How Electrifying Trucks Can Help Roadside Neighborhoods Breathe Easier

We know that electrifying trucks, as we wrote last month, can reduce significant amounts of air pollution; it can also have significant health benefits, particularly for frontline communities. Analysis by Alexander Meitiv and Ann Xu for Texas A&M’s Transportation Institute finds that, by electrifying just 40% of existing, predominantly diesel-fueled medium-and heavy-duty vehicles in the eight-county Houston area, Texans could avoid more than 21 tons of nitrogen oxides (NO_x) – over a quarter of the 80 tons a day emitted per day by Greater Houston’s on-road traffic. This could be achieved by electrifying a little over 60,000 medium-and heavy-duty vehicles, about 1% of all the vehicles in greater Houston.

This is big news for all areas in non-attainment for ozone under the Clean Air Act, a serious public health and economic challenge. But it is especially big news for people living near highway corridors, because electrifying the same vehicles also reduces fine particle emissions by nearly 20%.

Fine Particulates Are Deadly

Tailpipe emissions from medium- and heavy-duty diesel trucks contain significant amounts of fine particle pollution, also referred to as “PM_2.5.” PM_2.5 are particles that are 2.5 microns or smaller that are produced along with partially combusted fuel and from other pollutants like nitrogen and sulfur oxides. (To get a sense of just how small 2.5 microns is, the diameter of a human hair is around 50 microns.)

The World Health Organization’s International Agency for Research on Cancer characterizes PM_2.5 as a carcinogen, and for decades, we have known that PM_2.5 causes premature mortality. In the proceedings of the National Academy of Sciences research indicates that roughly 100,000 Americans per year die from fine particle pollution.

In spring 2020, public health researchers at Harvard issued a study further illustrating the danger of particulate pollution. They found that the pre-existing conditions that increase the risk of death in those with COVID-19 are the same diseases that are affected by long-term exposure to air pollution, and that a small increase in exposure to PM_2.5 leads to a large increase in the COVID-19 death rate. Emissions from medium- and heavy-duty vehicles, a major source of PM_2.5, should be of grave concern and raise a red flag.

Who Is Affected?

Low- and moderate-income (LMI) communities and communities of color, especially those located near transportation corridors, are disproportionately affected by transportation-related emissions of PM_2.5. Meitiv and Xu’s analysis finds that the proximity and exposure to truck-related emissions in certain neighborhoods “leads to environmental justice questions related to air pollution and public health.”

LMI communities are often located in very close proximity to roadways because property values in those areas are likely to be lower . The CDC has found that racial and ethnic minority communities, foreign-born people, and people who speak a language other than English at home represent the highest percentage of people living within 500 feet of a major highway.

As illustrated in the following figures, people living in close proximity to roadways in the Houston-Galveston region are subject to long–term exposure to these pollutants. Figure 1 shows a census block map organized by percentage of low- and moderate-income (LMI) residents. As the legend suggests, the darker the shade, the higher the percentage of LMI residents in each block.

Figure 1: Census Block Group Map of Percentage of LMI Residents

Figure 1 shows that in Houston’s surrounding communities – the northwest, northeast and southeast quadrants – neighborhoods are home to 50–100% LMI residents. Even in the city’s southwestern suburbs (lighter shade), where the relative percentage of LMI residents is low, there are still neighborhoods where the proportion ranges between 20% to as much as 50%.

The Strategy: Electrify Medium- and Heavy-Duty Vehicles

The most effective way to improve air quality for communities near roadways, according to the EPA, is to “reduce the emissions of each vehicle on the road and the number of vehicle miles driven.” Vehicle electrification can reduce emissions. And Meitiv and Xu’s research illustrates how the electrification of medium- and heavy-duty vehicles can be especially effective.

Figure 2: PM2.5 Concentration Reduction From 40% Heavy-Duty Truck Electrification

In their analysis, the authors found that (1) heavy-duty long-haul electrification reduces emissions along major corridors, whereas (2) medium-duty short-haul electrification reduces emissions across secondary roadways, especially on the west side of Houston. Figure 2 illustrates reductions of PM_2.5 concentrations (the lighter colors) across Houston and the surrounding areas produced by the electrification of 40% of heavy-duty trucks in the region. In addition, emissions reductions from electrifying heavy-duty trucks can be seen along major corridors in the region, including routes to Galveston to the southeast, Lake Jackson to the south, and Bay City to the southwest.

