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Texas Electricity Rates to Go Up In 2018

Texas electricity rates are expected to go up in 2018 as the state’s electricity grid experiences growing pains.  2018 will see the closing of a number of coal fueled power plants.  Coal has been giving way to cheaper electricity fuel sources for a number of years.

The growth in wind power and natural gas fueled power will offset the loss in coal over time but for the summer of 2018, expected record demand for electricity will converge with power plant closures to put a squeeze on wholesale electricity rates.  This, in turn, will cause the retail electricity prices paid by most Texas consumers to increase. The rise in wholesale rates could be particularly dangerous for consumers who have electricity plans that are tied directly to the wholesale price of electricity.

The rise in prices could be felt more in areas like Houston.  Houston electricity rates tend to be higher that rates in the Dallas / Fort Worth area.  Average summer temperatures also tend to be higher in the southern part of the state.

Reserves to fall below comfort level

The state of Texas typically targets a reserve margin of 13.75%.  This means that the available supply of electricity should exceed the projected peak demand for electricity by at least that amount.  This give a cushion for unforeseen spikes in demand or lose of capacity such as could be experienced during a large storm.

The most recent projections by ERCOT put the reserve margin during the summer of 2018 at 9.3%.  This number is expected to climb to 11.7% by the summer of 2019 as newer power plants come on line.

 

See Also: Hurricane Harvey’s Impact on Texas Electricity Grid
See Also: Oncor Proposes Electricity Rate Increase for Many Texans

 

Hurricane Harvey’s Impact on Texas Electricity Grid

High winds and significant flooding along the Texas Gulf Coast substantially impacted the Texas electricity grid.  The transmission and distribution infrastructure sustained severe damage in the southern portion of the state as a result of Harvey’s landfall.  10,000 megawatts of electricity was lost to the grid according to the Electric Reliability Council of Texas (ERCOT).

The loss of generation capacity was offset by a large drop in electricity demand across the state.  The loss in demand was a direct result of downed transmission lines.  Leaving hundreds of thousands of Texans without power at times.  The grid also benefited from a drop in temperatures across the state during the period when the loss of capacity was at its greatest.

Many factors associated with the storm combined to reduce electricity output.  Several power plants went offline as a result of flooding that impacted the delivery of fuel supplies to the generator facilities.  These same transportation difficulties kept personnel needed to run the plants from getting to work.

Near the coast where winds exceeded 130 miles per hour, many high voltage transmission lines were taken out of service by the damaging winds.  Further inland in the Houston area, flooding took a larger toll on transmission facilities.  Capacity was also lost due to loss of wind power.  Wind turbines are turned off when wind exceeds 55 mph in order to avoid damaging the equipment.

Power loss along with the failure of a backup generator were to blame for explosions at the Arkema chemical plant.  The plant stored chemicals that become volatile when not cooled to a certain temperature.

Meanwhile, many electricity providers in Texas stepped up to help in relief and rebuilding efforts.  NRG, the parent company of Reliant Energy and several other electric brands in Texas donated one million dollars to organizations including the Red Cross, and the J.J. Watt Houston Flood Relief Fund.   Direct Energy, the parent company of Bounce energy and the Direct Energy retail brand is matching donations up to $25,000 the Red Cross.  TXU Energy is allocating $500,000 to help customers who are unable to pay their electric bills in the wake of Harvey.

Texas Electric Grid Has Adequate Capacity for Summer/Fall 2017

ERCOT has released its latest Seasonal Assessment of Resource Adequacy for the summer months.   The organization anticipates that the Texas electric grid will have no trouble meeting the demand for electricity during the hot summer months from June – September.   The report forecasts a peak demand of 73,000 megawatts for electricity during the period.  This is based on the average demand for that same period over the last 14 years.

Against this demand, officials are projecting a peak production capacity of 83,000 MW.  Included in this total is 2,500 MW of new natural gas powered generation and 800 MW of new wind and utility scale solar generation.  Because of the intermittent nature of wind and solar energy generation, only 350 MW of peak power from wind and solar are being included in the projections of summer capacity.

