Released September 05, 2024 | SUGAR LAND
en
Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--In many areas, Labor Day marks the traditional end of summer and the start of autumn, even though the actual start of autumn is closer to September 22 and, in many cases, students began returning to school in August.
Still, when the Board of Directors of the Electric Reliability Council of Texas (ERCOT) (Austin, Texas) met in late August, Chief Executive Officer Pablo Vegas told them that the reliability organization has not had to call a single power emergency this summer. That's a huge improvement over last year, when ERCOT called on consumers to reduce their electricity use 11 times during the summer and fall of 2023.
It's not because electric demand fell. On the contrary, it rose to an unofficial new peak record of about 85,559 megawatts (MW) on August 20, 2024, fueled by unrelenting high temperatures and humidity, the Oil & Gas industry's drilling activity in the Permian Basin, cryptocurrency mining, AI-equipped data centers, population growth and businesses moving to Texas from out of state.
Instead, Texas has been able to meet peak electric demand the old fashioned way: by bringing on new generation and battery energy storage capacity.
According to data tracked by Industrial Info, approximately 51 new electric power generation projects and 12 stand-alone energy storage projects began operating in Texas between September 2023 and August 2024. The value of those projects was about $14.5 billion.
The state's grid watchers say that Texas' overall generating capacity has risen about 15,000 MW since the summer of 2023. The additions include 8,800 MW of new solar generation and 4,800 MW of battery storage. New wind generation rose about 1,700 MW year-over-year while gas-powered generation added just 164 MW.
Solar and wind generation projects accounted for the lion's share of those recently completed projects, with 35 and 8 projects, respectively, worth about $12.5 billion in total. Many of those renewable energy projects have a battery energy storage system (BESS) component.
The state now has about 8,000 MW of energy storage, according to some estimates. ERCOT reportedly projected that storage capacity doubling, to about 16,000 MW, by mid-2025.
Aside from renewables and storage, six new natural gas power plants, valued at approximately $407 million, have begun operating in Texas since last September, according to data tracked by Industrial Info. Plants using other types of fuel--specifically, coal and black liquor--round out the list of Lone Star State power generation projects that have come online over the last 12 months.
"We've had a very different experience operating the ERCOT grid this summer compared to last summer," Vegas told the group's board of directors August 20. "The weather profile differed significantly: The heat dome that we experienced for the better part of the 2023 summer was not in place this summer. In addition, we have continued to see the resource mix evolve, with significant new additions of energy storage assets, solar resources and wind resource as well as a few additions on the gas side."
"All of those factors helped contribute to more consistent, less scarcity conditions during peak periods of the summer."
Vegas told the board that ERCOT's The Permian Basin Reliability Plan identified "significant local and regional transmission projects to serve the forecasted load" for 2030 and 2038.
The reliability organization projected that, by 2030, new electric demand in the Permian Basin will reach about 23,659 MW, split almost equally between oil and gas operations (11,964 MW of new load) and non-O&G load (11,695 MW of additional load).
The 11,695 MW of incremental non-O&G load is comprised mainly of cryptocurrency mining (about 6,900 MW), followed by green hydrogen production (2,573 MW), general commercial & industrial demand (1,520 MW) and data centers (701 MW), Vegas told his board August 20.
In recent months, ERCOT has sharply increased its projected electric load growth to accommodate continued growth of Oil & Gas drilling in West Texas, cryptocurrency mining and AI-equipped data centers, among other growth factors. For more on that, see April 25, 2024, article - Data Centers, Oil & Gas Industry to Drive Surge in Texas Electricity Demand. Earlier this summer, ERCOT predicted there was a 12% probability of rolling blackouts in August. For more on that, see June 18,2024, article - Was $10 Billion Enough? Texans Face Another White-Knuckled Summer.
In 2023, Texas established a $10 billion fund to support the construction of new dispatchable generation or the refurbishment of aging dispatchable generation. Three months ago, Lieutenant Governor Dan Patrick said that fund had received $39 billion in funding requests from about 125 companies that want to construct about approximately 55,800 MW of new natural gas generating capacity.
