Texas’ fossil fuel fleet has never been used so hard. How long can this last?

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To keep the Texas grid running, regulators have ordered power plants to start up early and not disconnect in harsh conditions, even if it means delaying maintenance.

Texas needs all the electricity it can get to meet peak demands that set records this summer.

But the fossil fuel fleet, powered by natural gas and coal, is operating stronger than ever, said Michele Richmond, who represents the power producers. This increases the chances of a major breakdown and having to remove some plants because they are too old to repair.

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

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

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

ERCOT, the grid operator that handles about 90% of Texas’ electricity demand, has ordered plants to stay in service through “reliability unit commitments,” often referred to as RUCs.

In 2020, ERCOT used RUCs for 224 unit hours, all of which were aimed at managing transmission congestion. In the second half of last year, after regulators focused on reliability, the number of RUC hours jumped – and 80% was spent on increasing capacity on the network, said the market monitor.

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

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

The long-term solution lies in redesigning the competitive market, a process that should accelerate in the coming months. The changes will aim to attract new investment in dispatchable resources that can fill the gaps when solar and wind power is insufficient.

Natural gas-fired power plants will be the main target, although storage batteries are increasingly advanced – and many battery projects are already in the ERCOT pipeline.

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

“We also have to make sure it’s not a problem of 2025 and 2026,” Richmond said.

There’s also a real risk in the fall, said Michael Jewell, a longtime Austin energy attorney. If a late heat stroke occurs, many factories could be shut down for repairs when demand increases.

“It’s not a problem of thermal generators; that’s the reality,” Jewell said. “These machines need to be maintained.”

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