Texas and California are two excellent states with several of the best sports teams, food, and renowned enterprises. There are also two quite different electricity markets. Intersect Power has had success in both markets, and their approaches reflect separate sets of regulations.
Texas regulators are pushing to restructure the electric market design as well as identify a new way to provide reliability and resiliency for Texas electricity users in the wake of the 2021 freeze. The Public Utility Commission (PUC) is concentrating on weatherizing existing power facilities as part of that debate, guaranteeing that the plants will provide electricity when it is necessary to keep homes and businesses running. This includes the natural gas-fired fleet on Electric Reliability Council of Texas grid, which lost an estimated 45 gigawatts during Winter Storm Uri.
The PUC is curious as to why renewable energy developers in Texas have not previously included storage in their plans. An idea why this is happening is because they are a utility-scale solar contractor with projects in California and Texas. The answer can be found in the market structure.
They will be constructing two huge solar projects in California as well as two in Texas next year. Each project will be the size of 1,500 football grounds, but the California ventures will contain cutting-edge battery storage, enabling them to function more like a regular natural gas plant. That is, to be able to keep delivering electricity even if the wind stops blowing. Batteries will not be used in the Texas projects. Why is there no battery storage in the Texas state, even though the state clearly requires more resources to ensure that electricity is supplied even during excessive heat? The solution lies in the game’s rules and market design.
Texas has its own set of rules that are not found in other states. Texas prides itself on having a light regulatory hand when it comes to how power generators operate, preferring to depend on market forces and financial motivation to build a viable environment that results in low-cost electricity. While this competitive framework encourages low-cost resources, it does not prepare for or even pays for reliability in the same way that most other states do. Reliability planning requires more effort, but there are institutions in place to stimulate competition in order to give the most cost-effective reliability.
They add battery storage to their solar projects in California because there is competition for reliability. The Texas market is set up in such a way that the only way to earn from battery storage is to be able to charge when it’s cheap and sell when it’s expensive. Because there aren’t sufficient days when these conditions exist, Texas has minimal to no battery storage. That could change in the future.
A Texas version of a reliability preparation and payment program was recently suggested by large power production corporations. If their recommendations are effectively executed, they may motivate enterprises like mine and others to use battery storage to increase their flexibility and availability. With a broad and broad fuel mix, fossil as well as renewable, this method might stimulate significant investment and bring more resiliency to the Texas system. After all, there is a need for forward-thinking regulations that provide fair and transparent market regulations for all participants.
We’re all aware that the game’s rules determine how it’s played. The Texas economy excels in lowering costs, attracting investment, and creating jobs. The PUC is considering making changes to the rules to place Texas on the proper track to retain maximum competition and keep customer costs as low as feasible while maintaining a high level of reliability.