Are energy planners in Texas taking climate change seriously enough? The question pertains not to mitigation but rather to long-term resilience and adaptation of the state’s power generation portfolio. The state is doing OK in decarbonizing the grid through its record level wind investment and growing solar portfolio. Across the US, on a regular basis, new announcements are made of record-setting production and growth in the renewable energy sector. Just last week, Friday the 16th, the Southwest Power Pool set a record with over 60% of its grid being powered by wind. We see solar installations going in at a record pace surpassing 2015 installations, with 10.6 billion watts of installed capacity. 2016 still remains the highest year for solar installations at 15.1 billion watts.
Decarbonizing is not enough
Further, like the rest of the country, the state is realizing ongoing coal power plant retirements, with 5 GW coming offline in the near term. All of this activity has lessened the carbon intensity of the Texas grid and helps reduce the risk of price hikes if there is ever a carbon tax or carbon fee and dividend passed.
So Texas is to some degree pulling its weight in decarbonizing its grid. It could be doing significantly more to reduce energy consumption. For example, we are dead last with our energy efficiency resource standard goals. We have the lowest goals in the nation, by a lot. Other than that and also the significant lack of incentives and rebates across most of ERCOT’s territory to deploy distributed energy resources, particularly rooftop solar, we are doing OK.
OK, but we could be doing better if not for the lack of action on implementing battery storage into the market. Although I do hear that we should expect the PUCT to be making battery storage a focus of theirs in the next few months. That is good news for all of our decarbonizing efforts, whether rooftop or utility scale.
Where we are lacking, and where much of the country is lacking, is moving our energy planning from climate mitigation efforts to climate adaptation. As I mentioned, the state is reducing its climate intensity to some degree, with greater deployment of renewables and coal-fired retirements. All market driven.
What we are not considering with our new and future generation assets is to what degree they are going to be impacted by a rapidly changing climate. It is true steps are being taken on the transmission and distribution side to harden the grid and improve grid resilience. Hurricane Harvey, although highlighting where we are in need of improvement, did not cause the damage that could have occurred if we had not already started to deploy smart grid and grid hardening assets throughout the transmission and distribution system.
The power development that is occurring now, primarily wind, solar and natural gas are being developed using weather models and market information that does not take into account the near and mid-term impact of climate change. Climate models are finding that in the next few decades there will be changes in cloud coverage and wind patterns. There is also a higher likelihood of long-term drought across the state. This does not include the increased probability of more intense hurricanes and other severe weather events.
Market is Short-sighted
Have our energy planners thought about what the grid would like if there is more cloud coverage or the wind becomes less predictable? The market is largely determining the generation portfolio for ERCOT. This is great in the short-term, we get the most economical generation built. Currently, in the ERCOT Generation Interconnection Status report, there are over 67 GW of power generation systems under study to potentially connect to the grid. 81% of this is solar or wind power generation, with the remainder natural gas. Of course, not all of this is going to come online but it demonstrates the direction we are going in the development of the future grid for Texas. This is great news for emissions. Having such a large proportion of the new generation systems being renewables will further reduce the carbon intensity of the Texas grid and reduce overall emissions. There is a very large assumption here in regards to our future grid. The assumption is that the weather is going to continue to be how it has been. It is anticipated the wind patterns will remain predictable and similar to what they are now, as well as cloud cover. It is also assumed that water will be available to cool the large proportion of our power that will continue to come from water-cooled natural gas power systems.
The question here is whether we are doing enough to mitigate future climate risks to our power generation systems. Specific to future water risks, there have been studies that demonstrate we would be in a bind if the state had another 2011 style drought. Which is true, but these studies do not seriously consider future climate scenarios to provide recommendations on how to mitigate this risk. Largely, our current energy planning process does not do enough to mitigate risk. Much of this lack of foresight is due to state leaders that do not see climate change as real. So there is no effort to mitigate something that they feel is not a risk. Also, as I said earlier, our generation portfolio development is largely market driven based on lowest cost generation resources. It does not take into account whether these plants will be able to operate as expected in the next 5, 10, 15, 20+ years.
Solutions for Energy Planning
What are some solutions to mitigate climate risk? First, we need to start using regional climate models in our energy planning. Further, with these climate models, we need to deploy new decision frameworks, possibly a robust decision-making framework that allows for improved decision making under deep uncertainty. Another approach would be a multi-criteria decision analysis framework which is already being deployed by some energy planners, mainly in Europe. With these frameworks, we need to start looking at our technology options. For example, it is key that we look for ways to increase the opportunity for battery storage to participate as a generation resource, as well as support transmission and distribution. We should further support the deployment of combined heat and power or small natural gas gensets. (Enchanted Rock has an interesting model that should be considered). We should also look to deploy and/or convert large natural gas plants to hybrid cooling or air-cooling. Finally, to reduce impacts of cloud coverage, we should facilitate greater adoption of distributed solar for residential and commercial rooftops. We see some interesting distributed solar options being supported by new blockchain technology facilitating peer-to-peer selling.