Monday, October 15, 2018

Overheard at the TREIA GridNEXT Conference

GEORGETOWN, Texas — Almost 150 national and regional renewable energy industry representatives gathered here for the Texas Renewable Energy Industries Alliance’s GridNEXT conference. ERCOT CEO Bill Magness and NYISO CEO Brad Jones both delivered presentations, and panel discussions focused on distributed generation, storage technologies, renewable power and the various challenges facing the ERCOT grid.

Future Prices in the Texas Market

Magness opened the conference with a SWOT analysis of ERCOT. In listing the strengths, weaknesses, opportunities and threats facing the ISO, Magness’ focus became apparent: the ability to keep track of distributed energy resources (DERs) and their integration.

treia gridnext conference

Left to right: ERCOT’s Magness, Hala Ballouz of Electric Power Engineers, and NYISO’s Jones | © RTO Insider

He noted ERCOT has about 900 MW of distributed generation connected in its retail-choice areas and “roughly” another 200 MW in the market’s noncompetitive areas.

“That’s not a huge penetration at this point. These resources don’t raise a long-term reliability issue and we’re not waving a red flag, but we expect to see more,” Magness said. “We need to come up with a process to map those DERs. It’s the distribution service provider’s job to model the system, but we want to map those things into things we’re responsible for.”

Magness said ERCOT will soon be issuing a white paper on DERs and asked for stakeholders’ help with improving the resources’ visibility. “We want to work with you on that. We’ve got to get an answer, because it’s holding up the usefulness of the ERCOT system.”

He likened the ISO to an Austin-area moving company. “Their motto is, ‘If we can get it loose, we can move it,’” Magness said. “If we can see it, we can integrate it.”

NYISO CEO Explains 50-by-30

Magness’ counterpart at NYISO, the Texas-native Jones, delivered the conference’s keynote address. Jones detailed the ISO’s plan to meet New York’s “50-by-30” goal: 50% renewable energy use by 2030. To meet that goal, NYISO would have to add either 25,000 MW of solar, 15,000 MW of wind or 4,000 MW of hydro by 2030; it currently has 1,700 MW of wind and 3,000 MW of hydro.

“It’s a significant overall goal, but this is the goal, economy-wide,” Jones said. “It includes transportation, it includes home heating, it includes all those elements. Electric generation would have to decrease production by 60% to account for increases in transportation.”

He said New York’s recent actions to protect the region’s aging nuclear plants will help the transition to a lower-carbon fuel mix. “The state has been very firm: We need to maintain nuclear generation,” Jones said.

The state “had a real concern it would lose these real low-carbon facilities, and that it would make it almost impossible to achieve this 50-by-30 goal. [The nuclear facilities] did it by making a side arrangement with the government. Utilities will charge the customers for it to provide enough financial support to keep them in N.Y. If we’re going to be a low-carbon [grid operator], we have to make sure we’re paying for the attributes we want, whether that’s fast-ramping capacity or baseload gen or low carbon or renewable facilities.”

Renewable Energy Credits: All About the Money?

Adkins | © RTO Insider

Adkins | © RTO Insider

Addressing the issue of corporate procurement of renewable energy, Jessica Adkins, a partner with the Bracewell law firm, said there are differences among major corporations seeking renewable energy credits (RECs). “If your goal is to say you’re buying green energy, that’s easy for people to do,” she said.

“If all your goal is to claim you’re buying renewables, you can offset usage with RECs. Where Amazon is going is additionality. They want do to more than go green. They want to tell their customers they’re putting renewables on the grid.”

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Royal | © RTO Insider

“In our business and outside our business, I’m seeing a further diversification of companies doing these kind of deals,” said Adkins’ fellow panelist, Hans Royal, associate vice president of strategic renewables for Renewable Choice. “They don’t really have an environmental goal, but they see the fixed price of energy. Education is the No. 1 hurdle to why we’re not seeing a faster adoption. It’s coming … industry organizations are actively sharing information and trying to create a community in the purchase-power space. Getting information out to those companies is key.”

Ermoian | © RTO Insider

Ermoian | © RTO Insider

Texas Energy Aggregation’s T.J. Ermoian said the issue is the color of money, no matter where customers are. “If they see the government investing in [renewables], they’ll be more comfortable,” he said.

“Being in Texas, we’re energy-rich. I tell people I’m in the middle [of the state] between George Bush’s ranch and Ted Nugent. We’re in the reddest of red states,” Ermoian said. “I start talking about climate change in Texas, and the eyes start to glaze over. Money is the greenest thing people understand. If we can give them a compelling economic vision and quantify what they’ve been paying and say, ‘Here’s what you could be paying.’ … Well, most people are pretty good at math.”