As grid manager, ERCOT manages about 90% of the electricity delivered to Texas homes and businesses. In a July update to its long-term projection of electric load, ERCOT projected its electric demand would nearly double, to about 153,230 MW, by 2033, to about 153,230 MW.
So while ERCOT has, so far, made it through this summer with calling energy emergencies, developers and utilities need to continue bringing on new generating and storage resources to keep the lights on and the air conditioners humming. Because, in Texas, sweltering temperatures are expected to continue through September.
"As a Texan, I am delighted that I have not been asked to reduce my use of air conditioning this summer when it's hot enough outside to fry an egg on the sidewalk," commented Britt Burt, IIR's senior vice president of research for the global Electric Power Industry. "It may be too early to break out the champagne and toast ERCOT for keeping the juice flowing, but I believe that day is coming."
He continued: "Those who have been monitoring where Texans' electricity has been coming from during the hottest days of the summer know that gas-fired generators provided between 56% and 68% of all electricity supplied in ERCOT's footprint. Solar and batteries are not providing Texas residents and businesses with the majority of electricity, despite what some would like to believe about intermittent renewable resources 'bailing us out'."
In fact, he added, this summer solar generators supplied between 20% and 25% of Texans' electricity during most days, and wind contributed between 3% and 7% during the day. Batteries don't start to make a contribution until the evening hours, when they supply 1% to 4% of electricity. When the sun goes down, solar output drops to zero, wind kicks up to about 20%. Natural gas and coal have been supplying the rest.
And gas' share of the Texas electricity resource mix is expected to rise in the future after the August 29 decision by the state Public Utilities Commission of Texas (PUCT) (Austin, Texas) to select 17 gas-fired projects totaling almost 10,000 MW for possible low-interest loans through the Texas Energy Fund.
The loan program, proposed in 2023 by the state legislature and endorsed by voters, to support dispatchable generation resources in the state, offers below-market interest rates of 3% to build new dispatchable generation or refurbish existing dispatchable generators.
If all 17 selected projects advance through a due diligence review, the portfolio would represent a total of $5.4 billion in loans. Projects passing muster will receive their first loan amounts by the end of next year. Developers had filed 72 loan applications representing more than 38,000 MW in the Electric Reliability Council of Texas system.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
Still, when the Board of Directors of the Electric Reliability Council of Texas (ERCOT) (Austin, Texas) met in late August, Chief Executive Officer Pablo Vegas told them that the reliability organization has not had to call a single power emergency this summer. That's a huge improvement over last year, when ERCOT called on consumers to reduce their electricity use 11 times during the summer and fall of 2023.
It's not because electric demand fell. On the contrary, it rose to an unofficial new peak record of about 85,559 megawatts (MW) on August 20, 2024, fueled by unrelenting high temperatures and humidity, the Oil & Gas industry's drilling activity in the Permian Basin, cryptocurrency mining, AI-equipped data centers, population growth and businesses moving to Texas from out of state.
Instead, Texas has been able to meet peak electric demand the old fashioned way: by bringing on new generation and battery energy storage capacity.
According to data tracked by Industrial Info, approximately 51 new electric power generation projects and 12 stand-alone energy storage projects began operating in Texas between September 2023 and August 2024. The value of those projects was about $14.5 billion.
The state's grid watchers say that Texas' overall generating capacity has risen about 15,000 MW since the summer of 2023. The additions include 8,800 MW of new solar generation and 4,800 MW of battery storage. New wind generation rose about 1,700 MW year-over-year while gas-powered generation added just 164 MW.
Solar and wind generation projects accounted for the lion's share of those recently completed projects, with 35 and 8 projects, respectively, worth about $12.5 billion in total. Many of those renewable energy projects have a battery energy storage system (BESS) component.
The state now has about 8,000 MW of energy storage, according to some estimates. ERCOT reportedly projected that storage capacity doubling, to about 16,000 MW, by mid-2025.
Aside from renewables and storage, six new natural gas power plants, valued at approximately $407 million, have begun operating in Texas since last September, according to data tracked by Industrial Info. Plants using other types of fuel--specifically, coal and black liquor--round out the list of Lone Star State power generation projects that have come online over the last 12 months.
