Kenneth B. Medlock III, “Long-Term Reliability in ERCOT: Some Critical Issues to Consider” (Houston: Rice University’s Baker Institute for Public Policy, July 17, 2024).
This publication was originally prepared as requested written testimony for the Texas Senate Committee on Business and Commerce on June 12, 2024. The author was unable to testify in-person due to a conflict.
Reliability and resource adequacy in the Electric Reliability Council of Texas (ERCOT) have been top legislative, regulatory, and commercial priorities in Texas for the past few years. Since Winter Storm Uri in February 2021, several different proposals have been advanced to increase system reliability. Many of the proposals are focused on aspects of market design,[1] but also include macro-level interventions, such as expanding transmission interconnects to neighboring regions, as well as firm-level actions, such as developing behind-the-meter generation options for large industrial consumers.[2]
In early 2022, the Baker Institute published a detailed examination of various factors that were blamed for the extended power outage in ERCOT during Uri.[3] That research concluded that no single factor was fully responsible. The various factors identified as contributing to the widespread outage included: DC interconnects to neighboring regions that were also experiencing generation outages had to be shut down; demand-response mechanisms were insufficient to mitigate other system failures, given the extremely high system load; all major forms of generation capacity (e.g., coal, nuclear, natural gas, and wind) experienced significant derates; and coordination failures in identifying and mitigating risks along fuel supply chains.
While wind capacity derates in the runup and during Winter Storm Uri could not be solely blamed for the outages experienced, the 2022 Baker Institute study emphasized a need to carefully analyze reserve margins as intermittent generation capacity expands, especially if long term grid reliability is to be ensured. Texas is number one in the nation in terms of existing wind capacity, as well as number one in terms of planned capacity additions for wind and solar power. Aggressive integration of intermittent resources can compromise reliability if it is accompanied by little-to-no addition of dispatchable forms of generation, especially if system load continues to grow. This point was further highlighted in a subsequent Baker Institute study published in February 2024 that was focused on reliability in ERCOT.[4]
[1] See “Resource Adequacy in ERCOT: How Long-term Market Design Reforms Could Enhance Reliability,” available online at https://www.bakerinstitute.org/research/resource-adequacy-ercot-how-long-term-market-design-reforms-could-enhance-reliability.
[2] Transmission interconnects to neighboring regions is the focus of the “Connect the Grid Act” introduced by Congressman Greg Cesar (D-Texas) in the 118th Congress. Behind-the-meter generation options was among the topics discussed at the Texas Electricity Policy Summit – A Consumer Focus: Demand growth, reliability, and investment, held at the Baker Institute April 9, 2024.
[3] See P. Hartley, K. B. Medlock III, and S. Y. (Elsie) Hung, “The Texas Deep Freeze of February 2021: What Happened and Lessons Learned?” Economics of Energy and Environmental Policy 12, no. 2 (2023): 5–29. An earlier, longer analysis is available at https://www.bakerinstitute.org/research/ercot-froze-february-2021-what-happened-why-did-it-happen-can-it-happen-again.
[4] See P. Hartley, K. B. Medlock III, and S, Y. (Elsie) Hung, “ERCOT and the Future of Electric Reliability in Texas,” February 7, 2024, https://www.bakerinstitute.org/research/ercot-and-future-electric-reliability-texas.
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