There is no new coal power electricity generation included in the forecast.  Coal continues its multi-year decline across the U.S. and in Texas in particular due to a combination of environmental regulations, competition from renewable energy sources and cheap natural gas.  Cheap natural gas more than anything else has helped to keep electricity rates in Texas low for several years.

In a separate report, ERCOT looked at generation over the next five years.  The trend is unsurprising.  Summer capacity is expected to rise to over 87,000 MW hours in 2022.  Wind, Solar and Gas are expected to grow both in real terms and as a percentage of total capacity.  Coal is expected to continue to decline.

The Texas electricity market continues to be a model for the benefits of energy deregulation.  Capacity and reliability continue to improve.  This is occurring with a lower per kWh environmental impact thanks to the proliferation of renewable energy in the state.  Additionally, giving consumers the power to choose their electricity provider has led to innovations in the way electricity is sold to end users.   All of this is occurring in an environment of sustained low rates.

See Also: Oncor Proposes Electricity Rate Increase for Many Texans
See Also: Electricity-Related Complaints Continue Downward Trend In Post-Deregulation Texas Market

 

Study Finds the Storage of Solar Power Increases Consumption and Emissions

Solar panels TexasRecent research from the University of Texas at Austin suggests that the greatest environmental and economic benefits from solar power come from sending excess solar power to the utility grid instead of storing it on-site for later use.

The paper examines the costs and benefits of adding energy storage to homes with existing solar panel systems. While the number of American households with rooftop solar panel installations has rapidly reached the level of 1 million, many fewer homes have a means for storing any excess solar power that is produced. However, there is a growing interest in the on-site storage of excess solar energy, and this study sheds some light on the factors involved in this decision.

Solar Power Still Effective Without Storage

The main thrust of the paper’s findings is that there is no need to have a storage system in place to benefit from the installation of solar panels. One of the most common negative myths about solar energy is that it requires the installation of an additional storage system for when the sun is not providing adequate electricity. However, it is actually more efficient to merely switch to grid energy during times when solar is inadequate rather than storing excess solar power.

The researchers found that the storage of solar power for nighttime use will actually increase a household’s energy consumption, compared to the use of solar panels without any form of storage, due to the consumption of additional energy caused by the charging and discharging of the storage unit. While an increase in energy consumption as a result of storage is not surprising, the level, from 8% to 14% over the span of one year, was much higher than anticipated.

Storage of Solar Power Leads to Greater Environmental Impact

The study discovered that the addition of storage indirectly increased overall emissions of carbon dioxide, nitrogen dioxide and sulfur dioxide. The increased emissions are due to the increased energy consumption that is required to compensate for the inefficiency of household storage. However, since storage will affect the time of day that a household will draw electricity from the grid, it will also reduce emissions in that way.

The benefit for utility companies is more clear. The storage of solar energy reduced peak grid demand by 8% to 32%, as well as the magnitude of solar power fed into the grid by 5% to 42%, which is beneficial for the utility as it will reduce the amount of required capacity.

Overall the analysis demonstrated that the storage of solar power now offers less environmental benefits than sending it into the grid, since the energy that is lost to inefficient storage will ultimately be covered by electricity from the grid that is produced using a high proportion of fossil-fuels.

See also: Solar In, Coal Out, In Texas Electricity Grid

 

Lack Of Water Still A Concern For Texas Electricity Grid

Water scarcity continues to be a concern for the Texas electricity grid.  In the United States, energy production is responsible for about half of the water use across the country. Plants that produce energy through the use of fossil fuels and nuclear fusion need to be continually cooled with a constant water supply. If the water is not available, then the plant cannot be online. When this happens, plants have to be shut down and power production is lost. If enough power plants go offline, the entire Texas power grid could topple.


