I ended Part 1 with questions about the future of older coal
fired electricity power plants and the possibility of replacing plants and
expanding electricity demand as Texas 's
economy and population continue growing.
4-6-2014: clean up some types and add to legend of figure 4.
The demise of coal-fired plants
Back in late 2011, the owner's of Monticello coal-fired plant in Titus
County, Luminant, had threaten to shut down or "idle" rather
than implement costly upgrades to put the plant
in compliance with the Clean Air Act, and, ERCOT suggesting that they couldn't
force Luminant to keep a plant open in violation of federal pollution rules (see
e,g,m Texas
power grid operator says blackouts possible).
What happened to these and similar coal fired plants?
It appears that the Monticello
plant was mothballed
for the winter of 2012. The plant
capable of producing
1,880 MW, enough to power 0.94 million homes in normal conditions, apparently was not needed in winter months and therefore
was not given a “Reliability Must Run” designation
by ERCOT. After re-opening for the
summer of 2013, the plant again was mothballed for the winter, and Luminant
requested to also mothball its Martin
Lake coal-fired plant for
the winter (A
Changing Market and Dim Future for Coal in Texas). Martin-Lake has a capacity of
2,250 MW enough to power 1.12 million homes. Altogether, Luminant owns five coal-fired
plants with a name-plate capacity of 8,017 MW—I
wonder if eventually all five of these plants will get shut down during
non-summer months.
Although part of Luminant's reason for mothballing the
plants is stiff economic competition from power generated by natural gas
plants, I think that it is the cost to comply with the EPA rules under the
Clean Air Act is what will lead to the eventual demise of all of these
plants.
Indeed, last summer, the DOJ, at the behest of the EPA, filed a law suit against Luminant alleging continued violations under the Clean
Air Act, citing the Martin-Lake plant and the Big Brown Power Plant, located
near the Dallas-Fort Worth area (Luminant
hit with suit alleging Clean Air Act violations). Luminant has argued for special
protection against the Clean Air Act for violations during startups and
shutdowns,and the Fifth circuit agreed, but then, the denial of an appeal
to the Supreme Court doesn't bode well for eliminating the possibility of
subsequent law suits attacking this theory.
Additionally, CPS Energy, in San Antonio , appears to on track with its
plan to shut
down entirely the JT Deely coal-fired plant at the end of 2018, citing as
the reason the high cost for environmental retrofits to comply with new
emissions requirements. The Deely plant which has a power generating capacity
of 871 MW will be replaced with a natural gas-fired plant.
A new coal fired plant, the Sandy Creek
plant near Waco ,
with a 900 MW capacity, did come online in 2013. Its opening, however, was only after a
settlement with the Sierra Club who had fired a lawsuit against the plant's
owner alleging violations of the Clean Act, among other things. After years of legal battles, as part of the
settlement the owners agreed to pay for stricter air pollution controls and to
not build coal-fired plants in Georgia
and Arkansas . The Sandy
Creek owners are still embroiled in
legal battles with a company, NAES, hired to maintain and operate the plant, alleging
that NAES's mismanagement damaged the plant's boiler (Sandy
Creek power plant owners suing over 2011 boiler incident).
It is apparent to me that no additional, Clean Air Act
Compliant coal fired-plants will be opened in Texas any time soon (if ever) due to litigation costs, federal regulations
and the present low price of natural gas (After
White Stallion Power Plant Canceled, Coal Faces Dark Future in Texas).
A power vacuum
While some see this as "big win for clean air in Texas ," and it probably is, I wonder how this will
impact Texas 's
ability to meet its growing power demand. Are there any non-coal power
generating projects underway to actually expand the power grid and not just
replace the existing capacity produced by the coal plants being mothballed or
shutdown?
In an interesting Forbes article, Will
Summer Blackouts Doom The Texas Boom?, Christopher Helman gave a summary of
Texas 's
energy status going forward. New
electrical capacity from Nuclear Power does not appear to be in the cards given
the blockage of to two new Japanese Toshiba reactors. Two 760 MW capacity gas-fired plants
owned by Panda Power are scheduled to come on line in 2014, and there is a third
plant scheduled to come on line in 2015.
The 540 MW natural gas-fired Ferguson
power plant in Llano in 2014 will replace the old 420-MW plant which closed
in the fall of 2013. Such gas fired
plant are important to ERCOT for their ability ramp up quickly when electricity
demand spikes—something that wind or solar power, or, even nuclear or coal are
NOT particularly good at. Finally, Helman's
article talks about another 3,000 MW of wind power set to be built by
2015. But even if all of this wind power is built, for
reasons already discussed in past articles in this blog, on a hot Texas summer
day, one might only expect to get ~10% or less of the name plate capacity from wind.
