Plotting Texas’ energy future in the dark

The State Energy Plan Advisory Committee was created in Senate Bill 3, which the Texas Legislature passed in response to the blackouts during Winter Storm Uri. Its 12 members — appointed by the Governor, Lieutenant Governor and Speaker of the House — represent coal and gas generators (NRG, former Energy Future Holdings/Vistra, and the Lower Colorado River Authority), oil and gas drillers (Apache, Pioneer, and ConocoPhillips), and utilities (Oncor and Pedernales).

Not one consumer representative, independent expert, or non-profit group of any kind has a seat.

They meet next at 9 a.m. CT on Aug. 10 at LCRA headquarters. Again, this secret meeting is posted nowhere.

The widespread assumption in Texas energy circles is that the group will recommend something like a capacity market — in which Texas ratepayers pay billions more for a fleet of expensive, increasingly obsolete coal and gas plants.

It’s also assumed that the group will recommend assigning certain costs to wind and solar generators — despite Texas’ burgeoning leadership in the field and the vital role that renewables are playing right now to counter skyrocketing electricity costs. 

And, considering the group’s members, why wouldn’t they? The state’s largest generators, well represented on the Committee, mostly own very old gas and coal plants that are increasingly vulnerable to breakdowns. A capacity market would guarantee billions in profits for their uncompetitive power plants, while providing no assurance anything new actually gets built.

Texas’ massive, deadly outages in February 2021 were not caused by renewables — that was clear at the time, and it’s even more clear in post-mortem reports produced by the University of Texas at Austin’s Energy Institute and North American Electric Reliability Corporation (NERC). Frozen gas lines and thermal plants were named as the two biggest problems in both studies.

In addition, Texas’ nation-leading clean energy resources have performed well this summer. Wind and solar are extremely complementary in Texas. When wind hits its low point around noon, solar is at its peak. Wind ramps up during the afternoon and evening (particularly coastal wind which has been phenomenal this summer) as solar power is declining. During peak hours on most days, the state’s wind and solar farms delivered enough electricity to make a serious difference, typically 20-25% of a staggering level of demand (driven by extreme heat and drastically under-resourced energy efficiency). There also is now 2.3 GW of storage (up 10x from a year ago), equal to ~3% of peak demand.

Still, the Committee — at least in its one meeting so far — has focused almost entirely on supposed problems caused by renewables. Detractors have cherry-picked data to spotlight low wind levels during non-peak hours while ignoring the powerful combination of wind and solar.

A real state energy plan would show how complementary wind and solar are, how energy efficiency, storage, and demand flexibility can help integrate these low cost resources, and how Texas needs more low-cost, no-emission electricity as part of a comprehensive energy portfolio.

Don’t expect such sensible and popular policy recommendations from the State Energy Planning Advisory Committee.

In May and June, when Texas was already seeing extremely hot weather, the state’s wind farms were cranking out about twice as much electricity as the state normally expects.

That overperformance, which was forecast more than a week in advance, offered a critical window for aging thermal plants to get the maintenance they need to make it through a Texas summer. On June 24, 2021, Michelle Richmond, representing thermal generators, told the PUC that when there’s 15GW of wind online, “that’s a good opportunity for a resource to be taken offline for a couple of days to do maintenance.” There were many 15GW wind days in May and June and coupled with an additional 5GW of solar this summer compared to last, there was ample opportunity for thermal plants to take those maintenance outages.

But the Public Utility Commission of Texas had other ideas. Commissioners instead adopted so-called “conservative operations,” which forced thermal plants to keep running and created excessive reserves available at “all hours regardless of reliability need” (Independent Market Monitor’s State of the Market report, p. 35 of the pdf)

The IMM reported that this policy likely created $1.5-$2b in added costs for consumers over the last year — paid by Texas homeowners, renters, and business owners. The ERCOT market is roughly $20b per year. This is an extra 10% in cost and it meant thermal plants could not go offline for needed planned maintenance.