Figure 3 illustrates reductions of PM_2.5 concentrations (the lighter colors) produced by the electrification of 40% of medium-duty trucks in the region. Most notable are PM_2.5 emissions reductions in the areas to the west and the northwest of Houston, on secondary roads and, similar to the effects produced by electrifying heavy-duty trucks, on major corridors as well.

Figure 3: PM2.5 Concentration Reduction From 40% Medium-Duty Truck Electrification

Conclusions

Electrifying trucks can reduce air pollution significantly and produce public health benefits, particularly for frontline communities. Texas A&M Transportation Institute’s analysis identifies major benefits in NO_x reductions by electrifying a fraction of diesel-fueled vehicles on Houston’s highways. They also found an important co-benefit of the same truck electrification strategy: Electrification reduces deadly PM_2.5 emissions by 20%. Not only is this good news for overburdened Houston neighborhoods near roadways, but it also has positive implications for similar communities throughout the United States.

对美国得克萨斯州能源危机的一些初步想法

得州能源危机引起了美国以及世界各国媒体的广泛关注。在中国，有关得州事件与中国电改相关性的讨论也正在进行。得州政府和相关专家现在正处于调查分析危机的早期阶段，距离所有相关事实公开还需要一段时间。也许现在给出完全确定的结论还为时过早，但可以从得州的经历中得出一些早期的启示。

目前可以识别出一些与危机相关的因素。2月11日至16日，冬季的天气状况在强度和持续时间上都远远超出了通常被认为是“极端”的水平。得州和其他中西部州的一些地方打破了有史以来最低气温的记录。电力需求在15日和16日达到顶峰，高达约74 GW。这超过了得州独立系统和市场运营商ERCOT去年发布的资源充足性规划中的“极端”冬季规划情景预测的67 GW的高峰需求。这个对“极端”冬季高峰需求的预测，部分来自于2011年发生的一次较小的冬季风暴的经验。然而，得州夏天需求高峰曾超过74 GW，ERCOT对此处理良好。

不幸的是，当时许多发电机组出现了无法使用的状况。在ERCOT假设的冬季“极端”和“低风”情景下，预期风力发电只会占到可用资源的一小部分(约为2 GW )。尽管一些风机被冻结，但风力发电出力超过这一基线，在危机期间，除了几个小时外，风电出力均超过了“低风”情景的预期。与此同时，许多燃气发电和其他火电出人意料地无法使用。ERCOT预测的极端情景下，可调度的火电为58 GW；但在15日，实际可用的火力发电只有42 GW。天然气基础设施的冻结是一个主要因素，一些燃气发电机组无法发电是由于电厂设备的冻结，一些是由于天气作用导致天然气井和管道故障问题。

