil! Lots and lots of oil.

So it may surprise you to learn that Texas is one of the States which has experienced the largest growth in renewable energy generation, with Texas leading the nation in wind-powered generation. The State produced one-fourth of all the US wind-powered electricity in 2017 and wind turbines in Texas have produced more electricity than both of the state’s nuclear power plants since 2014. 

And this is for the State the produces the most electricity in the US.

With over 15,000 miles of high voltage transmission lines and almost 11,000 miles of low voltage lines, one of the biggest challenges for utilities operating in Texas is to ensure grid infrastructure is suitably robust to withstand the Texan weather. The leading cause of outages in Texas has been due to weather – thunderstorms, hurricanes, flash floods or tornadoes – and falling trees, followed by equipment faults and human error.[i] As a result, utilities are intensifying their efforts to increase vegetation management in efforts to manage the causes of outages. 

Speaking to the Longview News Journal, Carey Sullivan, communications director for Southwestern Electric Power said the company is working to address with more money and an increased focus on vegetation management.

“The number of outages has increased in 2019, and it’s due to two factors,” Sullivan said. “The first is the number of minor storms we’ve had, and the second is excessive rainfall.”  

Because rainfall and wind impacts the stability of tree roots in the ground and results in increased vegetation growth, Sullivan further told reporters: “We’re doing all we can do to make our tree trimming dollars go farther,” Sullivan said, adding that SWEPCO’s tree trimming budget for distribution lines that serve people’s homes and businesses in Texas is $10 million a year — up $2 million from 2016.

Add price increases

Over the summer, wholesale electricity prices in Texas peaked at $6,500MWh, a reflection on the triple-digit temperatures that strained capacity and triggered price adders that were boosted by Texas regulators earlier this year. 

Earlier this year, the Public Utility Commission agreed to increase the amount that can be charged for producing power during peak demand periods. Once operating reserves dip below 2,000MW, price adders increase the price of power to $9,000MW – the highest allowed in Texas.

The Public Utility Commission agreed earlier this year, to increase the amount generators could charge for producing power during periods of peak demand. If operating reserves dip below 2,000 megawatts of operating reserves the price adders would increase the price of power to $9,000 per megawatt-hour, the highest price allowed in Texas.

Generation companies had previously lobbied for the change, reportedly saying that there was no incentive to build new power plants or upgrade old ones if there was no upward price adjustment in the operating reserve demand curve.

Texas set a new record for power when demand reached 74,531MW on Monday 12 August according to the state’s grid manager the Electric Reliability Council of Texas.

Then the need for resilience

Texas Senate Bill 1012 states: “(d) Subsection (b) does not require a municipally owned utility or an electric cooperative that owns or operates electric energy storage equipment or facilities described by Subsection (a) to register as a power generation company under Section 39.351(a).”
This means that the role of batter storage may change significantly in that State, despite generation companies asserting that the utilisation of storage is akin to generation and would impact on wholesale markets and pricing.
Early last year Texas regulators rejected TDU AEP Texas’ request to own two battery storage systems. 

Because the Texan power market is exempt from federal jurisdiction, it likewise does not fall under FERC order 841, which aims to remove barriers to the participation of energy storage in power markets.

What does this all mean?

For a market which is now heavily reliant on renewable energy and which has a goal to reduce carbon emissions by almost 39%, Texas is experiencing some of the duality now so much a part of the modern power grid. The contrasts between intermittent renewable energy and a need to move away from base-load coal to gas and/or nuclear; between a reliable, secure power supply at a reasonable price, that takes the input of prosumers and renewable energy generators into account with adequate storage and balancing, that has to balance the vagaries of increasingly intense weather with an expectations that the lights will stay on at all costs.

How the utilities in Texas and other parts of the US manage these and other expectations will be a balancing act between technology, skilled staff, supply and demand and rapid responses to challenges? How do you anticipate they, and others, can manage the contrasting needs and expectations while continuing to provide cost-effective, safe and reliable energy supply?

Wishing you a powerful week!


PS:  Our first edition of 2020 will be focused on US markets, and will be distributed to all the delegates and attendees at the upcoming DISTRIBUTECH 2020 due to be held in San Antonio, Texas.

If you wish to bring attention to your company positioning, focus and leadership position within the US market, this is an opportunity not to be missed. Contact Errol Bryce today to find out how you can be front and centre in San Antonio, speaking directly to your chosen utility audience!