Dive Brief:
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The grid operator for most of Texas on Friday canceled plans to procure up to 3,000 MW of capacity to ensure reliability this winter, after finding no power plants willing provide the additional operating reserves.
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Despite the canceled request for proposals, the Electric Reliability Council of Texas market “is not projecting energy emergency conditions this winter season,” ERCOT President and CEO Pablo Vegas said in a statement. The procurement was intended to be “an extra layer of precaution,” he said.
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ERCOT’s RFP was supposed to entice shuttered power plants to restart, but instead the grid operator received demand response offers for just 11 MW. Experts say demand reductions and energy efficiency could help stabilize the Texas grid more cheaply than building new generation sources.
Dive Insight:
ERCOT canceled its RFP “due to the limited response from the market,” but power experts say there were also concerns regarding cost and the grid operator’s authority to procure the additional capacity without authorization from the Public Utility Commission of Texas.
PUCT Commissioner Will McAdams expressed concern about potential costs and the grid operator’s authority in a Nov. 1 memo. And in a 3-1 vote on Nov. 2, the commission took steps to limit the cost of ERCOT’s planned procurement.
Canceling the RFP was a “smart move” by ERCOT, Texas energy analyst Alison Silverstein said in an email.
“The PUC made it pretty clear that they didn’t think ERCOT had the authority to acquire and pay for all this extra capacity, and they also made it quite clear that they would not let ERCOT pay much for additional capacity,” Silverstein said. “And the market made clear that most of the zombie power plants and other resources ERCOT was asking to show up weren’t going to do so.”
But Silverstein also said ERCOT’s reasons for canceling the notice are “puzzling.”
According to ERCOT, it issued the RFP after finding a 20% chance of entering emergency operating conditions if the region experienced a storm similar to last year’s Winter Storm Elliott. But in canceling its request, the grid operator said it had “weighed factors such as the costs of the program, including costs of administration, and the incremental additional complexity for the control room operators against the very small amount of capacity that could be provided.”
Experts say regulators and the grid operator should be looking to energy efficiency and demand response, both of which can be developed faster than new power plants can be constructed.