根据我们国际专家团队对得州和中国能源体系和政策的异同的理解，以下是我们的一些初步想法。

1. 美国各区域独立系统和市场运营商负责资源充足性规划的各级领导和工作者肯定会重新评估各种天气情景。气候变化意味着，在规划情景时，重新审查需要考虑什么样的气候条件将非常重要，包括对“极端”天气的假设。
2. 这场危机凸显了能源政策不同方面相互关联的属性。在规划和政策制定的过程中，应将电力行业改革、天然气行业改革、能效政策和减排政策等方面统筹考虑。
3. 现在说ERCOT电力市场规则的细节是否应该根据危机进行修订还为时过早。正确制定电力市场规则并不容易。必须在必要的地方对这些规则进行不断审查和修订，即使是在像得州这样经验丰富的地方。理想情况下，政策制定者会在需要的地方做出调整，同时保留市场设计的积极因素。
4. 从积极的方面来看，ERCOT市场多年来一直是运用稀缺定价的一个有用例子，它支持经济调度，促进可变可再生能源并网的灵活性，并为需求响应和储能提供激励。ERCOT市场在应对夏季热浪的同时以成本有效的方式做到了这一点。在中国，新的电力现货市场和有弹性的市场机制也有助于向成本有效和可靠的清洁能源转型方面取得进展。对于中国和美国，始终将这些目标放在聚焦的位置是非常重要的，即使在出现新挑战时也需要继续进行调整并确保达到所需的可靠性水平。
5. 科学的规划流程和精心设计的市场都是必要的，并且要相得益彰。得克萨斯州制定了一个资源充足性规划流程，在网上定期公开发布的报告中包含了详细信息，该流程旨在确定电力系统是否有足够的资源来满足未来几年的峰值用电需求。然后，将资源充足性预测的结果用于调整ERCOT市场机制中行政设置的参数，这些参数会影响系统稀缺时电厂和其他资源得到补偿程度。调查结果可能会表明，ERCOT资源充足性规划的假设和统计分析存在一些问题，导致对风险的低估（例如，规划中的统计分析可能没有充分考虑相互关联的风险，即低估了大量发电容量受同一事件影响的可能性）。但是，重要的是这种透明的资源充足性规划过程值得不断完善，对支持成本效益、系统可靠性和可再生能源并网的目标必不可少。得州的危机凸显了在中国现货市场地区正式建立科学且透明的资源充足性规划流程的重要性。
6. 得克萨斯州早已采取一些初步措施来促进需求响应，需求响应是一种非常经济高效且充足的资源，随着风能和太阳能的渗透率增长，可以帮助系统保持平衡。但是，需求响应的巨大潜力才刚刚开始释放。在这场危机中，大量的需求响应本来会非常有价值。虽然需求响应本身无法避免这场灾难，但在减轻其严重性和成本方面可以发挥重要作用。 此外，尽管需求响应在未来应对极端事件中的价值是显而易见的，决策者必须认识到，在非危机时期，特别是随着可变可再生能源的渗透率不断提高，增加需求响应也非常有价值。中国推动需求响应的努力（包括广东省关于需求响应和储能参与现货市场的新政策）是非常值得的。
7. ERCOT区域的电网与北美其他地区的电网是分离的。尽管ERCOT 周边区域的电网在这次冬天风暴时也遇到了压力，但ERCOT和周边区域如果有更大互联输电容量的话，可能部分缓解得州这次的危机。从更广泛的意义上讲，覆盖更大地理范围的一体化系统运行的电力市场可以带来巨大的好处。出于当地政治原因，ERCOT区域不太可能与周边区域组成一个一体化系统运行的更大的电力市场，但美国一些地区和世界其他地区已经认识到了大规模系统运行和市场一体化的好处，并正在创建具有广泛地理范围的一体化市场。 在这方面，中国南方电网地区，作为中国第一个区域现货市场的经验将非常重要。
8. 得州需要进行的一些重要的改革可能与电力市场设计并不直接相关，在无论选择哪种市场结构和规则的情况下都适用。参与市场的资源缺乏基本的绩效标准，这是系统在极端条件下失效的一个主要原因。尤其是，建议得州政府应该考虑对电力和天然气系统（包括燃气电厂）的各个部分制定新的最低防寒规定。在这个问题上，得州可以借鉴美国其他地区的经验。
9. 就支持终端用户节能的政策和项目而言，得州低于美国各州的中位数水平。更好的隔热建筑和更高效的电器和设备将会减少能源需求。这也将有助于减缓房屋在这种极端寒潮中降温的速度。中国的节能政策和项目在很多方面已经超过了得州，但在成本有效地提高能效方面肯定还有更大的潜力。

随着今后对2月份得州事件了解的更多，我们将分享如何解读这场危机的其他结论和建议。

本文首发于中国电力报

Brussels, Texas – lessen uit de winter black-out

Het ligt in onze menselijke aard te zoeken naar bevestiging van voorafnames. Dat was in de eerste reacties op de blackouts door de winterstorm in Texas niet anders. Ook in België, waar de politieke zenuwen gespannen staan door de nakende kernuitstap en een capaciteitsubsidie nodig lijkt om elektriciteit in de winter te garanderen.

Nu betrouwbare informatie beschikbaar komt, is het tijd voor een nuchtere analyse.

