By Marshall Coover, Strategic Advisor
It’s no secret that ERCOT is racing to accommodate the booming energy demand that data centers, advanced manufacturers, and other 21st century industries will create.
The question is how to do it – and how to make sure that needed, well-developed projects don’t get stuck in line.
In the past, ERCOT has relied on a serial large-load evaluation framework, which evaluated one project at a time, reconsidering transmission and reliability assumptions as new projects came onto the grid.
That process made sense when there were only a few dozen large-load projects in the queue. But now, there are well over 200 such projects, most seeking to serve industries such as AI that need huge amounts of electricity – and fast.
ERCOT rightly wants to streamline the process to bring those projects onto the grid in a more efficient way that doesn’t sacrifice reliability. The grid manager has landed on what’s known as the batch study process.
This process organizes pending projects into batches. Doing so, as TEBA said in comments submitted to ERCOT this month, “provides a single, contemporaneous snapshot of the transmission system and required upgrades, reducing restudies and improving efficiency while providing greater certainty to both ERCOT and interconnection customers.”
Sounds great, right? So why has the process become so controversial in energy circles?
Who goes first?
The issue is not with the process – it’s with the implementation. Specifically, which projects will be included for study in initial batches, and which will have to fall further back in line?
TEBA and its member companies, including more than 200 of the state’s largest employers and energy customers, believe the criteria for including projects in initial batches is overly restrictive. It could push out large-load projects that are nearing completion – the very projects that Senate Bill 6, which the Texas Legislature passed last year to improve the process of interconnecting large loads, intended to accommodate – forcing them to wait years longer before they can plug in and start serving customers.
That cuts against the “open for business” message that the state has been sending out to employers for decades. More than that, it functionally changes the rules midstream for companies that moved to Texas in part for its competitive energy market, welcoming new projects with as few regulations as possible. As TEBA says in our comments, current criteria for assigning projects to batches are “being perceived as arbitrary and punitive.”
Go slow to go fast
Voices that range from employers and stakeholders to Public Utility Commission Chairman Thomas Gleeson have urged ERCOT to slow the process down – to take more time to protect the grid and the economy, and to get the rules right.
Fortunately, ERCOT is doing just that.
At a workshop last week, ERCOT rolled out a new calendar that will add another half-dozen workshops to gather input on the batch process and refine it into a more workable model. A final ERCOT board vote is currently scheduled for June.
Improvements should include:
- Conducting and considering a pre-evaluation of project readiness, which would use a range of factors to evaluate a project’s ability to begin construction, when assessing a project’s inclusion in a batch.
- Leveraging other ERCOT processes to avoid unnecessary duplication and determine whether there is a viable transmission plan to serve the load.
- Creating a process to rapidly advance co-located loads (which generate energy on or near the site of a new data center or other large-load project), serving that project and requiring minimal transmission upgrades. ERCOT should incentivize these projects by moving them ahead in line, not discourage them by pushing them back.
“Doing the batch study correctly is far more important than doing it quickly and causing billions of dollars in harm to economic development in Texas,” our comments state. “There are contracts, lease terms, and significant infrastructure investments that could be stranded with the current approach and study timeline delays.”
The trick will be balancing the urgent need for a speedy, clear, and fair batch process. The Texas economy depends on these decisions. The additional time should be used wisely – to hear from more voices and move expeditiously toward a solution that allows the grid to grow, reliably, and affordably with the economy.