Energy Storage a Positive ‘Disruptive Technology’

Hayslip | © RTO Insider

Hayslip | © RTO Insider

Referring to energy storage as a “disruptive technology,” Narrow Gate Energy President Darrell Hayslip was one of several panelists who predicted a brighter future for the technology.

“We’re all trying to figure out where will storage go. Where will it play?” he said. “We’ve done a lot to prove out this technology. The trick now is how are we going to apply it in the system. These are disruptive technologies that require some changes.

“It’s something new we’ve never had before. Cars wouldn’t do any good without highways, cell phones without infrastructure. We’ve got to see infrastructure catch up. The builders don’t make that investment unless they see benefits come out.”

judy-mcelroy-ceo-fractal-business-analysts-rto-insider

McElroy | © RTO Insider

Fractal Business Analytics CEO Judy McElroy said she is finding “compelling reasons” for solar and storage in ERCOT. She predicted one of the largest municipal utilities in Texas — thought to be San Antonio’s CPS Energy, with nine solar farms already generating 230 MW of energy — would be issuing a request for proposals within a week for energy storage solutions.

“We’re seeing in ERCOT the evolution a utility goes through. They’ll do solar first, then storage,” McElroy said. “You have to take into account that from a utility’s perspective, things take a lot of time. It’s sometimes more complex than it needs to be.”

Feuge | © RTO Insider

Feuge | © RTO Insider

“A lot of people are looking at RFPs in the future,” said Bradley Feuge, head of project management for German solar manufacturer KACO new energy. “Once this big RFP comes out … this municipality kind of sets the pace in the state. They’re seen as a leader nationally, and once they take the leap, you’ll see more people stepping out there as well.”

Mena | © RTO Insider

Mena | © RTO Insider

“Once you add solar to storage, then you essentially have a microgrid that can sustain an hour or so of outages,” said Hugo Mena, Electric Power Engineers’ vice president of business development. “EPE has seen this coming for a couple of years because the integration of storage, whether to a solar plant or a wind farm or storage as a transmission asset, is positive for the grid. The question now is, when it is going to be economically feasible for developers or utilities to implement this technology in their systems. We’ve seen at the municipal level that it’s become economically feasible, but some [investor-owned utilities] are also installing storage for microgrid purposes.”

Transmission Planning: More Complicated than Rocket Science

Bojorquez | © RTO Insider

Bojorquez | © RTO Insider

Bill Bojorquez, Hunt Power’s vice president for transmission planning, said during a panel focused on Texas transmission that continued solar and wind development in the state will not be able to take advantage of initiatives like ERCOT’s Competitive Renewable Energy Zone (CREZ). The $7 billion project facilitated the construction of 3,600 miles of transmission lines, connecting West Texas wind farms with the state’s huge metropolitan load centers.

“We have a lot of solar development coming into West Texas, but this area has a weak transmission grid,” Bojorquez said. “Without CREZ, wind and solar are going to have to follow the same process of any other generation. You’re going to have to commit before we can plan for you.”

Crowder | © RTO Insider

Crowder | © RTO Insider

“Twenty-five years ago, transmission couldn’t get funding in a company. It was all about generation and keeping things patched together so we didn’t get into trouble at the commission,” said Calvin Crowder, president of GridLiance’s South Central Region. “The returns in Texas are attractive considering what else you’ve seen. There’s been a lot of transmission invest in the investor-owned utilities, the municipal power utilities and the municipal power agencies, as well as the co-ops.”

Donohoo | © RTO Insider

Donohoo | © RTO Insider

“Texas knows about energy in every single form. We know how to manage it, we know how to control it, we know how to develop it,” said Ken Donohoo, Oncor’s director of system planning, distribution and transmission. “We as planners have to think about a lot more changes and complexity. Communications and control is key.”

As an example, Donohoo said Oncor has more than 9,300 rooftop solar installations on its system. “We know where every one of those is on our system,” he said.

“Transmission planning isn’t rocket science,” Crowder said. “I talked to a planner once and they said, ‘That’s right. It’s a lot more complicated than putting a rocket in the air.’”

Distributed Generation and Microgrids: Evolving Business Models

Thomas McAndrew, whose Enchanted Rock company provides on-site, natural gas-fueled backup power, said his business provides what is essentially a microgrid control system.

