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USA Market: Texas signs off plans to “weatherize” ERCOT

Eirgrid warns of “challenging” winter

Texas has signed into law new regulations in response to the February blackouts to weatherize ERCOT (The Electric Reliability Council of Texas) along with the reforms to the organisation. At the signing, Texas Governor, Greg Abbott said, “The bottom line is that everything that needed to be done, was done to fix the power grid in Texas.”

The first bill, Senate Bill (SB) 3 is a sweeping bill that aims to address the direct consequences of the blackouts. It requires broad assessments of severe weather vulnerabilities throughout the system including for natural gas systems and ancillary services, the establishment of load-shedding strategies and protocols, and more robust mapping and identification of critical infrastructure.

Ancillary services are emergency operations employed only when generation levels are low and grid conditions become tight. Because of their nature, the prices for those services far exceed the wholesale cost of electricity, and even reached $26,000 per megawatt-hour (MWh) during the winter weather event. The legislation directs regulators to facilitate the deployment and establishment of dispatchable power at generation and transmission.

During the February blackouts, some gas producers had their infrastructure cut off from power because they were not marked as critical infrastructure. The Bill requires transmission and distribution companies to identify “critical load” — such as generators themselves — that cannot be cut off from power. Voluntary load-shedders, such as large manufacturing facilities, are also to be identified.

SB3 also creates the Texas Energy Reliability Council to improve communication between the gas and power industries. Creation of the body, whose members will include industry and government representatives, comes in response to the lack of coordination between the two industries during the storm, when natural gas-fired power plants were unable to access fuel after the winter weather froze up infrastructure in the supply chain.

The electric and natural gas industries will see more robust weatherization standards to ensure power plants and pipelines are prepared for winter weather.

The second bill, Senate Bill (SB) 2, overhauls the ERCOT board and the Public Utility Commission (PUC).


Wayne Muncaster, VP for North America at GridBeyond, said the Bills don’t solve all of the issues facing ERCOT:

“Much of the legislation tasks the PUC and ERCOT to set protocols and policies aimed at protecting against cold weather, but with Texas’ sweltering summer heat just over the horizon, industry may be wondering what lies in store over the nearer future.

“Texas blackouts have served as a wake-up call to diversify energy sources and boost network flexibility. The priority of SB 3 was around weatherizing the power system, almost nothing was done to protect end consumers.

“To protect their bottom lines, businesses need to develop a holistic energy strategy and take more control of the way they operate in the energy markets, whether is it through participation in the financially incentivized grid balancing services or automated optimization of the production assets to ensure they consume energy when it is cheapest to do so.

“In addition, by installing behind-the-meter batteries on their sites, large energy consumers and those in critical power sectors can not only increase their own energy resilience, but also generate new streams of revenue from trading energy in the wholesale markets.

“Ultimately, openness to new technologies such as AI-powered platforms that enable robotic trading, asset optimization and access to balancing services, will enable businesses to make the most of the transitioning energy market and protect them from the negative impact of market volatility.”


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