- Texas SB 1278 and HB 4466 are Discriminatory in Nature and Do Not Reflect the Reality of the ERCOT Ancillary Services Market
SB 1278 and HB 4466 seek to assign ERCOT Ancillary Services costs to wind and solar generation “to address reliability issues arising from the operation of intermittent wind and solar resources.” These bills are unnecessary, discriminatory policy that will increase costs on residential, commercial, and industrial electricity consumers.
There are no Ancillary Services in ERCOT that have been created or implemented only because of wind and/or solar generation, or for any other type of generation for that matter.
Ancillary Services perform a variety of operations and have existed since Day 1 of the ERCOT market and in electricity markets before there was any renewable energy generation on the grid. Ancillary Services are required to maintain grid stability and security and support the continuous flow of electricity so that supply will continually meet demand.
In ERCOT, Ancillary Services are offered by dispatchable thermal generation and generally not by renewable generators (although there is some discussion about allowing renewable energy to provide limited types and quantities of Ancillary Services). The existing ERCOT Ancillary Services market is a forward market that largely rewards thermal generation for its dispatchability.
Wind and solar generation are variable in nature. That is no secret. What is not understood by many is that wind and solar output are predictable. ERCOT has very sophisticated modeling and forecasting tools that allow ERCOT to reliably manage the grid, balancing thermal and renewable output on a five-minute basis. It should be noted that since wind and solar are zero fuel cost generators, ERCOT protocols and dispatch plans seek maximum output from these resources so long as there are no reliability issues.
Over the years, there have been some attempts to have ERCOT calculate some level of Ancillary Services that is attributable to the intermittent nature of renewable generation, but the ERCOT market participants have not adopted any proposals.
In ERCOT, there are some rather large industrial loads (specifically steel mills with large electric arc furnaces) that actually require high volumes of Ancillary Services. Unlike wind and solar, these loads cannot be forecasted or controlled by ERCOT. Like a thermal power plant, wind and solar can be ordered to reduce output if there is too much power on the system or if reliability issues arise.
The last time ERCOT considered charging renewable generators for Ancillary Services, it was discussed by stakeholders that large, erratic industrial loads would similarly need to be charged for the extra Ancillary Services required to follow their intermittency. The effort to allocate Ancillary Services to renewables ceased.
If ERCOT and its market participants want to make changes to Ancillary Services protocols, they have the ability to do so. SB 1278 and HB 4466 are not needed.
- SB 1278 and HB 4466 are unnecessary, discriminatory policy that will increase costs on residential, commercial, and industrial electricity consumers.
- There are no Ancillary Services in ERCOT that have been created or implemented specifically because of wind and/or solar generation, or for any other type of generation for that matter.
- The existing ERCOT Ancillary Services market is a forward market that largely rewards thermal generation for its dispatchability.
- Over the years, there have been some attempts to have ERCOT calculate some level of Ancillary Services that is attributable to the intermittent nature of renewable generation, but the ERCOT market participants have not adopted any proposals.
- In ERCOT, there are some rather large industrial loads (specifically steel mills with large electric arc furnaces) that actually require ERCOT to procure high volumes of Ancillary Services. Unlike wind and solar, these loads cannot be forecasted or controlled by ERCOT.
- The last time ERCOT considered charging renewable generators for Ancillary Services, it was discussed by stakeholders that large, erratic industrial loads would similarly need to be charged for the extra Ancillary Services required to follow their intermittency. The effort to allocate Ancillary Services to renewables ceased.
- If ERCOT and/or its market participants want to make changes to Ancillary Services protocols, they have the ability to do so. In fact, ERCOT is currently reviewing it AS offerings.
- While variable, wind and solar output are predictable. ERCOT has very sophisticated modeling and forecasting tools that allow ERCOT to reliably manage the grid, balancing thermal and renewable output on a five-minute basis.
- SB 1278 and HB 4466 are not needed.
Download Paper: Texas Ancillary Services Bills are Discriminatory in Nature and Do Not Reflect the Reality of ERCOT’s Ancillary Service Market