In Texas, the hot weather in the summer can stretch the state’s limited fresh water supplies. That drought cannot simply be stemmed by importing water from other parts of the country. Water is required to produce electricity, and lack of water could easily result in power outages for the state’s strained electrical grid.

Texas can have especially dry hot summers, which lower water supplies just as electricity demand peaks. There are concerns coming from ERCOT, the Texas regulatory commission responsible for the state’s electricity grid, that the water supply could be depleted or energy production might not reach the levels of demand because of a lack of water.

Studies have shown that greater efficiency in energy production can reduce the need for water to be used as a coolant. The U.S. Department of Energy does not have a policy regarding water use for energy production, but some forms of energy production are more efficient than others.

For example, a plant that uses natural gas to produce energy converts two-thirds of the gas it uses into energy. This results in less waste than from a plant that is fired by coal.  Renewable energies tend to have even less water demand.  However, despite leading the country in wind energy production.  Texas still gets a relatively small percentage of its power from renewable energy sources.

Cheap natural gas has not only brought down electricity rates in Texas, but has managed to displace coal as a source of power generation.  This tends to have a positive impact on the state’s water issues but serious challenges remain with regard to the state’s water and energy needs.

See Also: Texas Gets Its First 100% Solar Energy Electricity Plan
See Also: Microsoft Makes Large Texas Wind Power Purchase
See Also: Water And Energy: A Double Dilemma In Texas

 

 

Texas Clean Energy Coalition Report Provides Incentive For Renewable Energy

The clean energy advocacy group Texas Clean Energy Coalition (TCEC), in a new report entitled Exploring Natural Gas and Renewables in ERCOT II, Future Generation Scenarios for Texas, provides an in-depth analysis of the future energy supply prospects of the State of Texas, based on existing technology, with a realistic and somewhat conservative analysis. It is the first report of its kind, overshadowing previous somewhat simplistic modeling, and utilizing high-end modeling techniques and highly developed statistical analysis.

The study examines the current Texas electricity grid, based on the current power supply supplied through the Electric Reliability Council of Texas (ERCOT) —power grid. ERCOT manages electricity provided to 23 million Texas residents, supplying 85% of the state’s electric load. Varied energy sources are considered in the present grid, from coal-fired electric plants, electricity supplied by natural gas, as well as renewable energy’s current contribution to Texas power in the form of wind-powered electricity and solar energy.

Texas is already the state producing the most wind-powered electricity in the country, with more than 12,000 megawatts of current capacity, more than double that of any other state in the U.S.  40% of Texas’ electricity is currently produced from natural gas plants, while the state itself is the leading producer of natural gas in the United States. Additionally, the state of Texas has an abundance of natural sunlight all year round, which makes increased reliance on electricity through solar power both a reliable and economically advantageous proposition. Texas currently gets 10% of its energy from renewable sources, and the study suggests an increase in reliance on renewable resources prospectively reaching between 25% to 43% over the 20 year scope of the report.

Using various scenarios and models with major factors considered such as possible public environmental policy, the likelihood of a slight decrease in the cost of producing electricity through renewable sources, relative stability in the cost of natural gas vs. significantly higher prices for natural gas, and the required power reserve margin, the topic is examined not in the context of a “tree huggers” utopia, but realistically, and more importantly, in terms of costs and profits for power companies—how planning for the future, based on numerous likely scenarios and variables, may make investing in facilities for renewable resources along with an increase in reliance on natural gas powered plants, a strategy with long-term economic benefit for the state. The report, then, takes a pragmatic approach rather than taking on the tone of an environmental crusade.

A by-product of the report, is that it can provide incentive for policy makers who are interested in reducing reliance on “dirty” energy, such as supplied by coal powered plants, to pursue a stricter policy in reduction of carbon emissions, with a resultant increase in reliance on wind, solar and natural gas. Such an incentive for policy makers is not directly insisted on by the report, but it could be a beneficial by-product, in that a stricter policies on carbon emissions, one of the scenarios explored here, while perhaps making coal-fired plants less profitable, or in the strictest scenario, making them unprofitable and essentially forcing coal-operated plants closed, would not necessarily result in higher energy prices or loss of profit as a whole to the industry. With planning, low-cost energy could be maintained with clean energy supplies, alongside a stable profit margin for power producers, by investing more heavily in renewable energy resources, alongside an increase in reliance on the clean energy produced by natural gas fired power plants.