“Our primary job is reliability,” said McAndrew, Enchanted Rock’s managing director. “We’re creating a portfolio of quick-response natural gas assets. We think that’s incredibly important in our current environment, especially in ERCOT. We’re going to have periods of time in the shoulder months where we can displace almost all thermal generation. You may have wind at 90% of the supply stack, but we think it’s important to have quick-start assets. We’re there to buffer when we have sudden changes in either wind or solar generation.”

Middaugh | © RTO Insider

Middaugh | © RTO Insider

Brandon Middaugh, a senior program manager with Microsoft, described what she saw as “an interesting trend” in the high-tech industry.

“You have these large, concentrated customer loads,” she said. “When that’s one of your main operating costs, it really drives an organization to build up capacity to interact more directly with the markets, to be more about this collaboration and understand how [electric] markets work today, how they’re evolving and how that affects customers like Microsoft.

“There’s more of a need on our part to interact directly with the whole market,” Middaugh said. “That actually serves the grid operators and the utilities well. Apple, Google and others are registering to self-supply and become wholesale participants. I think you will see more of that, and it can be a boon to grid operators.”

Distributed PV Modules Taking off in San Antonio, Elsewhere

Luna | © RTO Insider

Luna | © RTO Insider

San Antonio’s burgeoning solar market was also a topic of conversation during a panel on distributed PV pricing. Rick Luna, CPS Energy’s senior manager of product development, said under the city’s rebate program, customers are paid to host rooftop solar systems.

CPS Energy’s board recently extended the seven-year-old program, though it is gradually reducing the rebate’s amount. Luna said 500 systems will be eventually installed, noting the $30 million program was expected to sell out next year. However, he said, there are downsides to the explosion of interest.

“That $30 million will be spent by January,” he said. “We’ve seen new market players from other markets coming to San Antonio and aggressively marketing to customers. We welcome them, but it’s not always a fair game. Customers don’t always know what solar should cost … they sign these contracts with $20,000, $30,000 commitments. We’ve updated our rules to try and educate our customers and give them some information to arm them and help them make a more informed decision.”

Cotney | © RTO Insider

Cotney | © RTO Insider

“There’s been some significant PV module pricing decreases this year,” said Eric Cotney, vice president of sales and marketing for Dallas-based Axium Solar. He attributed the 30% in cost reductions to better technology and lighter modules.

“PV modules are continuing to creep up in the power ratings. What used to be a 25-W power module is now a 275-W power module,” Cotney said. “You add labor efficiencies into that because [technicians] are now able to work with smaller modules. And then racking companies are making their systems more minimalist with fewer bolts, making them lighter and faster to put together. As more of our crews are up on roofs and encountering different installation challenges, we’re getting better at what we do.”

Solar Marketers Debate Texas Market’s Future

Another panel debated whether there’s still room for growth in the Texas market, with ERCOT showing 2,000 MW of solar generation with signed interconnection agreements and the ISO’s long-term studies showing another 20,000 MW in potential additions.

Schultz | © RTO Insider

Schultz | © RTO Insider

“In states like Texas, where the overall weighted power prices are low, it’s a race to deliver solar at prices that compete with traditional generation,” said Preston Schultz, director of development for Chicago-based Hecate Energy. “Everything is definitely bigger in Texas. You’ve got landowners who control large chunks of land, you’ve got an educated landowner base. In [the Southeast] we’re having to educate landowners most of the time what the technology is. They just haven’t seen it. We come to Texas, they know renewables, they know wind, they know solar on the utility scale. That just makes our job easier.”

Dixon | © RTO Insider

Dixon | © RTO Insider

David Dixon, of renewable energy company Native, said his company sees the same growth opportunities in the Texas market. He pointed to the Public Utility Commission of Texas’ Power to Choose website, where some retail electric providers are offering to buy customers’ excess renewable energy.

“We expect to see double-digit growth, especially in the residential market. We’re still seeing prices come down,” Dixon said. “What we’re not seeing is solutions for home storage aligning with the homeowner’s expectations. We’re in the early adopter’s stage, but I do think in the future, we’ll be installing storage solutions.”

Begert | © RTO Insider

Begert | © RTO Insider

“The commercial markets have grown due to projects in North Texas, thanks to Oncor rebates,” said Mark Begert, executive vice president and director for Meridian Solar. “Even 1- to 2-MW projects represent a pretty meaningful lift to the overall commercial market in Texas. The lower prevailing electricity rates are a challenge. Rooftop solar return requirements for solar customers are significantly higher than you see in the residential market. Commercial customers want their [internal rates of return] in the mid to high teens. They want payback in five years. The residential customer is more comfortable with eight to 10 years. That’s a significant return threshold solar has to overcome.”

– Tom Kleckner

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