A National Town Meeting on Demand Response Chairman Barry T. Smitherman Public Utility Commission Ju

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A National Town Meeting on Demand
ResponseChairman Barry T. SmithermanPublic
Utility CommissionJune 3, 2008
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• There is no question that the demand for energy
  in our state is escalating. Texas is attracting
  new business and citizens daily. In fact, our
  population is expected to double in the next 30
  years. We cannot afford to replicate the rolling
  blackouts experienced on the West Coast that
  might leave business, industry and our citizens
  without power.
• One thousand newcomers make Texas their new home
  every day, meaning we will need to increase
  electricity generation nearly 50 percent by 2030.
  To keep pace with the growing demand, we must
  diversify our energy sources. This diversity
  will enable us to manage emissions and provide
  adequate power for our state.
• Fossil fuels remain essential to our energy
  profile, but they should be supplemented by wind,
  water, solar, biomass and nuclear energy. A
  balanced portfolio will provide energy stability
  and a prosperous Texas economy in the decades to
  come. We have already surpassed California as
  the nations leading producer of wind energy.
  Advances in technology also have made nuclear
  power safer and cleaner. Our state is currently
  home to four nuclear generation facilities, but
  more are needed to help satisfy our growing
  energy needs.
• I also believe coal must play a role in our
  future energy portfolio, generating power as
  cleanly as technology will allow.
  
• When God gave mankind dominion over the Earth,
  we all became its stewards. That is why Texas
  will continue to pioneer innovative technologies
  while balancing the use of traditional energy
  sources to boost our states economy.
• ?Texas Governor Rick Perry
• Strong growth means increased use of energy at a
  pace that can strain the capacity to supply what
  is needed at a reasonable price. This highlights
  two urgent questions how to use energy without
  producing excess greenhouse gasses that create
  disruptive conditions on a global scale and how
  to reduce the threat to national security from
  excess dependence on oil.
• ? Former Secretary of State George P. Schultz
• To meet global energy needs, we are going to
  need everything 
  
• ? Graham Allison, Director of the Harvard
  Kennedy School of Government, Belfer Center
  for International Affairs

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Energy consumption in the modern world means
fossil fuel
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Source British Petroleum Statistical Review of
World Energy 2007
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The Most Important Plot for the 21st Century
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Source Bjørn Lomborg, The Skeptical
Environmentalist, and British Petroleum,
Statistical Review of World Energy 2006.
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Quality of life is strongly correlated with
electricity consumption
United States
Germany
Canada
United Kingdom
Australia
Japan
Mexico
South Korea
India
Russia
China
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Source CIA World Factbook, 2007
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Source Texas State Data Center and Office of the
State Demographer, Texas Population Estimates and
Projections Program, 2006
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Three Legs of Resource Adequacy

• Consumer tools
• Advanced meters for demand response
• Energy efficiency
• New Generation
• Look at resource mix to meet anticipated load
  growth
  
• All options must remain on the table, including
  cleaner coal and nuclear
  
• More renewable generation wind, solar, biomass,
  etc.
  
• Transmission
• New transmission for CREZ
• ERCOT transmission study identifies 3 billion of
  non-CREZ needs

Quocunque Jeceris Stabit 'Whichever way you thro
w me, I stand'
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There are three electric grids in the U.S. - the
Eastern Interconnection, the Western
Interconnection, and the Electric Reliability
Council of Texas (ERCOT)
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Within Texas, the ERCOT grid serves 85 of the
electric load, and covers 75 of the land. ERCOT
is connected to the Eastern Interconnect and
Mexico by DC ties.
North Tie 200 MW
East Tie 600 MW
Eagle Pass 36 MVA
Laredo 100 MW
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McAllen 150 MW
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ERCOTs Peak Day (8/17/06) by Fuel Type
Single cycle gas turbines
Generation from private networks not included
Natural Gas Steam Units
Combined Cycle Gas Turbines
Wind
Coal
DC Tie
Nuclear
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Aggressive
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Source Merrill Lynch
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ERCOT Reserve Margin Changes

