Texas eyes a Texas-sized role for DERs

Amy Heart, VP of public policy at Sunrun, joined the Texas Power Podcast to discuss lessons learned from Winter Storm Uri, Texas’ interest in virtual power plants, and more. Subscribe to the Texas Power Podcast wherever you get your podcasts.

The ERCOT board voted unanimously on October 18 to approve a pilot 80 MW “virtual power plant.” Lots of tiny resources, in this case mostly solar panels and batteries, will add up to a large amount that will help with grid reliability and resiliency.

I first wrote about the pilot in May after the Commission invited comments. They subsequently established a Distributed Energy Resource Task Force which has met many times over the last several months and doggedly ironed out differences to reach a compromise, which is notably twice as large as first proposed. The commission will likely vote to approve the pilot on November 3.

For the latest episode of the Texas Power Podcast, I talked with Amy Heart, VP of Public Policy at Sunrun and member of the PUC’s DER Task Force. Sunrun is the largest residential solar installer in the US and has grown its Texas business significantly after Winter Storm Uri. We talked about how much the market has changed, what are the biggest barriers to solar and storage installations, and about her work on the Task Force.

While the pilot is a massive step forward, it is only the beginning. It is small relative to the size even of the existing DER market (~3GW), not to mention the current exponential growth accelerated by persistent worry about the fragility of the ERCOT grid. Commissioner McAdams, who led the creation of the task force and the pilot, reported in a memo earlier this year that there are nearly 3000MW of DERs in ERCOT, with 25% of those installed in 2021 

Assuming a similar growth rate in 2022, the 80MW pilot brings in only about 2% of the existing installed base. But, as with all things, you’ve got to start somewhere and this is an excellent start. All involved, including the commissioners, recognize that the point is to get some lessons learned in order to expand the number of DERs participating in the ERCOT market.

Images from the installation of a Sunrun solar panel system on the roof of the home of HGTV’s Property Brothers.

And why not? Customers want DERs and they’re bringing their own money to the table to install generation, batteries, and devices to increase demand flexibility. These DERs increase resilience and, if integrated into the system well, lower system costs. 

In her book The Grid, Gretchen Bakke writes “What modern-day electricity customers want the most [is] the capacity to understand and control their own consumption and its cost coupled with some measure of control over where and how their power is made.” DERs like solar and storage give people all of that plus the ability to keep the power on during the next outage. And there is always another outage. Whether it’s a failure of the bulk system or the distribution system, outages are inevitable but being without power is not inevitable. With onsite generation, there’s no reason anyone needs to be without power.

In Texas, where refreshing the ERCOT dashboard became a regular activity over the summer and electricity rates went up 70% or more, DERs are looking mighty attractive to customers. It’s rare to find a solution that can lower costs, increase resiliency, and lower emissions. DERs can do all three. 

The pilot is important for all of these reasons but the cost issue is perhaps most intriguing. One of the biggest knocks on DERs is not all people can afford them. But if they are paid for the value they bring to the grid,  more people could afford them. As more people install DERs, we continue on the technology and installation learning curve and costs drop, and more people can afford them. It creates a virtuous cycle. 

The recent approval by the ERCOT Board marks a big step forward. While it’s a big step, it’s also the first step. We are rapidly moving toward a system with large amounts of decentralized power sources. It’s a sea change and if done right, it will yield massive benefits to consumers for both cost and reliability. Texas is on its way to realizing those benefits.

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Author: Doug Lewin

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