Texas Electricity Problems- Facing Peak Demand

Posted on January 29th, 2013 by

Everything is bigger in Texas, especially their energy consumption. This shouldn’t be a huge surprise considering it is ranked among the top four hottest states during every season.[1] Texas consumes 30 percent more electricity than California, a state 30 percent larger in population[2] and Texas had already been ranked last in grid reliability.[3] At the beginning of 2013, North American Electric Reliability Corp. voiced its concerns that the electricity reserves in Texas are below the recommended amount to meet peak demand, the hours when electricity consumption is at its highest.[4]

To deal with the electricity problems and meet peak demand, Texas has relied on the market to steady itself instead of paying for power plants to build new capacity. The hope is that once the cost of energy reaches a high enough price, the market will become attractive to new investment. In theory this will work but at the expense of the consumer.

According to Forbes, “the Texas Public Utilities Commission last October indicated they would let wholesale spot market prices essentially double from the current price cap of $4.50 per kilowatthour.  This would take place over three years, with caps going to $5.00 in June of this year, $7.00 by June of next year, and $9.00 by 2015.  For comparison’s sake, the average wholesale spot market price in 2011 was 5.32 cents.  So, by 2015, on the worst days when blackouts are likely, hourly prices could theoretically be 170 times greater than the 2011 average.”[5]

This is a huge increase to the operating costs of any commercial building. But utility costs aren’t the only problem.  If this coming summer is anything like last summer it’s pretty much a guarantee that Texas will once again be plagued with blackouts. These blackouts can wreak havoc on local businesses. Businesses can’t function without power, which costs them money – bottom line. Higher prices are supposed to attract new investments for power generation, but it just might drive business out of the state instead.

One bright spot when it comes to the Lone Star State’s power problems is the increase of renewable energy.  According to the Texas Energy Storage Alliance (TESA), Texas currently has “over 10,000 MW of wind installed and, due to a $6.7 billion investment in new transmission to renewable energy zones, anticipate reaching 18,000 MW over the next few years.”[6] This is a great investment and one that will surely benefit Texas in the long-run, but wind energy is unpredictable. Wind also tends to generate more energy at night than during the day. Unless you are able to store the energy at night and use it during the day during peak demand it doesn’t
 offer much relief to Texas’s energy reserve problem. Thermal energy storage does just that.

Thermal energy storage stores ice used for air-conditioning at night-time when the wind blows most, for use during the following day’s peak demand hours. This helps Texas’ electricity problems and makes more efficient use of Texas wind investments by meeting the need air-conditioning, the main driver of peak energy use during critical peak demand hours. It makes the use of renewable energy more viable and through incentive based programs it can offer commercial buildings a way to avoid inflated utility rates. The utility companies realize that they can’t keep up with peak demand. Other areas of the United States are offering financial benefits to a commercial building if it is able to curtail its load when prices and demand are high. There are a variety of demand management programs available for commercial consumers to take advantage of and create an additional stream of revenue. It’s time for Texans to face peak demand and the new renewable power system with much needed energy storage. The end result would be less electricity problems and savings on electricity costs – seems like a win-win.

[1] Osborn, Liz. “Hottest States in America.” Current Results http://bit.ly/AjNkcA

[2] “Market Status.” Texas Energy Storage http://bit.ly/Y1wjfH

[3] Galbraith, Kate. “State Ranks Last In Electrical Reliability.” The New York Times http://nyti.ms/Xzss70

[4] Patel, Sonal. “NERC Demands ERCOT Address Declining Reserve Margin Levels.” POWER Magazine http://bit.ly/W32Kfi

[5] Kelly-Detwiler, Peter. “Texas Power Adequacy Still A Serious Concern.” Forbes http://onforb.es/TYgxCq

[6] “Market Status.” Texas Energy Storage http://bit.ly/Y1wjfH

The opinions expressed in this article are solely those of  the author, Paul Valenta is Vice President of Sales and Marketing for CALMAC. For more information, visit http://www.calmac.com.

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