Network news: How Texas got its transmission needs right for wind and solar

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There are a lot of similarities between the Texas and Australian grids, except for the fact that Texas did its network preparation properly, and Australia did not.

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Texas has some of the lowest wholesale electricity prices in the US, half those of Australia. The 18% of electricity that comes from wind has contributed to those prices.

Texan stakeholders were united in 2005 that there was an opportunity for wind if the transmission was built. The Texan State Government took the lead (are you listening NSW). By 2013 there was enough transmission to connect 20GW and more. The transmission has had other benefits.

Other lessons learned is that there are going to be system strength and stability issues and they need to be considered at the beginning. Competition in transmission provision makes for better outcomes.

No matter how well done the process was in Texas it was still an 8-10 year process. We are nestled up behind the 8 ball in Australia’s NEM (National Electricity Market) as our need is greater but our transmission process and alignment is less well done.

An additional issue in Australia is that we have to think about a grid with far more distributed resources. Not just the solar but, if say there are 1 million households with batteries this will have big, big impacts. But we will still, in my opinion, need the transmission.

Background

This note re runs through the successful development of transmission in Texas which allowed the State to go from 1 GW to 20 GW of wind and keep some of the lowest electricity prices in the USA.

This note draws very heavily from:

Lessons from Texas Competitive Renewable Energy Zones presented by cleanenergy solutions.org in Sep 2017

A quick comparison of  ERCOT (the main electricity grid in Texas) and the NEM (the main electricity grid in Australia) is as follows. Both grids have competitive retail and gross pool markets although of course there are differences. Still, I find it interesting how comparable the two grids are:

Figure 1: ERCOT and the NEM. Source: ERCOT, NEM Review, AEMO

Texas is more customer dense as measured by customers per circuit km but Australia is more energy intensive (MWh per customer). Note that at the retail level thanks to lower whole sale and distribution costs the average household in Texas consume far more electricity than the average household in Australia – about 14 MWh to 6 MWh.

But Australia has more industrial electricity consumption. This goes to show that nothing works like price in terms of encouraging or discouraging energy efficiency.

Low household costs for electricity also mean that Texas has next to no rooftop solar, something like just 500 MW compared to the 7000 MW in the NEM.

The Australian data is for FY18. Since then of course the wind and solar share has grown from 10% to 15% and adding in hydro gets you to 22% and growing.

Finally ERCOT,  like the NEM, is basically  a stand alone grid. It does not synchronous connection to the rest of the US.

Transmission and renewable zone development in Texas

A one paragraph summary is that a transmission issue was recognised  in Texas as early as 2003.  In 2005 legislation was passed to designate Competitive Renewable Energy Zones [CREZ] and associated transmission and by 2013 Texas spent  around US$7 bn to build 3600 circuit miles of 345 kV transmission facilitating 19 GW of new wind with flexibility to go higher.

The following slide prepared by Nathan Lee from NREL explains the need for “circuit breaker” excuse the pun approach to transmission..

Figure 2: Transmission needs to come first. Source: Nathan Lee, NREL 2017

In my view, and I’ve been saying it for years, this is where John Pierce and the AEMC have really let Australia down. A better view of transmission from the top, as Texas took in 2005, would have seen us well ahead of where we are today. And this was foreseeable.

A more active approach to modifying the RIT-T test could and should have been adopted years ago. Too late for that, on we go. However, it must be said that ALP’s proposed $5 bn infrastructure fund can potentially help. Money talks

Timeline and process 2005-2013

The original problem in Texas was that the wind was in the West of the State and the load was in the East, same as China and to some extent Australia. Low load meant only small transmission infrastructure. Developers wanted to build wind, but did not want to tie up financing and then wait five years for transmission.

So in 2005 Texas Senate Bill 20 mandated CREZ and transmission, but did not specify where the zones were or how many MW were involved.

By 2007 the Texas public utilities commission [PUC] had identified 5 zones and some scenarios.  They identified that there was demand for say 20 GW of wind.

By April 2008 the plan was finalized. Further studies were done and construction commenced in 2010 in a big way.

By 2013 or at least January 2014 the 3600 circuit miles were built at a cost of about US$7 bn. In the figure below, note that a lot, but not all, of the combined cycle gas growth is offset by decline in steam turbine gas.

Generation development in ERCOT
Figure 3: Generation development in ERCOT. Source ERCOT

Process points to note

The transmission building process was competitive, and was handed out to a several  transmission service providers, some of whom had not previously been in ERCOT. This spread the work load round and made building the work on time competitive in that one provider could be benchmarked against the others.

Another point of note is that there is, right now, no marginal loss factor [MLF]. Each generator pays the same transmission cost no matter where they are located. The so called postage stamp transmission tariff.

That said ERCOT is studying whether customers would benefit from the introduction of something like an MLF and preliminary evidence is there maybe US$250 m of benefits to consumers per year. In this context it seems the average loss factor (energy lost in transmission) is about 2% in Texas but I think probably double that in the NEM.

Transmission learnings from the erect process

Inverter based technologies like wind and solar need a strong synchronous signal, but when wind and solar generators are located at the end of the grid they have trouble finding the 50 herz signal. (My non technical comment is I expect newer equipment to have grid forming inverters that will obviate some of this issue).

Secondly, it’s important to do stability studies early in the process. Jeff Billo from ERCOT in his talk noted that if there was one thing he would do different its start the stability studies earlier. The grid stability became the limiting factor.

Next was the importance of a grid code, that is that new generators provide reactive power, low voltage ride through, high voltage ride through and frequency response. Again my comment would be that if AEMO, and wind and solar farm investors had been listening to what people in say Texas were saying a few years ago a lot of problems could have been minimised and managed better.

Next some curtailment is generally included in the most economic systems. That’s true for wind in Texas but it’s also going to be true for high solar penetration, maybe even more true. California’s resource planning and procurement process allows for more solar curtailment as penetration goes up and still finds the solar is the most economic solution for them.

Transmission policy learning from the Texas process

The high penetration of wind has helped Texas have one of the lowest wholesale electricity prices in the USA for  instance in2016 there was a record low price for Texas. Not just wind but also low gas prices of course.

Stakeholder collaboration was the key to success. The decision makers from the legislature, the PUC, ERCO and the generation developers worked together. Everybody focused on the goal of getting the system in place and making sure it was reliable and efficient.

That’s somewhat of a contrast in Australia where the process is bureaucratic and there is little agreement. My own comment would be that agreement has to be not just formal but in spirit. A shared vision has long been what makes the impossible achievable.

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