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So, exactly how much electricity can Texas produce? No one knows and regulators are trying to find out

By: L.M. Sixel |

Texas is heading into summer with the tightest reserve margin on record, a less than comfortable cushion if Texas faces another string of triple-digit temperatures and power generators have problems keeping up with demand.

But it turns out that Texas has more power generation at its disposal that can be tapped in extreme conditions, thanks to the state’s history of hurricanes, floods and other natural disasters.

Over the past three years or so, businesses including grocery stores, gas stations, hospitals, shopping malls and factories have invested in back-up power in the form of small natural gas-fired generators, diesel generators and small solar farms. That way, if a tree limb falls on nearby power lines or heavy rains knock out electricity, hospitals can continue to serve patients, gas stations can keep selling gas and grocery stores can protect their frozen inventories and keep cash registers ringing.

Businesses have also realized that if they install their own generation capacity, they can make money selling power back to the wholesale electricity market, especially when power prices spike, electricity analysts say. Those sales can offset the cost of installing and maintaining the back-up generators.

The generation units popping up around Texas are tiny compared to the big power plants, producing as much as a half megawatt, enough to power about 100 Texas homes during a hot summer day. But add all the small units together and it’s enough to make a difference during power shortages.

The problem? No one really knows how many micro-generators are out there and how much power they can produce.

DeAnn Walker, chairman of the Public Utility Commission, asked the state’s grid manager to do some digging at a recent meeting, after she called next summer’s projected reserve margin of 8.1 percent “very scary.” The Electric Reliability Council of Texas, which manages the state’s grid, has a reserve margin goal of 13.75 percent.

“We have to have more transparency”, as more businesses and homes install power generation capabilities, said Walker. She cited the example of Buc-ee’s, the unofficial rest area of Texas, as one company producing its own back-up power.

Eight Buc-ee’s locations are outfitted with natural gas-fired generators through a deal with Houston-based microgrid developer Enchanted Rock. HEB also has invested in back-up power, teaming up with Enchanted Rock to install natural gas-fired generators at 97 stores in Texas, according to Enchanted Rock.

All together, Enchanted Rock has installed 295 megawatts of generation across Texas, about double what the company had two years ago.

Clients like Buc-ee’s and H-E-B get the power they need when they need it. But when they don’t, which is most of the time, Enchanted Rock watches wholesale power prices and starts up the small generators when prices climb to profitable levels.

Allan Schurr, Enchanted Rock’s chief commercial officer, estimates that the company’s generators contribute less than 1 percent of power for ERCOT during peak demand periods.. The entire microgrid industry, he estimated, isn’t producing more than five percent. But it’s hard to know exactly.

Some small generators are included in ERCOT’s generation data, but others that don’t feed the massive transmission lines and keep power within smaller distribution networks aren’t as easy to count. Another complication is that industrial and commercial operations have financial incentives to reduce electricity use during hot summer days which, to the grid operator, can cut demand so dramatically that it resembles new generation coming on line.

Warren Lasher, the senior director of system planning at ERCOT, is charged with trying to calculate how much power Texas can produce during heat waves and cold snaps. His best estimate for now is that micro-generators can produce power in the hundreds of megawatts.

“It’s enough to move the needle, for sure,” he said.