Regulatory Developments and Impacts Involving Electricity Storage in Texas

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Regulatory Developmentsand Impacts

Involving Electricity Storage in Texas

Elizabeth Drews31st USAEE/IAEE North American Conference

Austin TX, November 4-7, 2012

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The usual disclaimers

• This is not legal advice or legal services

• This is no one’s opinion but mine, & might not stay mine

• This is a summary

• Laws & facts change

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Why storage could especially benefit ERCOT

ERCOT’s

• Electrical isolation from other grids

• > 11,000 MW wind (# 1 in US, # 6 in world, > 2,000 MW coastal) 12,277 MW by 2014

• Growing demand

• Potential capacity shortfalls

• Nodal market design

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Where would storage fit in ERCOT?Capacity, Demand, Reserves Report (May 2012)

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Generation under study in ERCOT *

* No firm commitment to build+ Calculated at 8.7% of nameplate capacity

Fuel typeCancelled studies (MW)

Suspended studies (MW)

Active studies (MW)

Gas 1,939 2,890 8,317

Nuclear 5,900

Coal 3,635

Wind + 394 1,092 1,560

Solar 236 353 856

Biomass 50 100

Storage 906

Other 700 1,480

Total 7,400 21,747 16,854

Peak demand68,379 MW

Wind record8,368 MW (17.64% of 47,452 MW load) of which 7,381 non-coastal

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Some IPP storage development in Texas

Compressed Air Energy Storage Battery

Apex: 275 MW AES: 40 MW

Chamisa: 270 MW, expandable to 810 MW

Xtreme/Duke: 36 MW, behind meter w/ wind

ConocoPhillips: behind meter w/ wind or solar

Source: filings in Public Utility Commission of Texas (PUCT) Projects 39764, 39917, 41026

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Some uses of electricity storage

• Energy time-shift• Peak shave• Ancillary services• Reliable power in outage• Address voltage, frequency variations• Transmission support• ↓ transmission congestion• Defer T&D upgrades

Adapted from PUCT 2011 Scope of Competition Report

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Generalized attributes of storage technologies

CAES Battery

Can inject for hours-days Can inject ≤ hour

Can respond to grid needs in minutes

Can respond to grid needs in seconds

Hundreds of MW Tens of MW, modular

$ hundreds of millions $ 1-10 million

2 years to build 1 year to build

Must be near cavern or similar, TX has

Attributes/capabilities vary by project & technologies are evolving

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Regulatory limits on uses of ERCOT storage

In non-retail choice areas, utility, coop, muni can own G&T

• Can own storage that serves both functions

In retail choice areas, utility owns T&D, power generation company owns generation

• Protects competition

• Keeps storage from supplying & being paid for all its uses

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Storage as transmission

PUCT Docket 35994, ETT

• Transmission/distribution utility owns 4 MW battery to help voltage & delay transmission in remote area, does not own or sell energy from the battery

• PUC: transmission asset, can put in rate base• Operational since 2010

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Storage as generation

2011 statute (SB 943) – Texas storage:

• Intended to sell energy or ancillary services at wholesale is generation

• May interconnect, obtain transmission service, sell electric energy & ancillary services at wholesale consistent w/ TX law re: power generation company or EWG

• Must register as power generation company

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PUCT pricing rule on storage(2012, Project 39917) 3 main decisions

• Electricity purchases by storage for charging are wholesale, not retail (same as FERC)

• Such electricity purchases are settled nodally (at bus that connects the storage facility), not zonally like a load

• Retail transmission & ancillary service charges do not apply to such electricity purchases

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ERCOT rule changes, integration issues

ERCOT’s Emerging Technologies Working Group

IDs & proposes changes to ERCOT requirements that preclude market participation of emerging technologies

• Has addressed # issues relating to storage

• Is developing a list of operations issues relating to storage

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PUCT ERCOT pilot project rule(2012, Project 40150)

Allows ERCOT pilot projects for storage/other ET• ERCOT may temporarily exempt pilot participants from specific ERCOT requirements• ERCOT board must approve pilot project; board decision appealable to PUCT• Rule leaves many issues, e.g. cost allocation & post-pilot transition if any, to ERCOT pilot review process to resolve

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Pilot projects at ERCOT

• ERCOT posts documents for each pilot project on its website• ERCOT has been working on a pilot project for a Fast Responding Regulation Service (similar to FERC Order 755, “pay for performance”)