Wat betekent de Texaanse winterstorm voor de verwachte impact van klimaatverandering in België? Wat betekenen de blackouts en prijspieken voor de voorbereiding van de Belgische kernuitstap in 2025?

Ongeziene vriestemperaturen leiden tot algemeen falen

Pieken in elektriciteitsgebruik zijn in Texas normaal gezien het gevolg van de koelingsnood in de zomerhitte. Midden februari beleefde het Midwesten van de USA de laagste temperaturen in de annalen. Daardoor piekte de elektriciteitsvraag naar hoogten die zelfs in de zomer zeldzaam zijn. In Texas lag de piek op ongeveer 74 GW (gigawatt), tegenover normaal gezien gemiddeld 55 GW in februari.

De Texaanse systeembeheerder ERCOT bereidde zich in haar noodplan voor op een winterpiek van 67 GW, afgaand op de laatste “extreme” winter van 2011. Helaas kwam een groot deel van de voorziene capaciteit niet opdagen. Miljoenen mensen vielen dagen zonder stroom of water.

Hoewel bevroren windturbines een probleem waren, was het tekort ten opzichte van de – lage – verwachting beperkt en overschreed de windproductie de projecties zelfs meestal.

Dan was het falen van zogenaamd betrouwbare klassieke centrales veel ingrijpender. Van de 70 GW waarop ERCOT rekende waren er op 15 februari slechts 42 GW aanwezig. Dat is een tekort van 28 GW, net op een moment dat de vraag naar elektriciteit historisch hoog was. Ter vergelijking: dat tekort is ongeveer dubbel het totale in België opgestelde vermogen.

Het grootste deel van het tekort was te wijten aan onbeschikbare gascentrales, maar ook kolencentrales en een van de vier nucleaire reactoren van de staat vielen uit. Bevroren gasinfrastructuur was aantoonbaar een belangrijke factor. Die is niet voorbereid op dergelijke omstandigheden. De gasproductie in het zuiden van de USA daalde met een vijfde tijdens de storm.

Kaalslag onder producenten en leveranciers

Naast zware menselijke ellende binnen en buiten Texas, vormt de winterstorm ook een zware financiële dobber. Meldingen van gezinnen met astronomische rekeningen trokken de aandacht. De meerderheid van de consumenten in Texas – net als in België – hebben echter vaste prijscontracten met hun leveranciers en zien geen onmiddellijke gevolgen voor hun factuur. We verwachten veeleer een kaalslag onder producenten en leveranciers die contractuele verplichtingen met dure aankopen op de markt moesten dekken.

Vermeende en echte oplossingen

Sommigen zoeken in de blackouts het ultieme bewijs dat capaciteitsmarkten de beste verzekering zijn tegen calamiteiten. In een capaciteitsmarkt legt een overheid, regulator of transmissiebeheerder via contracten lang op voorhand voldoende capaciteit vast om mogelijke pieken te dekken. Texas heeft geen capaciteitsmarkt. Het is een van de vaandeldragers van het laten fluctueren van stroomprijzen om voldoende flexibiliteit en investeringen via de markt te stimuleren. Onder energie-experten woeden al jaren debatten over de merites van dergelijke “schaarstebeprijzing” (scarcity pricing) tegenover capaciteitsmarkten. De vraag is welke het meeste zekerheid biedt, tegen welke kost voor de consument. In de praktijk combineren sommige markten overigens elementen van schaarstebeprijzing met een capaciteitsmarkt.

In België plant de energieregulator CREG het invoeren van schaarstebeprijzing vanaf 2022, terwijl de regering en Elia hard verder werken aan een capaciteitsmarkt om de kernuitstap voor te bereiden. De verleiding is groot om in Texas een bewijs te zien dat een capaciteitsmarkt superieur is om stroombevoorrading te verzekeren.

Regio’s elders in de USA die een capaciteitsmarkt hebben raakten in 2014 door de Polar Vortex echter net zo goed ontregeld. ERCOT bediende tot nu toe zonder problemen de zomerpieken. De blackouts in Texas zijn geen gevolg van ontspoorde scarcity pricing.

