Five Steps to Affordable Grid Resiliency | Black & Veatch

Texas Resilience 2021

Five Steps to Affordable Grid Resiliency

Winter came to Texas. In February 2021, sub-freezing temperatures forced the largest power outage in U.S. history, leaving millions without electricity and millions more facing severely disrupted water service as outages crippled critical infrastructure systems throughout the state. The scale of the crisis grew so large that it has reverberated throughout the nation, dominating headlines and raising questions about grid integrity and the interdependence of infrastructure networks that extend far beyond the Lone Star State. Why did the grid fail during the unusually cold weather conditions, can it happen again, and how can it be prevented in the future?

Texas is uniquely independent, and its commitment to an independent power grid reflects this mindset. The Electric Reliability Council of Texas (ERCOT) is the first independent system operator (ISO) in the U.S. and dispatches about 90 percent of the state’s electric load. While its structure has fostered tremendous investment in lower carbon natural gas baseload and renewable generation resulting in low corresponding power prices for consumers, its separation from other regional transmission organizations (RTO) limited ERCOTs ability to draw resources from less impacted regions to balance demand load at its most critical time of need. Barring complex regulatory overhauls, power utilities must consider what steps can be taken to minimize the likelihood of a similar system failure in the future.

The issue of extreme weather is not unique to Texas; system shocks in California, New York, and other storm-prone areas along the Atlantic Coast highlight the critical need for asset owners, utilities and grid operators to plan today to initiate new levels of grid resiliency and flexibility. These next-generation grids must cope with externalities such as increasingly frequent and extreme weather events,  and global energy market shocks, all while managing new levels of variable load and generation arising largely from the integration of renewables and the adoption of electric vehicles. Our team of industry insiders has identified the following five steps as options for improving grid resiliency in the short- to mid-term.

Winterization Programs

The severity of the cold weather experienced in Texas has erased preconceived notions of what can be termed “normal” weather conditions. How utilities calibrate risks and prepare against the impacts of extreme weather requires imagination and re-evaluation.

Effectively planning for winterization means taking a broad view across the portfolio of generation facilities; transmission and distribution infrastructure and grid operations; connecting infrastructure, including the supply of fuels (as applicable); and the digitization of operational technology.

Ideally, winterization programs should begin with roadmaps that allow owners to allocate capital most effectively, assigning resources where they are needed at the right time. Insulation, heating elements, reconfigured infrastructure, backup fuel sources and more can be rapidly deployed to enhance system reliability. With these programs in place, owners can invest in essential upgrade work to help prevent freezing and other seasonal preparations while simultaneously planning major capital-intensive project investments.

Typical winterization programs consider not only seasonal weather impacts but also extreme storm events and other scenarios that form the operator’s enterprise risk management strategy, further driving organizational value. Recognizing not all assets were built at the same time, examining project design conditions are a key requirement to validating each asset’s resiliency. By incorporating holistic operational assessments, programmatic winterization means existing assets are hardened and new assets are designed with winterization in mind, while human and procedural gaps in the management and recovery protocols are also addressed.

Winterization efforts also include the implementation of data analytics software such as ASSET360 to provide early warning of potential issues before they undermine system integrity. Monitoring & Diagnostics services leverage data analytics to uncover emerging issues, including those associated with extreme weather conditions, to avoid costly outages and de-rates.  Deployment can take about eight weeks, requires very little plant personnel involvement, and covers all major equipment and balance of plant. Often data collected by the plant system can be fed into the software for root cause and potential failure modes during previous extreme events.

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Invest in QuickStart Reciprocating Engines

Invest in QuickStart Reciprocating Engines

As the Texas event demonstrated, balancing traditional baseload assets and intermittent renewable energy sources is an essential function of all grid operators. As more renewable energy is integrated, complementing these variable generation resources with flexible, modestly sized gas-fired assets will improve operators’ ability to deal with sudden demand surges.

Portland General Electric (PGE) in Oregon did just that through the addition of approximately 200 megawatts (MW) of gas-fired capacity at Port Westward Unit 2. Given PGE’s commitment to renewable energy and the addition of new wind and solar power capacity into the system, PGE also needed an efficient technology capable of quick starting and fast ramp-up and ramp-down rates to fulfill the electric grid’s need for flexibility and resilience.

