Will the lights stay on in Texas this summer? With record energy demand and even higher energy demand this week, there are some doubts. What may be a solution? Greater focus should be placed on energy efficiency to reduce near and long-term risk.
Soaring Demand for Power
The Texas electricity market continues to hit record power demand highs. The most recent record high was 73,259 MW on Thursday. Demand is expected to go as high as 75,596 MW some time in the next few days as record temperatures hit the area. This will be close to 6,000 MW higher than average over the last few years, about an 8% increase from the previous year.
More importantly, this is almost 3,000 MW higher than was anticipated April 2018 when ERCOT made its last summer peak demand prediction for the summer of 2018. With a generation capacity of 78,000+ MW ERCOT had planned for a reserve capacity of 5,428 MW during the 2018 summer peak. If the new prediction for this week of a peak demand of 75,529 MW happens, that reserve capacity goes down to 2,588 MW.
The Razor’s Edge
2,500 MW of reserve capacity is not a lot to play with when you start looking at the possible generation outage scenarios, such as natural gas plants have mechanical difficulties or the wind slows down in west Texas. ERCOT looked at a bunch of different scenarios to determine the potential risks that could eat into the reserve margin. When the reserve was north of 5,000 MW ERCOT saw that there were three scenarios where the reserve margin would be used. With the new possible reserve margin, all risk scenarios show inadequate capacity.
When there is inadequate capacity, we may begin to see brown outs and rolling black outs. Some of this threat is limited by demand response and load management programs that allows for voluntary reduction of loads by large energy users. This does not provide a lot of comfort because the demand response and emergency response service only gives us about 2,300 MW of spare capacity.
To sum up, Texas is running on a razor thin amount of reserve power this summer and there is not much that can be done in the short term to increase generation capacity. Due to such low electricity prices in Texas there is no appetite to build new merchant generation plants in Texas. Operators cannot make money in the current market due to such low prices throughout the year. Operators only get paid when they run. ERCOT is not a capacity market where generators get paid to have additional capacity onsite and standing by. After this summer, if peak prices get high enough for long enough period of times, and these higher summer prices appear as if they are here to stay, we may see some entering the market. But don’t hold your breath.
What to do? What to do?
There is one relatively easy solution. It doesn’t get the attention of a lot of people because it is not a shiny solar panel or a big turbine. Typically, most people never see it or know it is there. It is energy efficiency. Unfortunately, the state of Texas is a laggard at energy efficiency.
How Texas Compares to Other States in Regards to Energy Efficiency
I am not saying utilities responsible for energy efficiency programs run bad programs. They are very efficient operators of their efficiency programs. They do good work. The problem is that they don’t have to try to hard. The energy efficiency requirements for utilities is very low in Texas. We have the lowest energy efficiency goals by far across the entire United States. These goals are set by the energy efficiency resource standard (EERS). The state of Texas was the first state to adopt an EERS in 1999. We then quickly became laggards and fell of the pace. The image below, although a couple of years old, shows how far Texas lags behind other states in energy efficiency savings goals by utilities.
Everyone in the ERCOT market pays for energy efficiency. You may see it on your bill as the energy efficiency cost recovery factor (EECRF). You may not have noticed it because it is either bundled with other costs on your bill. Even if it was listed it is such an inconsequential piece of your bill you wouldn’t notice it anyway.
Saving Energy is Cheaper than Making Energy
Energy efficiency continues to be on of the cheapest ways to increase the amount of generation capacity in Texas. Solar and wind have come down in price significantly, that is for certain. However, energy efficiency should not be set aside. The United States wastes a lot of energy. If we waste less through energy efficiency programs, we put less stress on the grid and we will not have to be as concerned as to whether we have enough electricity to keep the lights on.
Energy Efficiency Simply Done
It doesn’t take a lot of time and requires minimal disruption to a business or household. It can be as simple as some behavioral change, such as not having every TV on in the house that no one is watching because they are on their IPad or Nintendo Switch. Other simple things to do would be to buy new high efficiency LED light bulbs ( the light quality is excellent, they last forever and are really not that expensive anymore); adding insulation to your attic and walls; adding weather stripping and caulking to windows and doors; installing ceiling fans and finally, upgrading to a new high efficiency air conditioning system. A lot of options and there are ways to find out what you can do.
A very well kept secret is that utilities provide free residential energy audits. In Texas, call up your utility, not your retail electricity provider (although some are now offering these services) and see who their providers are. We had our house done a few years ago. They came in, did and audit, and on the same day, installed new light builds, added weather stripping, sealed leaks in the A/C duct work and added insulation. You are paying for it with your EECRF so why not take advantage of it. Businesses should do the same thing. There are a large number of energy efficiency programs to take advantage of, but act fast the dollars go very quickly. Which gets me back to one of my pain points, Texas as a state sucks at energy efficiency. Not because of the work of the programs, the utilities do good work, but because of the lack of funding provided to these programs.
Regulators and Legislators Lack Sense of Urgency
Our legislators and regulators have not been convinced that energy efficiency is a priority for the state. The PUCT has actually put a pretty restrictive cap on what utilities can spend on energy efficiency. If the state, marginally increased its energy efficiency goals under the EERS, and just brought Texas up to the state that is second to last, the amount of dollars would be significantly higher. SPEER, a state-wide energy efficiency organization finds that with modest tweaks to our energy efficiency goals, we should expect about a 10% decrease in energy consumption. That is a significant reduction and impact when we are playing so close to the margins.
There is a pretty clear path to reducing the likelihood of blackouts. The 2019 legislative session is coming up. Let your representative know that you don’t want black outs, you see energy efficiency as a simple fix and you want more funds to support it.
More funds would mean more energy efficiency, which means improved reserve margins which means a much lower likelihood of the lights going out in Texas. Plus your house or business will see lower power costs and probably be a lot more comfortable.