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The Texas Senate on Thursday voted 27-4 to advance a plan to provide incentives and including 20-year, zero-interest loans to companies building gas-fired power plants and the House of Representatives has to consider the measure, .
The bill replaces a similar measure, SB 6, which passed the Senate in April but stalled in the House over concerns it could fundamentally alter the Texas energy market and benefit few companies.
The state’s legislative session is scheduled to end May 29, adding a sense of urgency heading into the summer cooling season. The Texas grid operator warned last week that the state should it face periods of extreme heat and high generator outages combined with low renewables output.
Population growth in Texas has stretched the grid thin, and heading into this summer the risk is acute, say regulators.
“The Texas grid faces a new reality,” Public Utility Commission Chairman Peter Lake said in a news conference Wednesday. “Data shows, for the first time, that the peak demand for electricity this summer will exceed the amount we can generate from on-demand dispatchable power.” he said.
“So we will be relying on renewables to keep the lights on,” he said.
The Electric Reliability Council of Texas, the state’s grid operator, last week published its , or SARA, showing a base summer peak load of 82,739 MW and approximately 97,000 MW of summer-rated resource capacity to meet the demand.
The summer SARA includes a typical thermal generating unit outage assumption of about 5,000 MW based on historical data from the last three summers, the grid operator said.
“The most severe risk scenarios assume very high peak load, extreme unplanned thermal outages based on historic observations and extreme low wind output,” ERCOT President and CEO Pablo Vegas said. “These scenarios are based on circumstances that include a combination of unplanned forced outages and varying weather conditions.”
The tighter grid conditions are a result of the state’s growth, Vegas said. Texas’ population swelled to 30 million last year from about 21.7 million in 2002, according to and the .
“Our models estimate that this summer's peak could be about 6,000 MW greater than last summer,” Vegas said. “However, we're only expecting a nominal increase of about 850 MW of thermal capacity since last summer. ... The majority of new generation capacity that has been added since last summer in our economy continues to come from intermittent resources.”
ERCOT anticipates about 1,000 MW more wind capacity and 3,400 MW of solar compared with last summer.
“So as a result, we are expecting to have to rely more on renewables during peak conditions than we ever have before,” Vegas said. “The urgency to move forward with meaningful electric market reforms that will incentivize the development of dispatchable generation remains extremely high.”
Texas lawmakers have been working on plans to ensure more gas-fired power plants are available to meet the state’s peak demand. SB 2627 was proposed by Sen. Charles Schwertner, R, to "create in-market incentives to entice private industry to build more generation capacity in Texas,” according to a statement. The incentives would not be available to battery resources.
Schwertner said the plan would help ensure the state has “long-term resource adequacy and dispatchable generation to balance out the ever-increasing penetration of interruptibles and renewables on the Texas electric grid.”
The emergency backup generation plan laid out in SB 6 “received pushback from some market participants as an out-of-market solution where a few companies would receive help from the state to build plants,” according to . Additionally, under the best grid scenarios, those plants would likely remain idle.
Schwertner says the new plan means those plants will be developed by the “deregulated market” but added that not everyone will be pleased.
"They both have pluses and minuses," he said. "There is, again, no perfect solution regarding 'how do we get more dispatchable generation.’”