PGE chose 12 natural gas reciprocating Wärtsilä, 25,000-horsepower 18V50SG engines. It was the first installation of the engine in the United States and the configuration of multiple small engines gives PGE powering-up and maintenance flexibility, controlling costs efficiently. The smaller footprint design also accelerated the rapid deployment of this reliable generation option.

Build Storage Capabilities: Natural Gas, Hydrogen and Batteries

The newer, more resilient grid will call for improved storage capabilities, increasingly seen as central to the management of electric systems worldwide. Whether by increasing capacity to store gas supplies locally, or supplementing generation systems with battery energy storage systems (BESS), investing in storage significantly benefits grid stability while helping to lower costs down the line.

BESS complements quick-fire gas-fired peaker facilities. For example, lithium-ion storage systems work together to improve operational efficiencies and lower the cost of providing reserve power. Emerging battery technologies such as those deployed at the Shell Microgrid in Houston, Texas, offer extended discharge options while new battery technologies are expected to further extend the storage and discharge capabilities of BESS systems.

Together, gas-fired peakers and BESS will function as a new kind of reserve that springs to life immediately to smooth and optimize turbine performance levels. 

This will translate to fewer turbine starts and stops leading to longer turbine operating lives – measured in years – and reduced wear and tear, measured in lower costs.

In addition, hydrogen may become an increasingly attractive storage option for both power generation and heating. Hydrogen can be mixed with existing natural gas fuels. Plus, it is the only clean energy fuel source that can be transported at scale. If structured and priced appropriately, hydrogen-based systems could emerge as a complementary solution to renewables, where reliability pricing services could be developed as interest and momentum surrounding carbon-free alternative fuel grows.

Diversify the Grid Further with More Renewables

Diversify the Grid Further with More Renewables

As the levelized cost of renewables continues to fall, capacity shortages inherent in the grid can be met through the addition of more renewable energy. Reporting that wind turbines alone led to the power shortage has been disproven as the freezing conditions disrupted nuclear, gas-fired, coal and renewable generation facilities.

Many renewable (and traditional) power assets operate effectively in cold climates. If winterization programs are implemented systematically, new renewable assets will incorporate anti- and de-icing options into their configurations at the design stage of project development. This is consistent with the wind turbines in colder northern states such as North and South Dakota, and offshore resources that regularly encounter severe cold temperatures yet continue to operate safely and reliably year-round.

As renewables become an ever-increasing share of the power generation mix, it’s critical that investments are made in transmission infrastructure to move power from locationally favorable renewable generation plants to load centers. Transmission can also play a critical role in integrating large scale storage which helps offset the intermittency of renewable generation.

Re-evaluate Market Structures

The crisis has fundamentally shifted thinking around supply risk and how the Texas power market  will evolve. Some  adjustment to the regulatory compact is likely to take shape in an effort to address the gaps exposed by the most recent cold weather event. Since Texas does not have a capacity market, a mechanism to pay for the costs of enhancing resiliency through some of the options above, such as the costs associated with winterization will be required.  Creating additional surety of supply of natural gas to Texas generators will also be important since the majority of Texas generators do not contract for firm gas supplies with associated pipeline capacity and are often curtailed during high demand events, further escalating the crisis. Mid-crisis, facing tightening supply from increased demand as well as freezing wellheads, the Texas governor ordered producers to sell only within the State of Texas. Such moves – expedient to keep the people of Texas warm – opens the risk of similar future scenarios. While long-term ramifications are still unclear, owners of gas-fired facilities should consider other contractual options to help manage and balance their risk more effective long-term.

Understanding regulatory alternatives to address these needs as well as identifying their impacts on utility, commercial and industrial services, operations and business models, will be critical for successful advocacy and business planning.

Looking Ahead

The implications of the electricity crisis in Texas will continue to play out in the coming months as the reform of ERCOT is tabled as an emergency item for Texas lawmakers while the Federal Energy Regulatory Commission (FERC) has also launched an investigation into the rolling blackouts in Texas and elsewhere. What is certain is that utilities, together with large commercial and industrial users, need to anticipate potential regulatory changes ahead and plan for more resilient operations in the face of future supply gaps and rolling blackouts caused by what must be considered inevitable extreme weather events ahead.

Reach out to our team of experts here to learn how we can partner with you to improve your resilience.

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