• 2008 2009 2010 2011 2012 2013
• May 2007 12.6 10.1 8.3 6.7 5.9 n/a
• December 2007 13.1 12.1 14.0 11.2 10.5 8.2
• May 2008 13.8 16.5 17.3 15.0 14.5 12.3
• Increases in the Reserve Margins for 2008 and
  2009 can be attributed to the Sandow and Bosque
  expansion for 836 MW, South Houston Green Power
  Expansion for 244 MW, Laredo Peaking Units 4 and
  5 for 193 MW, the Victoria Power Station for 332
  MW, Cedar Bayou 4 for 544 MW and Winchester
  Power Park for 178 MW.
• For 2010 and beyond, the following units have
  completed interconnection agreements and/or air
  permits JK Spruce for 750 MW, Oak Grove 1 and 2
  for 1710 MW, and Sandy Creek for 925 MW.

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New Generation in Texas

• Nuclear The Nuclear Regulatory Commission has
  received an application from NRG Energy and CPS
  Energy for licenses to build two new nuclear
  reactors at the South Texas Project, the first
  nuclear power application in nearly 30 years.
  The NRC also expects application from Luminant
  Power, Exelon Nuclear, and Amarillo Power.
• Natural Gas Companies such as NRG, Calpine, and
  Navasota Energy have announced construction of
  new and expanded facilities.
  
• Coal Luminant, CPS and NRG have announced
  construction of new facilities expected to come
  on-line within the next four years. Tenaska
  announced plans for a 660 MW facility in
  Sweetwater that would capture 90 of CO2
  emissions for use in enhanced oil recovery.

South Texas Nuclear Project Source F. Carter Smi
th, Bloomberg News
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Growth of Wind Generation in Texas

• In 2006, Texas moved ahead of California to lead
  the nation in wind generation.
  
• In ERCOT, there is currently 5,311 MW of
  installed wind generation capacity.
  
• Future projects, as described in the CREZ
  proceeding, have the potential to add up to
  18,000 MW of additional wind capacity in ERCOT.
  
• Presently 44,000 MW of wind under review at ERCOT.

Wind farm outside of McCamey, Texas
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Competitive Renewable Energy Zones

• The Interim Order in Docket No 33672 designated
  areas of the state where transmission will be
  built to encourage development of wind
  generation.
• In the final order, the Commission will identify
  the most beneficial and cost-effective
  transmission improvements necessary to deliver to
  customers energy generated by renewable resources
  in the CREZ.

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MW Tiers for ERCOT CREZ Transmission
Optimization Study

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New Non-CREZTransmission

• ERCOTs 2007 Electric System Constraints and
  Needs Report identified various projects to
  improve the ERCOT grid over the next five years.
  
• These improvements are expected to add or improve
  2,538 circuit miles of transmission lines and
  14,451 MVA of autotransformer capacity.
  
• The projects identified are estimated to cost
  approximately 3 billion.
  
• Some projects may be superseded by lines ordered
  in the CREZ docket.

Source Ansel Adams, National Archives
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Distributed Generation CHP, Solar,
Micro-turbines

• Large scale Cogeneration or combined heat and
  power. These facilities produce electricity, and
  the waste heat is used for heating or other
  purposes. These facilities achieve high
  efficiencies and are seen in, for example,
  industrial facilities, universities, hospitals,
  or commercial facilities. Excess electricity not
  used on-site can be sold back onto the grid.
• Small scale (residential) Solar (photovoltaic or
  thermal), micro-turbine (wind or natural gas).
  Allows customers to generate heat or electricity
  on-site. The Commission is currently working on
  standards relating to small-scale renewable
  distributed generation.

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Tools to Help the Customer Reduce Electric
Consumption

• Energy Efficiency Incentives paid by the
  transmission and distribution utilities to energy
  service companies and other providers of energy
  efficiency services to offset a portion of the
  upfront cost associated with energy efficiency
  measures. Customers can decide on a wide variety
  of energy efficiency options, and make the best
  choice for their specific situation.
• Demand Response and other benefits of advanced
  meters Gives customers information on their
  electric use, allowing them to adjust their
  consumption based on price signals and emergency
  situations. With advanced meters, utilities
  should also have the ability to better monitor
  the electric system and address disruptions.

