ERCOT Abandons Congestion Plan, Pinpoints Key Texas Grid Weaknesses

ERCOT CEO Pablo Vegas told his Board during a planning session this week that his agency will abandon a plan to relieve congestion on a key transmission line due to lack of customer response. Vegas said Tuesday that a planned conservation program has failed to attract significant commitments from big power consumers.

“The contract for capacity that was issued to support summer conditions resulted in a very low submission,” he told the ERCOT board. “It’s clear … we need to modify the approach for developing the next set of demand response capabilities in the ERCOT market.”

The issue at hand high-capacity transmission line designed to carry electricity generated by South Texas wind installations hundreds of miles north to the Dallas/Fort Worth market. During mid-day periods of high demand last summer, the line became congested with too much input, causing ERCOT to have to issue conservation warnings on as many as 11 days in August. The agency’s plan to address that issue was to solicit applications for voluntary conservation by major power users near the congestion point in South Texas for 500 MW of consumption, but the solicitation for bids attracted only three applications, all of which were for less than 10 MW.

Two Critical Grid Weak Spots

The failure of the plan – and the need to devise it to begin with – highlights a pair of key weaknesses in the Texas grid as currently constructed:

• The fact that the construction of new thermal generation capacity in high-demand regions like the DFW market has failed to keep pace with demand growth; and
• The heavy reliance on costly transmission lines to move power generated by wind or solar industrial sites hundreds of miles to those demand centers.

Where wind is concerned, the problem in the state is that the only regions truly fit to host the big industrial sites are in the West Texas/Panhandle region and in deep South Texas, where populations are sparse. Over the first decade of this century, Texas spent $7 billion to build high-capacity transmission lines called the CREZ lines to carry wind-generated power from West Texas to the Houston and DFW markets. That final tab was 700% bigger than initial estimates provided by wind developers. Additional transmission has had to be added along with the more recent build-out of wind generation in South Texas.

The obsession by the state’s policymakers and regulators to pack the grid with intermittent and often unpredictable wind and solar at the expense of encouraging the installation of additional thermal or nuclear capacity has resulted in an increasingly unstable grid that requires ERCOT to often invoke novel plans like this one. It didn’t get a lot of news coverage, but this past winter, ERCOT even resorted to the extreme measure of trying to convince owners of mothballed coal-fired generation plants to reopen them as part of a plan to avoid blackouts during a major winter storm event.

Help Is On The Way

San Antonio-based CPS is currently in the process of upgrading the transmission line that caused the near-crisis situations last summer, but the anticipated completion date of that project is still three years away. As I reported here last week, help in the arena of new thermal capacity is also on the way after the new Texas Energy Fund to incentivize development of more natural gas generation attracted an overwhelming response from generation companies. But those projects will also take years to plan and build.

Looking out farther into the future, help could also be on the way in the form of modular nuclear power, after Dallas-based Natura Resources received the good news from the Nuclear Regulatory Commission that a construction permit for its planned molten salt reactor to be sited on the campus of Abilene Christian University (ACU) will be approved in September.

In a recent interview, Natura CEO Doug Robison told me the project, which is a demonstration project developed in conjunction with ACU, the University of Texas, Texas A&M University, and the Georgia Institute of Technology, has an anticipated startup date in 2027. The eventual success of that project could spur development of an array of such modular reactors – Robison says the reactor itself is roughly the size of a home refrigerator – that have the advantage of being installed in the middle of major demand centers rather than hundreds of miles distant.

The Bottom Line

Unfortunately, while this set of prospects for a more stable grid to come remain years away from reality, Mr. Vegas and his grid managers and planners at ERCOT will continue to have to devise novel ways to keep power flowing to a rapidly growing array of big demand centers. It’s a tough job, but somebody has to do it.