Texas is rightly renowned for its competitive energy market. ERCOT’s unique structure ensures that, for the most part, Texas consumers only pay for the electricity they use. And market forces create price signals that prompt the private sector to build the generation capacity Texas needs to power our economy.
ERCOT also maintains what are known as ancillary services, which deliver additional energy when demand rises or the grid needs it. These energy boosters play an essential role, maintaining grid reliability without preempting the market forces that have made our state the U.S. energy leader.
Now, the ERCOT Board of Directors is advancing what’s known as the Dispatchable Reliability Reserve Service (DRRS), a new ancillary service created by the Texas Legislature that would shore up reliability in response to specific grid challenges.
TEBA supports DRRS because it fortifies the grid without compromising ERCOT’s competitive energy-only strengths.
There’s only one problem: DRRS, as proposed, does not include batteries.
Batteries have become ERCOT’s not-so-secret weapon in maintaining grid reliability and low electricity prices. They provided crucial electricity on summer evenings last year — when the state’s solar resources started to set but hot temperatures kept demand high. And less than two months ago, batteries held down prices and powered the state’s needs on the season’s coldest mornings when the grid was most vulnerable.
Texas is on pace to lead the nation in battery storage: we’ll add more than half of the battery resources projected to come online across the country this year. And ERCOT is banking on the continued growth of batteries to help meet the state’s needs — as ERCOT CEO Pablo Vegas said last year, “We’re at the very start of this journey. Especially the batteries, I think we’re only in the first or second inning.”
Batteries click on instantly and reliably when the state needs them — they’re the exact sort of energy resources Texas needs to weather grid challenges. Yet ERCOT is currently not including them as part of DRRS.
As TEBA noted in comments filed with ERCOT, the law that the Texas Legislature passed last year to create DRRS indicates that batteries should be eligible for the program.
We urged, and are urging, ERCOT to “allow all dispatchable resources” — including batteries — “to participate in DRRS so long as they are capable of meeting the applicable performance and operational requirements.” Doing so “would strengthen the program by expanding the pool of flexible, fast-responding resources available to ERCOT during periods of system stress.
“Storage resources can provide rapid and reliable support to the grid, often at overall lower system cost,” TEBA added in our comments. “From a consumer perspective, broader eligibility increases the likelihood that reliability needs are met efficiently and at the lowest reasonable cost.”
One more thing to know about this issue: In addition to considering DRRS, ERCOT has proposed something known as DRRS+. While the names are nearly identical, these are vastly different proposals.
Again, DRRS would build on ERCOT’s ancillary service system in a sensible way that maintains our market structure. DRRS+, on the other hand, would overwhelm that market structure, forcing consumers to pay a lot more for electricity — with little regard to supply and demand, the real-time cost of energy, or whether that electricity is needed at all.
That would radically undermine the competitive energy market and put Texas on the path toward a capacity construct, where customers pay for generation that they might never use.
As much as we’re for DRRS (with batteries), we’re against DRRS+, and we’ve filed comments to that effect.
Fortunately, the Public Utility Commission has tabled DRRS+ for now, while DRRS continues to advance through this process. Both are big priority issues for TEBA — we’ll continue to work on them through the spring and summer.
Stay tuned.