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Nationally, DR may offset 11 of peak demand
Additional peak savings would be achieved through
energy efficiency
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Source Ahmad Faruqui, Ph. D., Brattle Group
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Large-Scale Demand Response Programs in ERCOT

• Load acting as a Resource (LaaR) Customers with
  interruptible loads that can meet certain
  performance requirements may be qualified to
  provide operating reserves under this program. In
  eligible ancillary services (AS) markets, the
  value of the LaaR load reduction is equal to that
  of an increase in generation by a generating
  plant. In addition, any provider of operating
  reserves selected through an ERCOT AS market is
  eligible for a capacity payment, regardless of
  whether the demand-side resource is actually
  curtailed. Up to 1300 MW can be deployed through
  this program.
• Emergency Interruptible Load Service (EILS)
  ERCOT selects EILS resources to provide load
  reduction services under emergency conditions.
  These load resources may bid to make themselves
  available for curtailment during an emergency.
  This service is authorized by PUC Substantive
  Rule 25.507. Currently, over 200 MW has bid
  into and been accepted into the EILS program for
  peak time period (1 PM to 8 PM). EILS resources
  are only deployed after the LaaRs have been
  deployed.

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Energy Efficiency Programs

• Prior to 80th Legislature, Texas utilities were
  required to offer programs to reduce annual
  growth in demand by 10 per year.
  
• During 2006, CenterPoints goal was to achieve
  peak demand reduction of 20,440kW. CenterPoint
  exceeded this goal by reducing its peak demand by
  41,448 kW.
• TXU Electric Deliverys goal for 2006 was peak
  demand reduction of 79,149 kW. TXU exceeded this
  goal with 91,486 kW of peak demand reduction.
  
• Texas Will See Greater Efficiency Gaines Going
  Forward
  
• HB 3693 requires utilities to offer energy
  efficiency programs to reduce annual growth in
  demand by 10 in 2007, 15 in 2008, and 20 in
  2009 and requires the PUC to study whether an
  increase in the goal to 30 by December 31, 2010,
  and 50 by December 31, 2015 is achievable.
• HB 3693 requires, for example, that state
  facilities use energy efficient lights and
  equipment, and that any single or multifamily
  dwelling built with assistance from the Texas
  Department of Housing and Community Affairs be
  built to certain efficiency and conservation
  measures.
• PUCT and ERCOT must develop a method for
  including energy efficiency impacts into ERCOTs
  CDR.
  

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Energy Efficiency Benefits Customers

• Energy efficiency helps customers lower their
  long term demand for electricity.
  
• There are a wide variety of energy efficiency
  options and prices for consumers
  
• Compact fluorescent bulbs and other efficient
  lighting
  
• More efficient appliances, such as HVAC,
  refrigerators, and water heaters (Energy Star)
  
• Weatherization (more insulation, caulking around
  doors and windows, heat shield on roof, etc.).
  
• The customer can decide on the best option for
  their situation.
  
• www.texasefficiency.com provides a link to each
  utilitys energy efficiency program.
  

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Potential Energy Efficiency Gains(peak demand
projections)
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And Costs(Cumulative costs of HB 3693 energy
efficiency mandates at 370 per kWh)
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Advanced Meters

• Texas Legislature has recognized the
• benefits of advanced meters
• HB 2129 (79th R.S.) In recognition that
  advances in digital and communications equipment
  and technologies, including new metering and
  meter information technologies, have the
  potential to increase the reliability of the
  regional electrical network, encourage dynamic
  pricing and demand response, make better use of
  generation assets and transmission and
  generation assets, and provide more choices for
  consumers, the legislature encourages the
  adoption of these technologies by electric
  utilities in this state.
• HB 3693 (80th R.S.) It is the intent of the
  Legislature that utilities deploy advanced meters
  as rapidly as possible.
  

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Advanced Meters Increase Options for
Market Participants

• Real-time pricing will allow consumers to monitor
  and adjust their use.
  
• Consumers can participate in demand response
  programs to reduce peak demand.
  
• Advanced meters can automate functions for
  utilities, such as meter reading and thermostat
  cycling programs.
  
• Recent pilot program in the Pacific NW garnered
  average 10 savings for customers.
  
• CenterPoint and Oncor Electric have filed its
  advanced meter deployment plans.

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Benefits Savings of Advanced Meters
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• Questions?