Het is zeker ook niet mogelijk te concluderen dat “hernieuwbare energiebronnen het probleem waren”, wat sommigen ook mogen beweren. Zoals gezegd was het falen algemeen over alle technologieën. Wind droeg weinig bij tijdens de winterstorm, maar ERCOT rekende er ook niet op. Weinig windturbines zijn in Texas uitgerust met ijs- of vorstbescherming. In tegenstelling tot die in België, of in meer Noordelijke staten in de USA. De variabiliteit van wind is bekend, en we weten wat te verwachten.

Texas scoort in vergelijking met de andere Amerikaanse staten niet bijzonder goed op het vlak van energie-efficiëntie. Het staat 29^ste in de rangschikking. Betere isolatie en efficiëntere verwarming zullen de piekvraag tijdens extreem weer en de snelheid waarmee huizen afkoelen drastisch verminderen. Merk op dat België de slechtst geïsoleerde woningen van Europa heeft. Ook in België is energiebesparing een onderschat middel om energiebevoorrading veilig te stellen. Als je minder energie verbruikt, heb je minder capaciteit nodig om ze te produceren.

Texas was redelijk succesvol met het inzetten van flexibiliteit om tijdens zomerpieken het systeem in evenwicht te houden. Tijdens deze winterstorm botste de flexibele vraag echter op haar limieten. ERCOT en de regelgever moeten dit proberen op te lossen, ondere andere door meer klanten te stimuleren over te schakelen naar dynamische prijscontracten. Tegelijk kan het nuttig zijn een soort zekering in de markt in te bouwen zoals die in Australië bestaat. Die kan vermijden dat prijzen hoog blijven voorbij het punt in de tijd waar ze geen extra flexibiliteit meer stimuleren.

Is winter leaving in België?

Texas zal moeten herbekijken hoe betrouwbare wintercapaciteit te verzekeren. Tien jaar geleden was noodweer in februari 2011 een waarschuwing die grotendeels in de wind is geslagen. Een groot aandeel gasgestookte centrales vereist ofwel een sterkere regulering van de gasindustrie, ofwel diversificatie van bronnen. De energie systeemplanners zullen bovendien solide klimaatinzichten moeten integreren. Het klimaat verandert voor onze ogen. Extreem weer is een blijver.

België is natuurlijk Texas niet. Klimaatverandering heeft regionaal verschillende gevolgen. In België onderzocht de VUB op vraag van de regulator CREG de impact van klimaatverandering op de elektriciteitsnoden. In het toepasselijk getitelde rapport Winter is leaving, stellen zij een vermindering van harde winters vast en een navenante daling van de nood aan piekcapaciteit. Dat was opvallend omdat de transmissienetbeheerder Elia uit ging van de mogelijkheid van hardere winters dan wat de klimaatexperten waarschijnlijk achten. Elia overschatte met andere woorden de nood aan wintercapaciteit, wat kan leiden tot onnodige kosten voor de consument. Dit is ook waarom de Europese koepel van energieregulatoren, ACER, aanbeveelt om in studies over bevoorradingszekerheid niet langer dan 30 jaar in het verleden terug te gaan voor weerdata.

De extreme koude in Texas verandert niks aan de inzichten over de klimaatimpact in België. Die was consistent met de verwachtingen. Het zuidoosten van de USA warmt minder snel op dan de meeste andere streken op aarde, inclusief België. Hetzelfde geldt voor de recente verdere inzichten in de vertragende golfstroom in de Atlantische oceaan. Binnen de tijdshorizon van de planning voor het opvangen van de Belgische kernuitstap is die niet relevant.

Het is onze hoop dat lessen uit deze tragische episode in Texas uiteindelijk kunnen leiden tot een beter energiesysteem. Niet alleen in de USA, maar ook in Europa en België.

Deze tekst is een voor de Belgische context verwerkte versie van dit opiniestuk op Euractiv.

Real-life drama: Learning from a Texas tragedy

Othello: “But this denoted a foregone conclusion.”

