Securing the Grid with Words versus Watts

Proposed dispatchability requirement for new energy projects misses the mark

The conversation continues about how best to secure the state’s electrical grid and manage growing demand. At a hearing Tuesday morning, the Senate Business and Commerce hearing heard invited and public testimony on SB 388.

Bill sponsor and co-chair of the Senate Business and Commerce Committee Senator Phil King explained the bill:

Existing law specifies that 50% of the ERCOT portfolio must be composed of natural gas generation. No action has been taken on this requirement so far because natural gas currently occupies more than 50% of our portfolio. However, according to Senator King, recent federal clean energy incentives have created a situation where more than 80% of the projects currently in the interconnection queue are solar and battery storage, which would threaten the stability of the grid. In response, he proposed SB 388, which would change the language of that existing 50% requirement from “natural gas” to “dispatchable.”

Dispatchable generation is generation that can be operated continuously under human control. Renewables are classified as “intermittent” sources of electricity, because renewables depend on an intermittent resource like the sun or the wind.

A third kind of energy, sometimes called “nontraditional” forms of generation, includes things that are primarily under human control, but are not fossil fuels. These nontraditional sources are things like geothermal energy and nuclear.

So it would appear that one possibility is that SB 188 opens up that 50% to non-traditional forms of energy generation.

But that is not what this bill does, according to Senator Phil King’s opening remarks.

Senator King explained that the 50% requirement would be applied not to the whole ERCOT portfolio, but rather to each new project seeking to be interconnected onto the ERCOT grid. Projects which do not meet the 50% dispatchable requirement would be required to purchase credits from projects which have excess dispatchable energy credits.

For example, if a new natural gas generator was built and wanted to connect 1000 MW to the grid, they would have 500 MW in “dispatchable energy credits.” If a renewable energy operator wanted to build a wind farm capable of generating 1000 MW, they would need to purchase 500 MW in dispatchable energy credits from the natural gas operator in order to be in compliance with SB 388.

Although battery storage can function on the grid in a way similar to dispatchable resources, Senator King said that batteries would be considered dispatchable under SB 388, but since they are not able to operate for the same length of time as thermal power plants, their dispatchable credit value would be downgraded.

In public testimony Adrian Shelley from Public Citizen argued that building new supply is not the only way to keep the grid stable. SB 388 does nothing to improve things on the demand side. Improvements like improved energy efficiency in buildings and homes, demand response programs, and distributed generation could be done faster and less expensively than adding new thermal generation. A better approach would be to determine a minimum number of megawatts required from dispatchable generation, considered in the context of the whole portfolio, and then to work toward that goal. SB 388 adds needless complication to the energy market that will increase prices and slow innovation.

Cyrus Reed, from the Lone Star chapter of the Sierra Club, testified that this weekend, Saturday over 50% of our electricity came from solar, and on Sunday 75% of our generation was from solar. He joined others in calling for a megawatt goal for dispatchable generation rather than an arbitrary required ratio of renewable to dispatchable. SB 388 unnecessarily pits energy producers against each other in a time when we need an all of the above energy solution to meet the state’s growing needs.

One big question remains about the bill sponsor’s primary motivation for filing SB 388: Did federal clean energy subsidies really create a situation where there is too much new development of renewable energy?

It is true that 80% of the projects currently on the ERCOT interconnection queue are solar and battery storage. We need these new sources of electricity as the state’s demand continues to grow. Solar and battery storage require significantly less time to come online and are cleaner and cheaper to operate. Growth in renewable energy has created numerous jobs in the state and rural landowners and communities have seen billions of dollars of economic benefit from the renewable energy industry.

We have seen renewables save the day on multiple occasions when extreme heat or cold threatens to cause demand for electricity to exceed supply. That means that increased renewable generation has made the grid more stable, not less.

One of the biggest drivers of grid instability in Texas wasn’t even covered in today’s hearing on SB 388: climate change. A recent Climate Central study found that 80% of large-scale power outages in the US are caused by extreme weather. And the frequency of weather-driven power outages is increasing. “The nation’s electrical grid wasn't built for the present-day climate.”

The state that was found to have the most weather-related outages in the US? Texas.

Source: Climate Central

Requiring an arbitrary 50% ratio of renewable and dispatchable generation for new projects complicates an already complicated energy market and does nothing to improve reliability. Simply adding more thermal generation to the grid fails to make the grid more stable, contributes to worsening extreme weather conditions into the future, doesn’t address transmission challenges or the need for distributed generation, and costs more for consumers.