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One Lesson from the Texas Energy Crisis: We Need a More Flexible Grid

New federal leadership offers hope for progress toward more flexibility and greater resilience

By Jay Zoellner, CEO of Kiwi Power

Last month, millions of people in Texas were hit with a six-day energy crisis. A historic cold snap triggered a perfect storm of failed supply (mostly from fossil fuel and nuclear power plants, but from some wind resources as well) and historically-high demand that caused huge portions of the Texas grid to fail. Grid operators implemented power cutoffs to avoid more widespread failures and monthslong outages that were just “minutes” away at the peak of the crisis. When we look to solutions, more supply or resilient supply alone are not the answers. Texas’ grid, as well as the other regional grids that cover the U.S., need more flexibility to avoid catastrophic failure and adapt to more frequent storms and other major events. Crucial support for that enhanced flexibility will need to come from the federal government, and the recent arrivals in the Biden administration have shown signs of delivering it.

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In the U.S. power sector, value is already migrating away from the supply of electricity and towards the supply of flexibility, and the federal government has been reinforcing that trend. In 2020, the U.S. Court of Appeals declared that states cannot opt out of the Federal Regulatory Commission’s (FERC) Order 841 provisions, meaning distributed energy storage can participate in wholesale energy markets with the backing of federal regulators. This provision has tremendous potential to enhance grid flexibility by allowing even the smallest energy assets (as small as 100 kW) to participate in the market. The passing of Order 2222 last year expanded on Order 841 by allowing all distributed energy resources to compete in all regional organized wholesale electric markets. This further opened up the flexibility market for increased participation by all stakeholders in the energy transition. 

 

FERC’s ability to regulate the Texas energy market is severely limited by the state’s non-participation of interstate commerce in electricity, but Texas would do well to take some cues from the feds. The lack of a capacity market--a market that pays electricity providers to be on standby to deliver supplemental supply in an emergency--played a role in the breakdown of Texas’ electricity system. The creation of a capacity market in the Electric Reliability Council of Texas’ (ERCOT) jurisdiction would offer fresh incentives for owners and operators of energy storage and other distributed resources to prepare the kind of emergency reserves of electricity supply that could have blunted some of the damage of last week’s crisis. In the lightly-regulated, “energy only” ERCOT electricity market, there is little financial incentive for power suppliers to build extra supply and flexibility into their systems--a capacity market would help change that. But isn’t a panacea; the ability to flex the grid with all distributed resources, load, generation and storage is the ultimate goal for modern, resilient grids. 

 

Updating and improving the current grid infrastructure, paired with flexible market programs, is another requirement for achieving next-generation grid flexibility and resilience that a changing climate necessitates. The Biden administration recognizes the importance of grid improvements and focuses on them in his Infrastructure Plan. In it, Biden foretells building “the next generation of electric grid transmission and distribution” by equipping existing power lines with new technology, leveraging energy storage breakthroughs to help rural cooperatives and utilities, and incorporating clean energy to reach net zero emissions by 2035. Perhaps if federal support and funding were on offer, stakeholders in Texas would have moved more decisively to shore up generation and transmission assets in response to warnings about the devastating impacts of extreme cold. Their reluctance to do so led a Texas resident to file a lawsuit against ERCOT and transmission company American Electric Power Company just days after the crisis began. 

 

Federal initiatives to make electric grids across the country more resilient and reliable are also sprouting in the legislative branch. The recently-formed House Grid Innovation Caucus “provide[s] a forum for discussion of the many challenges facing the grid, and education of Members of Congress and staff about the importance of the electric grid.” It is currently co-chaired by a republican and a democrat, Robert E. Latta (R), from Ohio, and Jerry McNerney (D), from California. Together, they have described the importance of improving grid resilience against storms, describing how Hurricane Sandy–whose destructive impact on energy systems in the Northeast rivaled what we saw in Texas last week–gave rise to advanced technologies such as smart meters and wind-resilient poles, and have noted the need for grid infrastructure to protect against cyberattacks. Most recently, The Grid Resilience for National Security Subcommittee was created under the Department of Energy to further the Electricity Advisory Committee’s goal of “modernizing the nation’s electricity delivery infrastructure.” With this already-demonstrated bipartisan interest in grid flexibility, federal legislation that invests in and supports grid improvements that enhance flexibility have a fighting chance to pass. 

 

The failure of energy systems in Texas demonstrated to the country yet again how critical it is to add more flexibility to electricity grids around the U.S. and the world. Lessons learned from this acute crisis, in combination with a federal government signalling that it will invest in grid flexibility and resilience, portend a new era of energy flexibility that is needed to continue advancing our carbon emission reductions while still providing for the fundamental needs of our population.  As we have seen, the secondary and tertiary effects of power unavailability can have unacceptable consequences.  There is no need to throw the baby out with the bathwater here.  Flexible grid and flexible energy program designs are an intelligent response.

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Thank Jay for the Post!
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Matt Chester's picture
Matt Chester on Mar 4, 2021

The failure of energy systems in Texas demonstrated to the country yet again how critical it is to add more flexibility to electricity grids around the U.S. and the world. 

Unfortunately, the other grids in the U.S./world already seemed to know this, and the real question will be whether Texas learns its own lesson. What action do you see coming from the leaders in Texas to embrace flexibility? Will they loosen their 'no federal involvement, independent grid' stance? Or will they try to find an alternative solution? 

Jay Zoellner's picture
Jay Zoellner on Mar 5, 2021

Big changes are coming to ERCOT as a result; we've already seen multiple resignations and today the ERCOT CEO excused from the role. The economic growth rate in Texas gets larger, and recent events notwithstanding, wind and solar continues its march forward. Ancillary services and the flexibility programmes to balance it all is a must. This will happen rather quickly I predict!

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