Late last year, the Electric Reliability Council of Texas (ERCOT) predicted that energy supply would only have an 8.1% reserve margin when electric demand is high this coming summer, significantly lower than their target planning reserve margin of 13.75%, and even below the “Economically Optimal Reserve Margin” recently estimated to be 10.25%. To encourage more new power resources to be built, generators went to the Public Utility Commission with a proposal to boost generator revenues with an adjustment to the “price adder”, officially known as the Operating Reserve Demand Curve, in theory to incentivize investment in new generation.
Well, the reserve margin is expected to be even tighter this summer, but the good news is that it’s because the the owners of the Gibbons Creek Generating Station (see photo of architectural rendering from when your parents (or grandparents) were young), a coal-burning power plant northeast of Bryan, told ERCOT that they officially plan to permanently mothball the coal plant. Originally, the plant (currently not operating) was expected to come back online this summer, but now the Texas Municipal Power Agency, which operates the plant on behalf of three city utilities (Denton, Garland, and Bryan) that own it, says it no longer wants to run it. At 470 megawatts, the relatively small power plant would cause the expected reserve margin to drop to 7.4%.
Currently, ERCOT is studying whether the plant can close without impacting the grid or transmission system. An initial determination from ERCOT is due January 20, with a final determination expected on or before February 20, 2019.
Sierra Club has been working with local volunteers to encourage the cities that own Gibbons Creek not only to close the plant, but replace the dirty energy with utility-scale renewable energy contracts and local solar and energy efficiency. Recently, both Bryan Texas Utilities and Denton Municipal Electric signed long-term solar deals that largely replace the power they would have received from the coal plant, while Garland Power & Light is reported to be looking at two potential solar contracts in West Texas and North Texas. Those contracts are part of joint projects with other public utilities.
The potential closing of Gibbons Creek in 2019 comes on the heels of the closing of three coal plants owned by Luminant (a subsidiary of Vistra Energy), and the Deely coal plant in San Antonio owned by CPS Energy in 2018.
With the potential closing of Gibbons Creek, pressure will grow on the Public Utility Commission to do something to ensure adequate resources this summer. While the generator community has largely been supporting the need to boost the “price-adder”, Sierra Club has been calling for better transparency of distributed resources and incorporation of onsite solar, energy storage, and demand response resources into the actual energy market, raising the artificial cap of $50 million placed on Emergency Response Services which are only called upon in emergencies, revamping our ancillary services to better incorporate fast acting storage resources, and raising energy efficiency program goals to one percent of energy sales either through commission or legislative action. Thus far, the PUC has taken no action on either the generator proposal or other ideas. The PUC next meets on January 17.
Assuming the old dirty Gibbons Creek coal plant does get permanently shuttered, prices may rise this summer with tight reserves, but it will also send a stronger signal to the market to continue to invest in cleaner resources like wind, energy storage and solar power. The Sierra Club will continue to work with our volunteers and public power entities to encourage investment in those better resources.
Photo source: UNT