Fast forward to July 10 and July 13, days on which ERCOT called on Texans to conserve energy in order to avoid rolling blackouts. Both days, thousands of megawatts of thermal power dropped offline — pushing Texas to the brink of blackout.

July 13 was especially dramatic as ERCOT was within roughly 1.4GW of outages. The wheels started to come off on July 11:

• On July 12, CPS Energy lost its Braunig plant, all 412MW. It would remain off until July 20.
• NRG — the company pushing the hardest to raise Texans’ bills to pay more for aging coal and gas plants — had already lost 610MW of coal-fired power from its W.A. Parish plant back in May. On July 12, it lost another 119MW from the Parish plant. By the 13th, another outage pushed total losses from the plant to nearly 1,000MW. The Parish units were out for extended periods during Winter Storm Uri, too.
• Also on July 12, NRG’s Cedar Bayou gas plant lost 377MW of power, and their Limestone coal plant lost another 127MW. They would remain offline through the week.
• The South Texas Electric Cooperative — another entity pushing hard for extra payments for supposedly dispatchable thermal power — lost their coal plant on July 12. It would remain out until July 20 — all 391MW of that reliable power. The stated cause, according to ERCOT records: “tube leak.” This plant, near San Antonio, is among the dirtiest in the country.
• And the LCRA — a state owned utility that has pushed hard for a capacity market, and whose general manager chairs the State Energy Plan Advisory Committee — lost 336MW from its Sam Gideon gas plant at the worst possible time: 1pm on July 13. That loss correlated with ERCOT’s electricity reserves dropping below 3,000MW, which in turn caused price adders — supplemental payments for generators — to increase to their maximum levels. It was also when electricity prices rose to $5,000/MWh, the maximum level allowed.

The same day, wind power performed at 230% of the “low wind” projections in ERCOT’s Seasonal Assessment of Resource Adequacy; in the SARA wind is expected to get 2,874MW on a low wind day, on July 13 at 5pm wind produced 6,752MW..

Despite all of this unreliability and lack of dispatchability, the owners of these old, rickety assets want a bailout and are using the State Energy Plan Advisory Committee to get it. The high prices in the market aren’t enough for them. The 70% average increase in ERCOT electricity customers’ rates — an amount almost certain to go up through the summer and fall — also isn’t enough.

The generators want more. And the Advisory Committee they control appears ready to recommend they get it — following deliberations out of public view with no meeting postings, livestream, or meaningful public input.

Its members don’t want to hear it, but there’s a better way. Texans don’t have to choose between surviving blackouts or paying billions of dollars for old coal and gas plants that are fast becoming obsolete.

The last time Texas created a legislatively mandated energy plan in 2007, Governor Perry’s Competitiveness Council put one together. Their recommendations included:

• Letting the market continue to solve the “what should we build” question — without favoring one type of technology (doing so is “likely to increase costs,” the council found);
• Encouraging energy efficiency and demand response measures, which — then and now — “have a lower cost per kW than any new generation resource”’
• Facilitating market-based demand response and distributed generation;
• Working o “fully integrate wind resources to the extent possible”;
• Encouraging coastal wind generation;
• Creating tax exemptions for solar and carbon sequestration equipment; and
• Offering innovation prizes for large-scale storage projects.

Hopefully some of those recommendations can be incorporated into this new plan — the principles still apply 15 years later.

Unfortunately, the State Energy Planning Advisory Committee seems to know where it’s headed whether the public likes it or not. And they won’t know what the public thinks because they don’t want them around. The economic stakes are too high. The companies represented on the Committee stand to gain many billions of dollars. Consumers, not represented on the Committee, will pay.

If the Committee has its way, the secret process will yield higher bills, increased pollution, and little or no reliability benefit. Texas needs new and independent thinking on reliability and affordability, to prioritize the needs of Texans and Texas businesses over those of generators.