Like “The Game of Thrones,” at times, it’s hard to determine who the good guys are. The political and regulatory environment (both state and Federal) around the Texas grid is obviously nuanced. Last week, the Department of Energy (DOE) and the Environmental Protection Agency (EPA) even played a part in taking the following measures:
· The EPA issued waivers to allow Texas temporary increase access to gasoline and diesel fuel in certain Texas communities impacted by winter weather.
· The DOE relaxed rules on emissions on February 14th in anticipation of the storm’s approach. (Interestingly enough, our state simultaneously has the highest-emissions grid in the country and leads the nation in wind power.)
The reason for the actions above probably has quite a bit to do with our increased population, thus increased demand, a robust economy, and a governance process that lags the ability to catch up to the growth.
A good friend of mine says, “you don’t ever want to build a church for Easter Sunday.” If you catch his East Texas wisdom, you don’t typically build grid capacity around 50 or 100-year events. Remember, someone pays for every utility expenditure, either the ratepayer through the recovery of costs (in the case of regulated utilities) or shareholders through an operating expense. It’s possible, in this case, there’s a third set of stakeholders: the taxpayers of Texas. Should the decision be for the state to pick up part of the cost?
So how should Texas respond to the recent grid crisis? What are the facts? Who should pay? Here are a few thoughts:
· First, Texas actually ranks highly (6th place out of 51) on the most recent Grid Modernization Index. Pretty good.
· According to the Energy Information Administration, Texas ranks 23rd out of 50 at 12.2 cents per kilowatt-hour in the average cost of power. Not bad.
- We have bad weather in Texas. We should have been prepared for bad weather, and we were clearly not. What might that mean?
- Insulating and/or hardening our critical infrastructure (including gas generation and transmission)
- Better preparing our buildings, neighborhoods, and homes
- Improving our emergency response systems
- Perhaps new critical infrastructure protection standards (NERC CIP) with increased emphasis on physical threats (up to now, the focus has been on cyber threats)
· Fully understanding how complicated a real smart grid can be, ours doesn’t feel very smart. It needs to be more than just smart meters. It means smart transformers and substations, and perhaps residential demand response (which enables consumers to manage consumption better). The technology for instrumentation of transformers (which enables condition-based maintenance) is no longer Star Wars technology, nor is Advanced Distribution Management Systems (ADMS) that enable lights-out reaction to, management of, and recovery from, outages at the sub-station level. Ratepayers will likely shoulder at least some of this cost as utilities will argue that it will provide higher power delivery reliability and reduce their O&M cost over time.
· Renewables are here to stay. They are only part of the current problem. Still, you can’t count on them yet, to participate alongside other generation sources in the stack without combining them with utility-scale storage, which greatly increases the cost. Much of our renewables generation is a long way from the load, making the transmission susceptible to weather conditions. Microgrids are perhaps one answer, combining renewables, combined cycle gas generators, and a storage medium, and located closer to the load. Many hospitals and universities already use microgrids. The capability is already here.
· Why would a utility debate the topic of greater distributed generation? Because they are committing billions of dollars to improve existing generation and transmission now. Distributed energy, in general, is here to stay, but like Houston zoning, it does not appear to be driven by a plan. Utilities aren’t able to plan as effectively for transmission and distribution without knowing where the generation is coming from. Distributed generation includes rooftop solar, which homeowners can use to sell power back to the grid (called “net metering”) or in a consumer home storage device (like a Tesla Powerwall). An added benefit: much of this generation is close to the load.
Before we bend the knee, we have to look at the entirety of governance, programs, and policies (and perhaps perverse incentives) that enabled or failed to prevent this crisis.
This 3-part series served to provide an industry overview and insight into the forces that drive it. As the aftermath of the Texas Winter crisis unfolds, you will be better prepared to judge the appropriateness of the response for yourself.
Have other ideas on how to prevent another Texas grid crisis? Let me know at [email protected], and as always, I welcome your comments and suggestions. Stay warm!