That seems to be about it—about 1,500 MW in 2014, and
another 1,000 to 1,500 MW in 2015, depending on how you feel about the wind
power contribution you could count on in the summer.
Keeping in mind that at a peak summer power usage of around
67000- 68000 MW, and, the need to grow the capacity by about 2 percent per year,
ERCOT's goal should be to add about 1350 MW capacity per year every year, just to
keep it's reserve margin about constant.
But ERCOT's own Capacity-Demand-Reverse
Report for 2013 shows their expectation of a shrinking reserve capacity,
going forwards (Figure 4).
As illustrated (red circle), ERCOT expects its summer
reserve margin to steadily decline from a margin of about 13.6% in 2014 of
total capacity to 4.5% by 2023. For
comparison, the North
American Reliability Corporation’s acceptable reserve margin
is 15 percent, and, NARC estimate of Texas 's
reserve margin to be 12.9%. NARC indicated that the peak demand growth rate in Texas (about 2.7%/year) is projected to be the highest in
the United States .
It is noteworthy that the growth in year-to-year summer
peak demand shown in the above table (blue circle) appears to be based on (or
is equivalent to) an assumption of demand growth increasing by 3 percent per
year (e.g., 72071 x 100%/69807=103 %) for the next few years, and then, suddenly slowing
down to less than 1 percent per year by 2021. I don't know where these projections come
from.
If I take ERCOT's 2014 "firm load forecast," and increase it
by a constant 2 percent per year every year, then the reserve margin drops
below 0% by 2023. If I take that same 2014
firm load forecast and increase it by a constant 3 percent per year every year,
then the reserve margin drops below 0% by 2020.
Of course, weather is the wild card, and on any one summer day,
particularly hot weather could shift ERCOT into emergency load shedding. We already know from the experience of 2011, and
ERCOT's own emergency
plans, that coming within ~3.4 percent of power resource capacity would
trigger industrial load shedding with rolling blacks outs to follow soon afterwards. Texas has just been lucky so far.
ERCOT has done two other things in an effort to mitigate Texas 's inadequate and
declining reserve power margin.
Understanding that Texas needs the summer capacity from
the aging coal-fired plants like Monticello, Martin-Lake and Big Brown, ERCOT
has raised its price cap on wholesale electricity, presumable to motivate owners, like Luminant, to de-mothball these plants every summer and supply an
important part of the based load summer power capacity. A coalition of these power providers are
pushing for some kind of guaranteed compensation in the form of permanent cap
increases to keep these plants available for summer use in the years ahead (Rolling
blackouts are Texas' future without reform, generators say)
I don't see this as a workable solution, given that in
2014 the EPA wants to implement more stringent rules for CO2 emissions from
existing plants, and, none of the existing plants in Texas are in compliance with such limits. The owners of these plants, like Luminant,
find the costs of retrofitting these plants with carbon capture technology
"unworkable." (Texas
electric grid getting greener even before EPA crackdown).
If, for example, Luminant decided that it wasn't financially
worthwhile anymore to "de-mothball" the Monticello and Martin-Lake plants for the summer and just leave them
closed for the summer of 2014 and beyond, then that would drop ERCOTs power
generating capacity by about 4000 MW. The 2014 reserve margin would then drop
to 7.8% percent and to only 4.8% by 2016.
I'm not sure who the public would blame for the likely ensuing rolling
blackouts—the EPA, Luminant or ERCOT? Would
the Clean Air Act rules be waived after a few summers with extended periods of
rolling blackouts and people dying from heat exhaustion? Perhaps we will see.
The other thing that ERCOT is doing is promoting voluntary
conservation. In 2013 ERCOT introduced a
voluntary pilot program, the 30-Minute Emergency Response Service ("30-Minute
ERS), for homeowners groups and commercial users to be compensated for cutting their
electricity use during times of peak demand when power supplies are tight and
prices spike, if, they can reduce power use by at least 0.1 MW within 30
minutes (ERCOT
plan rewards electricity cuts during peak demand). Presumably this option would be implemented at Energy
Emergency Level 1, when the grids' reserve margin drops below 2300 MW. This pilot program is still being tested, but from
a November
2013 report with about 1600 potential participants it looks like the 30-Minute
ERS could produce reductions of 100 to 200 MW.
