April 19, 2021 — Austin-based Electric Power Engineers President Hala Ballouz is joining four other power industry experts in recommending a regional system operator model for the Electric Reliability Council of Texas-controlled power grid.
Based on the known events that occurred during the Valentine’s week Texas power crisis, the group of five energy-related managers and engineers said in a published statement that many of the deficiencies that led to and exacerbated the crisis “are a consequence of the way deregulation was enacted in Texas.”
This helped result in a system currently being used in Texas that led to a tragic failure “primarily as a consequence of following an approach to resource investment that relies entirely on the use of (short-term) markets,” the experts said in a scholarly paper published at ResearchGate.
Claims made by others that the market-based shortage-recovery system used by ERCOT actually “worked” is “disputable,” they added.
For example, to put it simply, the ERCOT price-cap “$9,000/MWh is synonymous with blackout or shortage conditions.
“Therefore, any consistent argument that it forms an incentive for investment comes with an admission that Texans must tolerate blackouts and shortages like those experienced this past February.”
“There appears to be little hope that one can incentivize investment in costly grid infrastructure based on extreme short-term price signals.”
“The $9,000/MWh shortage price is claimed to be a long- and short-term incentive for generators to be installed in sufficient numbers and with sufficient reliability to avoid the problems Texas experienced.
“However, if there are sufficient, reliable resources, the market will not experience shortage pricing and the resource owners will never be fully compensated for their investments,” the authors wrote in an explanatory article published in Utility Dive.
“…only a handful of generators (mainly those providing operating reserves) stand to make massive gains during a crisis.”
As a solution, the authors “propose the creation of a reliability system operator (RSO) that acts as a central planner and develops an optimal resource expansion plan across the entire market.
“The RSO would take on many of the responsibilities of today’s RTO or balancing authority. In addition, it would create contracts with generation companies and distributed energy resource aggregators to ensure reliability at low cost.
“As in most other countries, and many parts of the U.S., services would be obtained through carefully constructed, financeable contracts.
See the entire article at Utility Dive here for a full explanation of the authors’ research, disputing the efficacy of the current Texas scarcity-control system and justification for solution recommendations.