"We've had a very different experience operating the ERCOT grid this summer compared to last summer," Vegas told the group's board of directors August 20. "The weather profile differed significantly: The heat dome that we experienced for the better part of the 2023 summer was not in place this summer. In addition, we have continued to see the resource mix evolve, with significant new additions of energy storage assets, solar resources and wind resource as well as a few additions on the gas side."
"All of those factors helped contribute to more consistent, less scarcity conditions during peak periods of the summer."
Vegas told the board that ERCOT's The Permian Basin Reliability Plan identified "significant local and regional transmission projects to serve the forecasted load" for 2030 and 2038.
The reliability organization projected that, by 2030, new electric demand in the Permian Basin will reach about 23,659 MW, split almost equally between oil and gas operations (11,964 MW of new load) and non-O&G load (11,695 MW of additional load).
The 11,695 MW of incremental non-O&G load is comprised mainly of cryptocurrency mining (about 6,900 MW), followed by green hydrogen production (2,573 MW), general commercial & industrial demand (1,520 MW) and data centers (701 MW), Vegas told his board August 20.
In recent months, ERCOT has sharply increased its projected electric load growth to accommodate continued growth of Oil & Gas drilling in West Texas, cryptocurrency mining and AI-equipped data centers, among other growth factors. For more on that, see April 25, 2024, article - Data Centers, Oil & Gas Industry to Drive Surge in Texas Electricity Demand. Earlier this summer, ERCOT predicted there was a 12% probability of rolling blackouts in August. For more on that, see June 18,2024, article - Was $10 Billion Enough? Texans Face Another White-Knuckled Summer.
In 2023, Texas established a $10 billion fund to support the construction of new dispatchable generation or the refurbishment of aging dispatchable generation. Three months ago, Lieutenant Governor Dan Patrick said that fund had received $39 billion in funding requests from about 125 companies that want to construct about approximately 55,800 MW of new natural gas generating capacity.
As grid manager, ERCOT manages about 90% of the electricity delivered to Texas homes and businesses. In a July update to its long-term projection of electric load, ERCOT projected its electric demand would nearly double, to about 153,230 MW, by 2033, to about 153,230 MW.
So while ERCOT has, so far, made it through this summer with calling energy emergencies, developers and utilities need to continue bringing on new generating and storage resources to keep the lights on and the air conditioners humming. Because, in Texas, sweltering temperatures are expected to continue through September.
"As a Texan, I am delighted that I have not been asked to reduce my use of air conditioning this summer when it's hot enough outside to fry an egg on the sidewalk," commented Britt Burt, IIR's senior vice president of research for the global Electric Power Industry. "It may be too early to break out the champagne and toast ERCOT for keeping the juice flowing, but I believe that day is coming."
He continued: "Those who have been monitoring where Texans' electricity has been coming from during the hottest days of the summer know that gas-fired generators provided between 56% and 68% of all electricity supplied in ERCOT's footprint. Solar and batteries are not providing Texas residents and businesses with the majority of electricity, despite what some would like to believe about intermittent renewable resources 'bailing us out'."
In fact, he added, this summer solar generators supplied between 20% and 25% of Texans' electricity during most days, and wind contributed between 3% and 7% during the day. Batteries don't start to make a contribution until the evening hours, when they supply 1% to 4% of electricity. When the sun goes down, solar output drops to zero, wind kicks up to about 20%. Natural gas and coal have been supplying the rest.
And gas' share of the Texas electricity resource mix is expected to rise in the future after the August 29 decision by the state Public Utilities Commission of Texas (PUCT) (Austin, Texas) to select 17 gas-fired projects totaling almost 10,000 MW for possible low-interest loans through the Texas Energy Fund.
The loan program, proposed in 2023 by the state legislature and endorsed by voters, to support dispatchable generation resources in the state, offers below-market interest rates of 3% to build new dispatchable generation or refurbish existing dispatchable generators.
If all 17 selected projects advance through a due diligence review, the portfolio would represent a total of $5.4 billion in loans. Projects passing muster will receive their first loan amounts by the end of next year. Developers had filed 72 loan applications representing more than 38,000 MW in the Electric Reliability Council of Texas system.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