Iago:    “Tis a shrewd doubt, though it be but a dream
               And this may help to thicken other proofs
              That do demonstrate thinly.” Othello, Act 3, Scene 3

Shakespeare’s tragedy centers on the theme of conclusions hastily arrived at, reflecting prior suspicions but unsupported by the available evidence. That same theme runs through much of the last week of snap judgments about the dire events in Texas and their implications for EU power sector reliability and decarbonisation. Headlines such as this, this, this and this make it clear that, while Texas may seem far away, this episode has been aggressively seized upon across Europe, rightly or wrongly, as fodder for multiple European narratives.

We have hesitated until now to join the fray, awaiting at least some minimal level of reliable information from reliable sources before offering diagnoses and recommendations. This has been a traumatic event for many people, and there has been an unseemly rush in some cases to leverage it for political gain. Yet while it remains early days, some things have become clear.

There have been some excellent fact-based analyses released over the past few days (three of the best are here, here and here), and we do not need to cover the same ground other than to highlight the most salient facts.

How extreme was the need for resources?

First, last week’s storms in the central regions of North America were of historic dimensions. For example, between 11 and 16 February, 50 locations across 11 Midwestern states saw the lowest temperatures ever recorded. While we must recognise the strong probability that extreme weather events such as this are likely to be more frequent worldwide, this was a freak storm by any objective standard. Before examining what should have been done better, it is worth reminding ourselves that widespread, long-lasting power system emergencies with staggering consequences have been recorded multiple times just in the past 25 years, including in Europe. Many of these disasters proceeded from weather events that were more historically predictable than the one that hit the Midwest of the U.S. last week.

Texas electricity demand during the storm peaked on the 14^th and 15^th at about 74GW, versus a normal February peak of about 55GW, a difference greater than total peak demand in The Netherlands in 2020. 74GW is unheard of in winter (the Texas system operator ERCOT’s “extreme” planning scenario assumed 67.2GW, based on the last severe event in February 2011), but it is typical of recent summer peaks, which ERCOT has served reliably for many years. Yet investment in generation was considered to be sufficient to weather the storm. State and federal reliability authorities reported prior to the winter season a quantity of investment in generating capacity sufficient to meet ERCOT’s “extreme” planning case. Actual conditions would have called for some amount of rotating service interruptions, which should be expected for an event of this historical rarity. Unfortunately, much of that planned capacity failed to show up.

What went wrong?

The failure of generating capacity is perhaps the most visible and yet most misrepresented aspect of the catastrophe, with many European politicians rushing to pin the blame for the blackouts on Texas’s significant investment in wind power. The relevant baseline is the resource plan ERCOT had in place for severe winter weather. Wind capacity constituted only a small share of the plan (6GW, or about 7%) and, while some frozen wind turbines were an issue, the shortfall against plan was only about 2GW on average, and wind generation exceeded the “low wind” contingency case in all but a few hours.

This was overwhelmingly a story of the failure of supposedly reliable thermal generation, most of it gas-fired. ERCOT’s resource plan included about 70GW of thermal generation (57.7GW in their “high forced outage” planning case); on the 15^th only about 42GW were available. Coal generation was at 60% of planned capacity. One of the state’s four nuclear power trains tripped offline hours into the event, probably due to inadequate freeze protection, and did not return to full capacity until the event was largely over. Gas plants made up 55GW of planned resources, but only 31GW were available on the 15^th, representing 80% of the resource shortfall.

It remains to be determined how much of the gas generation unavailability was due to plant freeze-ups and how much to fuel supply issues, but frozen gas infrastructure was a major factor. North American gas production dropped 15% during the storm, and South Central production dropped 20%. Gulf Coast and West Texas wells, pipelines and gas processing facilities, the sole fuel source for most of the 53% of ERCOT resources that are gas-fired, are unprepared for such conditions, lightly regulated and beyond the authority of either ERCOT or the Texas utility regulator. As analysts from the International Energy Agency noted immediately after the event, “Texas has a power shortage because Texas has a gas shortage.”

What are the implications?

Beyond the well-documented human misery endured by many in and beyond Texas, there has also been a seismic financial impact. Reports of some individuals facing incredible bills have been common, but the vast majority of Texas consumers will have been hedged by their suppliers. The toll among suppliers, as a result, is likely to be catastrophic, with few expected to survive and with adverse longer-term consequences for all consumers.

