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.
2016 Another Strong Year for Renewable Energy and Natural Gas
Continuing a 3 year trend, 2016 saw renewable energy account for the majority of new electricity generation capacity in the United States. The lion’s share of these additions came in the form of wind and solar power.
As is often the case, renewable energy generation peaked in the spring on a nationwide basis. The spring typically sees a peak in hydroelectric power in the western part of the U.S. as rain and snowmelt drives hydro power. The Western United States also contributed the majority of the country’s solar power with 77% of total U.S. solar generation. In Texas, the state’s massive installed wind base continued to churn out electricity for the Texas electricity grid which is separate from the other major U.S. electricity grids.
While 2016 also saw a large increase in solar power, most new solar capacity comes from small scale solar photovoltaic rather than large scale utility generation. As of October of 2016 the U.S had a total of 12.6 GW of small-scale solar power installed.
Wholesale Electricity Rates Continue to Fall
Despite the fact that new capacity generation is coming largely from renewable energy sources, it is cheap natural gas that continues to put downward pressure on electricity rates. Monthly wholesale prices for 2016 were lower than 2015; driven largely by lower natural gas prices. The cost of natural gas delivered to power generators was 17% lower for the first 10 months of 2016.
Low rates for natural gas also contributed to an increased reliance on natural gas for electricity generation. 2016 saw, first the first time, natural gas surpass coal for electricity nationwide. Although, in Texas this has been the case for a number of years.
Texas Sets Another Record For Wind Power
Texas has set a new record for electricity generated from wind. On November 27th 2016, the ERCOT system saw more than 15,000 megawatts of electricity provided to the grid from wind turbines.
The amount represented about 45% of the spot demand for power in the grid in the afternoon.
“We saw high wind output throughout the day, ranging from just over 10,000 MW during the late night hours to this peak output during the noon hour,” said ERCOT Senior Director of System Operations Dan Woodfin. “Over the years, ERCOT has taken a number of steps, such as improving renewable generation forecasts, to allow us to operate the grid reliably on days like this.”
During the period, total output from wind approach the system capacity of 17,000 MW.
Electricity-Related Complaints Continue Downward Trend In Post-Deregulation Texas Market
Over the last fiscal year Texans filed 4,835 electricity-related inquiries or complaints according to the Texas Coalition for Affordable Power. This represents a significant drop from the previous post-deregulation low set last year, where the Public Utility Commission registered 6,973 inquiries or complaints. Data from the PUC shows a drop across nine different categories of complaints, with only one category seeing an increase. The data from this year confirms the on-going trend of higher responsiveness and customer satisfaction in Texas’s deregulated retail energy market.
A Continuing Trend Based On Increased Customer Satisfaction
The almost 31% drop in electricity-related inquiries and complaints registered between 2015 and 2016 is the second largest drop so far recorded. Two of the main factors influencing this trend are lower energy prices and a growing familiarity with the conditions and providers of the deregulated market. Also, two major sources of complaints, Sharyland Utility and the installation of advanced meters, are no longer the source of as much dissatisfaction among customers.
The PUC registered a fall in almost every category of electricity-related complaints over the 2015 fiscal year. This falling rate of complaints includes a number of major categories of complaints, such as provision of service complaints, meter complaints and complaints related to switch-holds, the blocking of electric service for residences.
The data for 2015 suggests that customer satisfaction continues to see significant improvements across the state of Texas. The last three fiscal years in particular are registering increasing levels of customer satisfaction. While the data still shows a higher number of inquiries and complaints than pre-deregulation levels, the strong and on-going trend suggests that levels may soon approach their pre-deregulation lows.
Cheap Natural Gas Leads to Falling Consumer Electricity Rates
Plunging oil prices may have hit some energy companies hard and have some oil-producing nations worried about their budget deficits, but it has been a boon to the average American consumer as electricity rates have dropped 1% nationwide to an average of 12.4 cents per kilowatt hour, the first nationwide decline in energy prices in decades.
As developed nations move away from burning dirty coal for energy as a result of the efforts to meet international greenhouse emission caps, cleaner burning natural gas plants and alternative energy sources (wind, sun, geothermal, etc) are filling in the gaps. Natural gas is now the major source of fuel for energy producing plants, and a 28% drop in the price of natural gas for energy producers over the first half of the year has translated into big gains for consumers nationwide.
However, the replacement of coal burning plants with plants that use natural gas and a plunging price in hydrocarbons is not the entire story. Solar and wind energy in particular continue to become more efficient with advancing technologies, and are taking an increasing share of national, and international, energy production. This year the United Kingdom produced more energy from solar panels than from burning coal, and marked the first day since 1882 that no energy was produced from the burning of coal across the entire nation.
The state of Texas has enjoyed an even greater drop in consumer electricity prices, down 6% to 11 cents per kilowatt hour, thanks to easy access to plentiful supplies of cheap natural gas and a deregulated market. The deregulated market has allowed producers to adjust their prices sooner to reflect the lower cost of natural gas, and then pass these savings on to the consumer.
New England, which has a similar share to Texas of energy produced by natural gas, saw a similar decline in electricity rates over the year. However, the biggest decline of 12% was observed in the state of Hawaii, which uses oil for the vast majority of its energy production. The steep decline in the price of oil helped to bring electricity rates down substantially, albeit from a position that was far above the national average as a result of the state’s remote location and the difficulties that its geography causes for the installation of energy infrastructure.
Coal’s Importance To Texas Electricity Continues To Decline
The use of coal to generate electricity in Texas continues to slide. Just ten years ago, half of the electricity in Texas came from the burning of coal. Today, coal only contributes 20%.
Why the huge drop off? The two main factors are natural gas and wind energy, with solar and hydro also playing a part.
Texas is by far the largest producer of natural gas in the U.S., more than doubling the production of the #2 state, Pennsylvania. Texas is now producing so much natural gas, that a pipeline is being built that will send a significant amount of natural gas to Mexico to be used by their electricity generators.
Texas also produces more electricity via wind energy than any other state. There have already been days when the state saw more electricity produced from wind than from coal.
It is expected that by 2020, more than half of all coal-burning power plants in Texas will be shuttered.