Pat Wood III
It has been a summer for the record books in Texas. On Aug. 10, we set an all-time power use peak of 85,400 megawatts — 7% higher than last year. All summer our power plants and batteries have worked well, and power users also helped out, by responding to grid operator ERCOT’s voluntary conservation calls.
This year, we not only saw record heat from the sun, we also made record amounts of daytime solar electricity, our fastest-growing resource. As the sun goes down, power use lags behind a few hours, and that’s where all our new batteries worked great with gas, nuclear and coal tiding us over to the windier nighttime. With batteries, for the first time, we have broken the requirement that power be made the instant it is used. This is revolutionary.
But I worry about the cold winter nights, when no sun is shining, batteries cannot run long enough, and seasonal winds are historically low. After the February 2021 winter storm, the Legislature ordered all power plants to winterize their facilities. That has made a big difference. But we have not yet fully closed the demand-supply gap, in case of another extreme winter storm.
For those reasons, Texas is focused on more gas and oil-fired peaking power plants to give us the security we need. These plants will only run a few hundred hours a year during peak usage, but those are the hours that really matter. The Public Utility Commission (PUC) is updating our market design to attract more investment in these peaking plants, and it cannot come soon enough. We need straightforward, efficient rules that promote increased supply and reduced demand.
Today, 63% of Texans heat their homes with electricity; most of the rest use natural gas. Unfortunately, we burn twice as much gas to generate power for electric home heating as we use to heat our homes with natural gas directly. Paying power and gas customers to ratchet back winter demand, plus stronger building code provisions on insulation and appliances could help de-stress the dual-use natural gas system.
We really need a more modern way to rein in our demand for power. ERCOT pays some industrial customers to curtail use if needed. It’s time to open up the party. Most of us have the same flat retail rate year-round, so we don’t have any incentive to conserve when the wholesale price spikes. By paying me if I do conserve, my retailer gets my attention, and ERCOT can count on me to deliver my usage cut. So I can help the system just like a power plant.
Our regulated distribution utilities also must be much more flexible when called upon to rotate an outage, so people aren’t in danger. The Legislature has ordered them to submit plans to the PUC for segmenting their distribution systems to fix this. The resulting upgrades will not only save lives but get a modern, resilient network in place. We need our regulated companies focused on this crucial rebuild and on facilitating swifter hookups of new facilities, not getting distracted trying to generate temporary power on their own and passing those costs on to customers.
Outsiders are surprised when I assert that Texas is setting the global path for the clean energy transition. That shift is happening here faster than anywhere else. And it’s being driven by markets and innovators, not by monopolies and governments.
It helps that the good Lord has blessed Texas with abundant resources both above and below the ground. And Texans are the best in the world at converting those resources into useful energy. Wind and solar are now cheaper than gas and coal, and we will get even more power from them. Expect robust expansion of our new tools: power storage and active demand-side participation. Further out, we may see investments in nuclear power again.
But I also believe we will always need some controllable fossil fuel-fired power plants in the mix, even if they run less often than they do today. It is great that our power is cleaner and cheaper than ever, but reliability must come first: You can’t see whether your power is green or not if you’re sitting in the dark.
Pat Wood III is CEO of Hunt Energy Network and past chairman of the Public Utility Commission of Texas and of the Federal Energy Regulatory Commission. He wrote this column for The Dallas Morning News.