What lessons must be learned? Certainly not that the problem was the lack of a capacity market. Perhaps the best known of the U.S. capacity markets, in the PJM market, experienced a nearly identical failure of supposedly firm fossil generating capacity during a severe winter storm in 2014, largely for the same reason — a failure to properly account for the vulnerability of generator fuel supply chains. ERCOT’s installed reserve margin has been sufficient to reliably serve comparable summer demand peaks year in and year out. Building yet more fossil generating plant with the same vulnerability to the region’s fuel supply chain would have been of virtually no help. Certainly not that “renewables were the problem” – the variability of wind is well understood and had been planned for, and we know how to plan for it in the future. Here are some emerging recommendations of relevance to European policy makers:

• Texas ranks 29^th among U.S. states in energy efficiency; aggressive building efficiency standards and efficient electric heating systems can reduce both the demand for energy during extreme events and the speed with which homes become uninhabitable.
• This event revealed an underlying inability for much of potentially flexible demand in Texas to respond to tight supply. It offers a stark reminder that regulators and policy makers should make a concerted effort to enable more demand flexibility through rate designs and technology deployment as a low-cost hedge against extreme volatility.
• As in the recent EU Clean Energy for All package, ERCOT’s market is designed to provide for adequate investment through scarcity pricing, and ERCOT has demonstrated a strong record of its effectiveness in mobilising action and investment to meet demand reliably during its summer peak season. Yet beyond some duration, the actions scarcity pricing is meant to motivate have been largely exhausted, after which it is ineffectual. A pricing circuit breaker such as that employed in Australia would preserve desired functionality while avoiding unintended consequences such as those resulting from this episode.
• Just as payment for reserve capacity in “capacity markets” relies upon an accurate accounting of reliable reserves, so does the administrative scarcity pricing mechanism employed by ERCOT for the same purpose — a mechanism similar to the cash-out mechanism adopted in Great Britain’s market in 2016. For any market design to ensure adequate resources, regulators must set clear standards for reliable capacity value of system resources, starting with the European Resource Adequacy Assessment process.
• There is now ample scientific and empirical evidence for revisiting what sort of climate conditions are considered within, versus beyond, the limits of prudent planning. Whether the severity of this event would have fallen within those limits is a valid question, but the limits must be expanded to encompass the likely effects of climate change, which would have mitigated at least the worst consequences of this episode.
• An emerging strategy for resilience is to enable local communities to isolate from the bulk system and continue to serve at least a minimum level of essential services for some period of time. While net benefits depend on local circumstances, it is an option worth investigating.

It is our hope that, as we digest and act upon lessons from this tragic episode, we strive not “to thicken other proofs that do demonstrate thinly.”

A version of this article originally appeared on Euractiv.

A Hearty Bowl of Texas Soup: How ERCOT Keeps the Lights On

ERCOT (or the Electricity Reliability Council of Texas, the independent system operator of that state’s stand-alone wholesale market) has confounded the doomsayers once again. Despite dire predictions that ERCOT lacked sufficient generation capacity, it came through the peak summer season of 2019 without any firm load curtailments, despite a hotter-than-normal summer and notching a new peak demand record. This happened despite the fact that ERCOT does not enforce a mandatory minimum reserve margin over peak demand, relying instead on its wholesale energy market construct to incentivize buyers and sellers to make their own decisions about how to manage their respective market risks.

Every year, it seems, those who stand to benefit the most from new mandates for government-backed contracts (principally the large generators) do their best to scare the bejesus out of everybody by shrieking that ERCOT will not be able to “keep the lights on.” These claims gain credibility by reference to target reserve margins published by the North American Electric Reliability Corporation (NERC). Environment & Energy News reported at the end of August that Jim Robb, NERC’s CEO, “told a regulatory conference that based on ERCOT’s percentage of power reserves, ‘there’s no way in hell they can keep the lights on.’ Then he added, ‘And yet they do,’ concluding ‘there’s something in the soup.’ ” So which is it? Is ERCOT playing with fire? Or are they onto something?