Through the study all involved can take a realistic look at the next 20 years of increasing energy needs in Texas, and while the study does not focus on environmental benefits, the thrust of the report is that there are both economic benefits to a greater investment in renewable energy and gas, with the implied side benefit of less impact on the environment (less pollution). If power companies can maintain profits while saving the environment, why not? It is a win-win situation for everyone involved. This is especially poignant in view of the fact that Texas’ energy requirements are expected to double over this same 20 year time period, placing a tremendous demand on existing resources. The topic of how to meet future energy demands is something that needs to be addressed regardless of the one’s environmental position, so the question becomes, simply, which direction to point the arrow. The report implies that pointing in the direction of clean energy makes economic sense for everyone involved by adequately covering a wide range of possible scenarios including future technological developments.

 

See Also: Microsoft Makes Large Texas Wind Power Purchase
See Also: Texas State Senator Pressures ERCOT to Leave Reserve Margins Unchanged

 

 

 

Texas Tops States in Grid Modernization

Texas ranks at the top of 41 states for the modernization of its electricity grid.  This is according to a report released by a group called Gridwise Alliance in conjunction with the Smart Grid Policy Center.  The report assigned a Grid Modernization Index score (GMI) to 41 states and the District of Columbia.   The GMI value for Texas was 83, putting it alongside California at the top of the 41 states included in the report.  Nine states were not included in the analysis.

The Grid Modernization Index consists of three components.

  • Policy – State policies and regulatory mechanisms that facilitate grid investment
  • Customer Engagement – Investments throughout the state in customer enabling technologies and capabilities
  • Grid Operations – Investments throughout the state in grid enhancement technologies and capabilities.

In addition to a top overall score, Texas obtained top scores in the Policy and Customer Engagement categories.   The Policy score includes components such as the presence of a grid modernization strategy and the presence of Renewable Portfolio standards.

Texas obtained a top score for Customer Engagement which is a metric that includes such things as the availability of dynamic pricing plans or rates that leverage smart grid technology.  In recent years, Texas has seen a proliferation of innovate products made available because of smart grid technology.  These products include Free Nights plans, Free Weekend plans, and prepaid electric plans that rely on smart meter technology.

The Texas electricity marketplace is substantially different from other states in a number of ways.   The Texas grid is independent from the other major electric grids that serve North America.   Texas is also by far the largest deregulated electricity marketplace in the U.S.  The authors of the report point to a positive correlation between a state’s GMI score and the availability of retail choice within the state.

Challenges Remain

Despite Texas’ strong showing in this report, significant challenges remain for the state’s electricity grid.  Capacity has been a concern for a number of years and continues to be so.  Each summer there is concern that the state’s electricity producers will not be able to supply enough power to meet demand; especially in the event of an unusually hot heat wave.  Such concerns have led to, as yet, unsuccessful attempts to convert the state to a Capacity Market for electricity.  Under such a scheme, producers are paid simply to build additional capacity and have it available if needed to meet peak demand.  Such a move would inevitably lead to higher electricity rates.

According to numbers published by the Energy Information Administration, the average Texan pays 11.59 cents per kilowatt hour for electricity.  This average, however, is not indicative of what a motivated consumer who is willing to shop and compare rates should expect to pay.  For example; as of this writing, 4ChangeEnergy is currently offering a rate of 9.0 cents for a 12 month electricity plan in the Houston area.  Month-to-month rates are even lower.  Reliant energy, for example, is currently offing a rate of 7.9 cents in the Dallas area.

See Also: Texas State Senator Pressures ERCOT to Leave Reserve Margins Unchanged