With over 6
million residential smart meters installed across Texas the potential impact
of some form of residential power load shedding program is much larger than
this. Residential load shedding would
work best if those volunteering for the program simple have their power load
shed automatically as needed by the electric utility via a smart meter. For instance,
PUC
of Ohio is advertising how smart meters will give customers the opportunity
to "assist" PUC through voluntary “load shedding” where PUC will send
signals to thermostats and other appliances to adjust the devices’ activity
until another signal is delivered to restore normal activity. I would think
that a special device would have to be installed so that the power company
could selectively remotely control these appliances.
But perhaps a smart meter could
be used to more grossly limit the total amount of power flowing into individual
households. A smart grid controlling
smart meters has been proposed as a solution to mitigate Pakistan 's terrible grid problems by Dell. Pakistan is currently facing a power
generation shortfall of 6000 MW which results in 8-12 hours blackouts
throughout the country.
Of course, the "carrot" to volunteer for such programs
will be a price reduction, or rebate, when and if your power load gets shed (ERCOT
will pay homeowners to conserve electricity this summer). Low income customer will be attracted to
this, and, a partial shutdown of certain appliances is certainly preferable to full-scale
rotating blackouts. Those who can afford
to pay a higher price for electricity need not worry about such inconveniences—for
now.
Winter power woes
One final note that involves those those coal-fired power plants that
are mothballed over the winter and the reliability of the grid. I expect
that mothballing will be a growing trend if natural-gas prices stay low and rules
under the Clean Air Act become increasingly stringent and enforced.
But mothballing a significant portion of the
States' steady base load capacity can start to affect power reliabilty
during the winter months. Last November
2013, a cold winter snap caused Texas
to have its highest
electricity use on record for the month of November of 46,931 MW on
November 26. The previous month, October, had also set a new demand record of
54,710 MW for that month. The absolute
magnitude of this amount is paltry compared to the summer month's daily peak usages of
66,000-68,000 MW, but it is during the fall and winter months that power plants
either get mothballed or shutdown for servicing. Still, despite these records set in October and November, I saw no
reports of the Texas
power grid being stressed.
A few weeks later on December 6, about 250,000 people lost power
in the Dallas Ft, Worth Area during that week—but that was due to downed
frozen overhead power lines from a massive storm of freezing rain. Once
again there were no reports of the power grid being stressed.
On Monday, January 6, another cold snap through Texas did cause ERCOT
to issue a Energy Emergency Alert and implement “demand response" mitigation with
entities that contract to reduce their electric use when needed. What was the demand level that cause this
alert? Only 55,486 MW—just slightly
higher than that October record.
Power consumption of 55,486 MW was enough to get to an Energy Emergency Alert Level 2, meaning that the
reserve capacity was less than 1750 MW. Texas was probably less
than 1000 MW away from rolling blackouts, I suspect.
At the heart
of the emergency was the unexpected loss of 3700 MW of power production capacity
from two plants that had equipment failures due to the cold weather. That caused ERCOT to import about 1000 MW of
power from the Eastern USA and Mexico
and for wholesale electricity prices to hit the cap limit set by ERCOT.
While the loss of 3700 MW from these two unnamed plants might
have been a "surprise," what was not a surprise was the about 10,000
MW worth scheduled plant shut down in capacity for maintenance and mothballing.
What about the winter wind? Well that Monday, the wind capacity at
ERCOT's disposal was 17 percent of the 10,400 MW nameplate capacity,
providing about 1782 MW or 3.2 percent of the grid's total power generation. (Role
of Texas wind power debated after winter emergency; Did
Wind Really Save Texas from Rolling Outages?). I think this just goes to show, once again, that wind can provide some base load capacity but that base load contribution will variable. There still has to be enough steady base load
(coal and nuclear) and variable (gas) capacity to provide a reliable power margin.
In my opinion, as the coal-fired plants
get mothballed in increasing amounts, the size and reliability of this margin will
diminish.
This Saturday, January 18, ERCOT
issued another Level 1 energy emergency alert after yet another
expected/unexplained power plant outage of 1200 MW. As noted by one
reporter, Saturday morning was rather unremarkable weather-wise, with temperatures
in the 50s°F. It is hard to imagine that this plant outage was due to equipment failure
from cold weather. Once again, a Level 1
alert is issued when the margin drops below 2300 MW, so the loss of 1200 MW
from one plant was enough to drop the grid below this margin. If this plant had gone out the week before, then there highly likely would have been rotating blackouts in Texas.
These alerts underscore just how close Texans
are living near the margin for rolling blackouts—trying to walk a tight rope between
high prices, federal air pollution regulations and a reliable electricity grid.
===========================
This has been my first "free" weekend since October, where
I have not either been sick, working, or, both!
I will be back again, to what has become this occasional blog, as time
and health permits. 4-6-2014: clean up some types and add to legend of figure 4.