Robb’s choice of the soup metaphor proves to be apt, intentionally or not. In most other organized markets, resource adequacy is served as a simple meal consisting overwhelmingly of meat and more meat, in the form of mandatory amounts of generating capacity connected to the grid. How much is “enough” is expressed as a percent margin of firm capacity over the peak demand. These system operators, in concert with NERC, set target margins based in part on variations of a long-standing industry rule of thumb: “one [loss of load] event in ten years.” That rule, however, is maddeningly vague in application, and the end result is target reserve margins of 14% or more. Consumers in some markets are then compelled to underwrite investment in at least that much generation.

In contrast, ERCOT is held to the same reliability standards as these other markets but eschews mandatory minimum reserve margins. It relies instead on a hearty “soup” of market-driven short- and long-term decisions taken by Texas’s rich blend of wholesale generators, distributed generators, industrial and commercial consumers and, increasingly, residential consumers, on a base of robust and transparent energy market pricing, to ensure consumers enjoy the reliability they want and are happy to pay for. This has led to generation margins in ERCOT considerably lower than in other markets — 8.6% going into this summer’s peak season. (PJM’s official margin, for example, was 28.2% compared to a target of 16%.) This compares to NERC’s 13.75% target margin for ERCOT. And yet, as Robb notes, the lights remain on.

Why the disconnect? It turns out that the “one event in ten years” standard has its origins in technical papers from the 1940s, if not earlier, and has never been backed by an objective benefit-cost assessment. Texas utility regulators contracted a study by the Brattle Group in 2014 to assess, using information on customer experience and preferences, what an economically optimal reserve margin would be in ERCOT. The answer: about 10.2%. While this suggests 2019’s 8.6% margin was tight, it also suggests that it was much closer to what a reliable and economic ERCOT system needs than NERC’s target would seem to imply.

The extra cushion suggests that NERC and most system operators employ an extremely conservative interpretation of a conservative standard. System operators, regulators, and government appear to tacitly endorse a goal of never curtailing any firm load — an uneconomic and unachievable objective — by treating every instance of firm load curtailment, no matter how rare, as a failure not to be repeated in future. The result has been mandatory capacity margins leading to levels of capacity investment that, at the margin, cost their consumers $100,000 per MWh or more. If that strikes you as vastly more than consumers would knowingly pay to avoid briefly postponing or foregoing some of their more flexible electricity needs, that’s because it is. Many consumers, especially large industrial and commercial consumers, are happy to shift some of their more discretionary loads by a few hours for a tiny fraction of that cost. And simple economics tell you that, in extraordinary circumstances, it is in consumers’ best interests that system operators and regulators consider some level of directed firm load curtailment to be a feature, not a failure, of a prudently run power system.

NERC and the system operators have a difficult job to do, with nothing but downside risk, so a conservative bias is understandable. But consumers end up footing the bill. Some observers point to the few hours of very high prices that occurred in ERCOT this summer as a different kind of failure — “proof” that the market is failing. But rare instances of high prices are exactly what is to be expected — and desired — of the ERCOT market design. And at the maximum rate of $9,000 per MWh, they’re less than 10% of the $100,000 or more per marginal MWh that consumers elsewhere are paying for their all-meat diets. More to the point, weighted average wholesale electricity prices in ERCOT continue to be the lowest of any of the traded markets. ERCOT, with the support of the Texas commission and legislature, has chosen to trust in the wisdom of its consumers to recognize that this active dialogue between supply and demand is all part of why they enjoy reliable electric service at such low prices.

A final point to put this in perspective: Market ideology is not the issue here. The issue is how to position power systems to best serve consumers in the transition to a clean energy system. And here again ERCOT is at the bleeding edge, with the highest share of wind energy of any market in the country and rapidly growing solar production. Among experts it is well recognized that, as we travel farther down this road, it will be critical to tap into the inherent, low-cost flexibility of many end uses of electricity. It is difficult, verging on impossible, to imagine demand playing this essential role in the transition without having as a starting point the active, transparent dialogue between supply and demand that drives the ERCOT market model.

That dialogue begins with an adult conversation among system operators, regulators, consumer advocates and government — perhaps over a hearty pot of soup, or better yet, Texas chili — about what consumers really want when it comes to reliability and resource adequacy, and about the role that more transparent and robust wholesale energy pricing will have to play in delivering them cost-effectively.