ERCOT, Xcel Energy Show that Variable Renewable Energy is No Threat to Reliability

Posted by Frank Swigonski on Jun 11, 2015 2:14:00 PM


The EPA’s proposed Clean Power Plan (CPP), which will set limits on carbon emissions from existing power plants, is set to be finalized this summer. The North American Electric Reliability Corp. (NERC) has released two assessments so far, each of them raising concerns about the potential impact of the CPP on reliability. One of the challenges to reliability identified by NERC has to do with the increased deployment of variable renewable energy - namely wind and solar - in the power system. However, many states are already seeing unprecedented levels of variable renewable generation and successfully integrating them into the power system without impeding reliability. As renewable energy production across the country continues to increase due to the rapidly declining cost of these resources and state policies requiring utilities to use more renewables, integration is likely to be even easier when the CPP takes effect in 2020.

Following up on previous analysis of NERC’s initial reliability review by The Brattle Group and its own critique of NERC’s ‘Phase I’ review, the AEE Institute has published a new Brattle Group report, Integrating Renewable Energy into the Electricity Grid, which details some of the ways grid operators and utilities are already integrating variable renewables into their power system using well-established and widely available technologies. Not only does it show that high penetration levels (up to 20% on average, and at times above 50%) are feasible, they also carry relatively modest costs.

Download the Report

In this new report, the Brattle Group presents case studies representing the two types of electricity market structures in the United States: the Electric Reliability Council of Texas (ERCOT), a regional transmission organization (RTO), and Xcel Energy Colorado, a vertically integrated utility. Both of these entities have used a variety of tools, from improving how they forecast weather to deploying ancillary services like demand response and energy storage, in order to successfully integrate high levels of renewables without compromising reliability. 

ERCOT manages the grid operations in the majority of the state of Texas. With 12.5 GW already installed, Texas has the largest amount of wind capacity in the country and approaches the wind penetration levels of European countries that have the highest levels worldwide. ERCOT has used a variety of tools to manage these resources.

In 2010, ERCOT, which operates a competitive wholesale electricity market similar to that of other deregulated states, introduced a Nodal Market, which sends more accurate price signals based on geographic location. The Nodal Market allowed ERCOT to shift to resource-specific scheduling, enabling better wind integration. The Texas state legislature overcame transmission constraints by creating Competitive Renewable Energy Zones (CREZ), which helped link wind resources in West Texas to population centers in the East Texas. This overcame negative pricing and curtailment challenges. ERCOT has also taken advantage of new developments in accurate models for the contribution of variable renewable resources to meeting peak demand. These metrics allow variable renewables to contribute to resource adequacy and ultimately save consumers money by eliminating the need to keep  non-variable power sources running as backups.

Improvements in renewable technologies themselves, as well as improvements in ancillary services and technologies, are also having an impact in the ERCOT region. Ancillary services are those that support the grid operations and can include things like energy storage and automated demand response. By February 2015, ERCOT had deployed smart meters to nearly 98% of its load. The prevalence of smart meters allows residential customers to more easily participate in demand response, which is increasingly being used to provide capacity and respond to short-term reliability events.

The second case study presented by the Brattle Group is Xcel Energy Colorado. This vertically integrated utility serves 1.3 million customers in Colorado, and provides an example of a utility successfully integrating variable renewables without the oversight of an RTO. Among vertically integrated utilities, Xcel Energy ranks first in wind penetration by the American Wind Energy Association (AWEA) and fifth in solar penetration by the Solar Energy Industries Association (SEIA).

Xcel Energy has made use of the same well-established and widely available ancillary services used by ERCOT to integrate its variable wind resources. Automated demand response, energy storage, and other advanced energy technologies are fast acting; rather than waiting for a traditional plant to power up, these resources can be called on to respond within seconds.

Advanced wind forecast methods are even more important for a stand-alone utility like Xcel. In 2009, Xcel Energy implemented a system that was developed in collaboration with the National Center for Atmospheric Research. The new system produces forecasts every 15 minutes and has improved accuracy by 35% and resulted in savings of $20.4 million.  

Xcel Energy and ERCOT are not the only grid operators that are integrating variable renewable resources onto the grid. With declining costs and increasing demand, renewable energy is being developed in states across the country. Utilities and grid operators will be learning from Xcel Energy and ERCOT how to manage these resources reliably, and contributing to the ongoing innovation in grid management that will allow even higher levels of renewable energy penetration into the grid we count on for reliable electric power service every day.

Featured image courtesy of Chrishna and used under a Creative Commons license.

Topics: Federal Policy Update, EPA GHG Regs