Distributed Energy Resources are the Next Step in Texas Energy Leadership – and a Multi-Billion Dollar Opportunity

Posted by Claire Alford and Suzanne Bertin on May 6, 2020 11:42:21 AM


In 1999, the Texas Legislature passed Senate Bill 7, opening up the Lone Star State’s electricity market to competition. Since then, Texas has been at the forefront of energy innovation. Now, nearly 20 years later, distributed energy resources (DERs) are the cutting edge of energy innovation, continuing the two-decade process of making the Texas grid more secure, clean, reliable, and affordable. With the COVID-19 public health crisis changing where and how we use electricity, just as it has changed where we work and how we learn, DERs couldn’t have come along at a better time. 

DERs produce power, manage electricity demand, and provide valuable grid services. These resources — including rooftop solar, energy storage, electric vehicles, and energy efficiency — are typically smaller, flexible, and capable of decreasing overall electricity demand.

DERs are providing critical reliability and resilience to support essential Texas businesses and Texas residents during the COVID-19 pandemic. Backup generation can help keep the power on at hospitals. Clean energy microgrids that are being set-up at field hospitals across the country help overwhelmed health workers respond to the surge of coronavirus patients. DERs also help to lower energy bills at home, which is especially important since families are working and learning from home in this new normal. While overall electricity demand is decreasing, as shown in ERCOT’s recent COVID-19 Load Impact Analysis, daily residential demand is increasing as we shelter in place. New data from Pecan Street showed that in March, daily residential demand in Austin was 20% higher than in the same month in previous years. Rooftop solar, energy storage, and energy efficiency all help to lower residential energy bills. 

Even after the pandemic is over and we are no longer sheltered at home, demand for secure, clean, affordable power will continue to grow.  Texas’ population is growing, and by 2050, the number of Texans will be nearly double what it was in 2000. To deliver the electricity needed to support the Texas economy, we will need more utility infrastructure systems, but Texas should take every opportunity to optimize the system for which customers have already paid. Transmission and Distribution (T&D) spending can be reduced, deferred, or avoided altogether, by integrating DERs, sometimes referred to as “non-wires solutions,” reducing costs for customers so that customers can spend money in other areas to help grow the economy.

A recent report prepared by Demand Side Analytics for the Texas Advanced Energy Business Alliance (TAEBA) shows that Texas could save $5.47 billion over 10 years by fully incorporating DERs into transmission & distribution planning and Texas power markets. Specifically, Texas customers could save $2.45 billion over 10 years – an average of 8.5% of projected annual T&D spending – by utilizing DERs to prolong the life of existing, functional T&D infrastructure, and another $3.02 billion by injecting power into wholesale markets at times when energy prices are spiking. 

Although COVID-19 is top-of-mind for everyone right now, the need for resilience is nothing new. In 2017, Hurricane Harvey wreaked havoc on Texas, including knocking out more than 10,000 megawatts (MW) of electricity generation. As natural events such as hurricanes continue to impact the economy and the physical well-being of the population, customers are investing in DERs to keep their homes or business operations running when the rest of the grid may lose service. While these events are undoubtedly tragic, they give us an opportunity to reevaluate our current power system and make improvements where necessary. 

The legislature and the PUCT are beginning to recognize these benefits and have taken steps toward removing market barriers to development of DERs. During the 2019 Texas legislative session, Sen. Kelly Hancock, Chair of the Senate Committee on Business & Commerce, proposed legislation (SB 1941) focusing on battery energy storage. This bill would have clarified that storage is a competitive service, and would have created new opportunities for utilities to contract for battery-based “non-wires solutions” to reap savings from deferring or avoiding traditional infrastructure buildout. SB1941 passed the full Senate unanimously, and House State Affairs as well, but time ran out before the full House had an opportunity to vote on the bill. The concepts set forth in SB 1941 should be expanded to include DERs more broadly — not just batteries — for adoption in the 2021 legislative session. 

Although the Texas Legislature does not meet in 2020, both the House and the Senate leadership have issued interim charges for jurisdictional committees to examine growing customer demand for DER technologies, identify barriers to adoption, and recommend changes in law, if needed, with action to be taken in the 2021 legislative session. TAEBA was invited to testify as an expert before legislative committees (Senate Business and Commerce, and House State Affairs) exploring these issues earlier this year, and TAEBA is continuing to work with our member companies to educate policy makers on the benefits of advanced energy technologies, including DERs, in Texas  

For the past 20 years Texas, with its wide open spaces and wide open electricity market, has been a leader in energy innovation. DERs represent the next step in that leadership, providing cost savings for consumers and more competition in energy markets. These technologies are available now. With the right policies, in law and regulation, DERs can be put to work for the benefit of customers and the power grid.

Download Value of DER in Texas

Topics: Wholesale Markets, Texas Advanced Energy Business Alliance



Advanced Energy Perspectives is Advanced Energy United's blog presenting news, analysis, and commentary on creating an advanced energy economy. Join the conversation!

Subscribe Here!

Recent Posts

Posts by Topic

See all