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The Danger of Overzealous Reliance on Intermittent Renewable Resources (IRR)

© 2017 Bloomberg Finance LP

Let me begin with full disclosure, I recently left my job at ERCOT for another opportunity. I have no ill will towards anyone there, and this article is based solely on my knowledge of decisions made during my time there. 

With that being said...

The Electric Reliability Council of Texas (ERCOT) experienced what no Independent System Operator wants to deal with, not once but twice over the course of a single week. Though the cause is largely blamed on the state experiencing a heatwave, is that REALLY what led to two Energy Emergency Alert (EEA) level 1 conditions in a single week?

The problem with blaming the heat for this condition is that it ignores that fact that decisions were made to retire over 6000 MW of generation over the last two years in the face of a growing load profile and delayed IRR construction projects. System Operations personnel have been concerned with this issue for some time, and in an interview with Chron.com (2019) NRG CEO Mauricio Gutierrez called ERCOT to the carpet for being "too optimistic" with their resource availability projections after a May price spike revealed the true condition of resource availability. 

Prior to the two August 2019 events, ERCOT's last EEA condition was declared in February of 2011. This event resulted in rolling blackouts from firm load shedding to prevent the interconnection from going into a "blackout" condition. Since that time, ERCOT has approved the retirement of some of its largest baseload resources in favor of building more IRR resources. This has shown positive impacts at times, as the ISO has reported instantaneous wind penetration of over 50% multiple times. 

Still, the fact of the matter is Texas is growing in residential and commercial demand as the population of the state continues to boom. Hot and Cold spells will only wreak havoc on the grid, in the presence of resource inadequacy. Those two factors are constant and one can safely assume neither will go down anytime soon; as such, is retiring more generation really a good idea? As Gutierrez pointed out, "Less than 50 percent of the renewable power projects included in ERCOT’s reports have been completed," suggesting ERCOT planners jumped the gun in their projections of IRR availability.

In addition to planning shortfalls, it should also be noted that wind resources available on both days fell short of their projections, furthering the need for a discussion on what constitutes an adequate mixture of resources with existing technologies. What's certain though, is that retiring fossil fuel generation in favor of IRR's is not the fix everyone hopes it will be. As reported by Energy Voice (2019), generation prices across the interconnection went up as much as 36,000%, suggesting ERCOT's dispatch engine was looking to get MW's from any and every source available, and there were little to no extra MW's to be found; so much so that prices eventually went up to $9000 plus as reserve levels dropped. 

Ultimately, there are far more factors at hand than a heatwave and in reality ERCOT and other ISO's need to take a hard look at their planning processes to identify shortfalls and ensure plans are made in the most conservative manner possible. 

In closing...I am writing this on 8/20/19, and according to the graph below taken from the ERCOT website, it appears the interconnection is headed for another EEA day. 

References:

Energy Voice. (2019). Extreme heat propels electricity demand in Texas to all-time high - News for the Oil and Gas Sector. [online] Available at: https://www.energyvoice.com/otherenergy/205419/extreme-heat-propels-elec... [Accessed 20 Aug. 2019].

Houston Chronicle. (2019). NRG CEO Gutierrez says ERCOT overstates generation capacity. [online] Available at: https://www.chron.com/business/energy/article/NRG-CEO-Gutierrez-says-ERC... [Accessed 20 Aug. 2019].

 

 

 

Joshua Aldridge's picture

Thank Joshua for the Post!

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Matt Chester's picture
Matt Chester on Aug 21, 2019 8:49 pm GMT

Thanks for sharing, Joshua.

Ultimately, there are far more factors at hand than a heatwave and in reality ERCOT and other ISO's need to take a hard look at their planning processes to identify shortfalls and ensure plans are made in the most conservative manner possible. 

In particular-- the heat wave was of course bad, but not on the level that would be unthinkable to plan for. Resources certainly need to take into account the extreme examples and build around that

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