ERCOT requires more market-design reform to promote grid resiliency: CPS CEO

For the Electric Reliability Council of Texas to avoid another energy emergency, such as what occurred during the deadly mid-February winter storm, it has "a whole lot more to do with market design," the head of San Antonio's CPS Energy said July 30.

During a US Energy Association press briefing, "The Resilience Imperative for US Electric Utilities," CPS Energy's president and CEO Paula Gold-Williams expressed disappointment with various laws resulting from the Texas legislative session that ended May 31.

"There were some great bills, but there really wasn't a look at the energy market that we have," Gold-Williams said. "They didn't answer the whole question about how the market should function ... I think it's proven that energy-only markets don't work. Winter storm Uri won't be the last disaster we face. ... I think we have a whole lot more work to do with market design in Texas."

During that storm, about 4 million electricity customers lost service, some for days. CPS Energy is the nation's largest municipal utility in terms of electricity delivered to customers, according to the American Public Power Association. Fuel prices soared during the storm, and CPS Energy has filed a number of lawsuits related to storm costs.

ERCOT has relied upon scarcity pricing during periods of high demand and constrained supply to incentivize investment to maintain and expand the generation fleet, but that has not worked, Gold-Williams said. "Capacity markets have their own problems. I am an advocate for a hybrid redesign."

Gold-Williams did not elaborate on what she means by "hybrid redesign," and a request for clarification was not answered in time for publication.

For the power sector, resiliency refers to a system's ability to withstand significant stresses and to restore service quickly when failures occur.

A variety of 'unpredictable' risks

Risks discussed during the USEA press briefing included extreme weather, wildfires, coastal sea-level encroachment, pandemics, and cybersecurity, while potential solutions included the improved and more widespread deployment of various technologies, increased resource diversity, more creative market design, and stronger leadership at the federal level.

Of those risks, "many of them are unpredictable, said Joseph Fiksel, integrated systems engineering professor emeritus at Ohio State University.

Asked whether the market structure could provide solutions to manage these risks, Richard Mroz, former New Jersey Board of Public Utilities president, said markets tend to provide "the least-cost solution" for any need, but said, "a pure market is going to be difficult to provide" the sort of robust system necessary to avoid an energy emergency on the scale of the mid-February winter storm.

CPS' Gold-Williams said, "it's going to have to be some type of blend; markets, per se, will not do that."

But Mark McGranaghan, Electric Power Research Institute fellow and former vice president of technology innovation, said the European power sector has developed a variety of market solutions to enhance resiliency. "You have to create incentives," he said.

'When do you jump in?'

Technologies that might be used to address resiliency concerns include promoting the establishment of microgrids so that when disaster cuts off a load pocket at the end of a long transmission segment, the residents in that load pocket can continue to function, which is an approach used in Australia, McGranaghan said.

Batteries have been touted as a "game-changer," allowing more widespread deployment of intermittent renewable resources, but CPS Energy's Gold-Williams said that technology is not yet ready, and Texas rules prohibit batteries from being charged during energy emergencies.

The issue is "duration, duration, duration," Gold-Williams said, because the mid-February winter storm wrought havoc in Texas for five days, 10 times as long as the previous capacity shortfall in February 2011.

McGranaghan said, "Hydrogen is probably, post-2030, the energy storage resource of choice."

But Gold-Williams said the maturation of product development remains problematic. "It's typically very expensive to work on a lot of these technologies. We want the efficiency and effectiveness to go up and the cost to go down. It's like double Dutch. When do you jump in?"