"As we move from a supply side system where it was just vertically integrated utilities, and now it's generators and reps, gentailers as we call them, are providing resources, the lines between what a utility does and what consumer does are being blurred. The transmission and distribution systems are being blurred, as consumers become generators of power and put that back on the system. We have to account for that. […]The demand side are suppliers now. We want to push for them, we want their megawatts as part of the market.”
-- Texas PUC Commissioner Jimmy Glotfelty - 12/02/21 Remarks, Texas PUC, cited in ERCOT VPP Workshop Materials: https://www.ercot.com/files/docs/2022/05/31/02.%20%20Tesla%20Presentation_OBDRR041%20VPP%20May%2031%202022%20(1).pptx
In May 2022, I was sitting at in a conference room with a colleague and friend, James McGinniss, the CEO of David Energy, at his offices in Brooklyn, New York, prepping to run the first workshop that ERCOT had ever hosted on the concept of #VirtualPowerPlants. (That narrative, we brought up many times in my recent podcast with James for the DER Task Force). At that time, I called for the workshop and circulated a note via the ERCOT stakeholder committee list serv, to socialize with the market a public data set - available on the PUC Texas Website Project 51603 https://interchange.puc.texas.gov/Documents/51603_40_1215791.PDF - outlining the results of 60 + Tesla Powerwall customers participating in a demonstration project that allowed ERCOT technical staff to see responses from residential batteries following basepoints from ERCOT SCED while exporting power to the precise technical standard ERCOT requires to qualify non-residential, front-of-the-meter storage and generators. The Workshop Deck Slide 9 is pictured here:
The gist of the effort was to find a market design construct that could fit these sub 1 MW batteries, capable of exporting their reserve energy stores as a valuable grid capacity product in an aggregation that provided seamless response and helped the grid with its first and subsequent lines of defense against outage-prone conditions. When the rubber hit the road on the public proceeding OBDRR041 - available on the ERCOT website https://www.ercot.com/mktrules/issues/OBDRR041#keydocs - it became clear that we needed an actual market design that fit what these distributed, residential scale batteries could do for the grid, asap. Without a market design, without a commercialization opportunity, more and more residential batteries would enter the homes of Texas residents who value their resiliency and have the capital to spend $$ on battery energy storage, but we would have no way as an energy system,of monetizing the extra stored energy to help the grid and keep down constraint-induced congestion and scarcity prices - and certainly, we could not pay customers for the value of their grid service provision to ERCOT (and nor was there, at the time, a way to measure it).
The #ADER Pilot, constituted in Project 51603 and launched through a task force charter in project 53911, was founded on the critical tenet that a piloted market design should draw more competition and more reliability #DER MWs to Texas, creating the price signal for technology providers to work with residents to unlock new MWs quickly. We created that price signal, first by launching nonspin qualification for residential DERs that can export, and then ECRS. From the looks of it, autonomous response services are next in line (see presentations at the last Task Force meeting, April 2024). Together, this revenue opportunity stack monetizes the stored capacity value of residential storage and allows it to participate in wholesale price formation. The "holy grail" of initiatives like FERC Order 2222, is already here in Texas, enabled by the work of the state regulator, maverick technology companies, the grid operator, and the ADER Task Force volunteer companies.
So consider me thrilled to point out, after the inception of this program and the phenomenal work that has gone into its early days and its current growth trajectory, that Texas has gotten the attention of technology venture capital firms and we have new market entry as of today, brought about by the investment and revenue opportunity for monetizing residential storage that was created through the ADER pilot. From this morning's news, Jason Ryan (the ADER Task Force Chair, quoted in this Businesswire release today: https://www.morningstar.com/news/business-wire/20240507687959/building-the-foundation-for-an-energy-abundant-future-base-power-launches-in-texas) and I can both safely say that we are glad to see the good work being done in Texas be put to good use by new investment and brilliant minds on the ground. Texas energy policy needs lieutenants wherever we can get them - the #alloftheabove energy strategy needed to secure a reliable and resilient future will not be possible without them. And we are getting more of them, as we learned today from Base Power Company : a new business model is here in Texas from a "team of engineers and operators from companies like #SpaceX, #Tesla, #Anduril, #Blackstone, #Apple" and backed by tech venture firms like "Thrive Capital, Valor Equity Partners, Altimeter, Trust Ventures, Terrain".
I think it is time for the ADER Task Force to pat itself on the back for clocking another win for innovation in competitive markets: when we get the policy right and show we're serious about it, we get serious outcomes that are critical for the world to see, and critical to the growing success of the Texas ERCOT system as a place where investment is truly driven by innovation in market design. Congratulations to the Base Power Company team and we can't wait to see your customers help the Texas grid!
PS: The ADER Task Force has its own Youtube Channel - https://www.youtube.com/@texasadertaskforce8290/videos