The Texas fossil fuel fleet has never been tougher. How long can this last?

To keep the Texas grid running, regulators have been directing power plants to come on early and not go offline during tough conditions, even if it means delaying maintenance.

Texas needs all the electricity it can get to meet record-setting peak demands this summer.

But the fossil fuel fleet, powered by natural gas and coal, is running hotter than ever, said Michele Richmond, who represents electricity producers. That increases the chances of a major breakdown and having to remove some plants because they are too old to fix.

“We are risking our reliability every day,” said Richmond, executive director of Texas Competitive Power Advocates.

In 2021, 70% of the coal capacity on the grid was at least 30 years old, according to the independent market monitor that tracks wholesale power.

What is the price of a reliable Texas network? $2 extra a month, $1.5 billion or TBD?

ERCOT, the grid operator that handles about 90% of Texas’ electricity demand, has been mandating that plants remain in service through “reliability unit commitments,” often called RUCs.

In 2020, ERCOT used RUCs for 224 unit hours, all of which were intended to manage transmission congestion. In the second half of last year, after regulators shifted focus to reliability, the number of RUC hours increased, with 80% going to increasing capacity in the network, the market monitor said.

ERCOT continues to implement the tool widely. Nearly 2,900 RUC hours were used in the first six months of 2022, more than triple the number in the same period last year.

This “creates wear and tear on the generation fleet because there are only a limited number of times a unit can be turned on,” Julia Harvey, vice president of Texas Electric Cooperatives, told a House committee in June. “So the concern, as I understand it, is that those units might not be there when they are really needed.”

The long-term solution lies in the redesign of the competitive market, a process that is expected to gain momentum in the coming months. The changes will aim to attract new investment in manageable resources that can fill in the gaps when solar and wind fall short.

Natural gas plants will be the main target, although storage batteries are becoming more advanced, and many battery projects are already in the ERCOT pipeline.

Richmond wants the Texas Public Utilities Commission to speed up market redesign because it takes two to three years to build a combined-cycle gas plant and bring it into service. That means the grid will be tight next year and the year after that, he said.

“We need to make sure this is not a 2025 and 2026 issue as well,” Richmond said.

There’s also a real risk in the fall, said Michael Jewell, a longtime energy attorney in Austin. If a late heat gust arrives, many plants could be out of commission when demand picks up.

“It is not a dis of thermal generators; it’s reality,” Jewell said. “These machines need maintenance.”

The Texas grid is holding out amid a brutal heat wave and record demand. But at what price?
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