Most Texans already know that the state’s fortunes were and are fueled by oil and natural gas. What many don’t realize, however, is just how much the future of the Lone Star State will be powered by renewable energy. With the Green Energy in Texas series, we will explore various aspects of the green energy industry and keep you informed on how those changes and innovations might affect your Texas electricity bill.
Distributed Generation (DG) refers to technology that generates energy at or near the place it’s being used. Distributed generation could serve homes, businesses, college campuses and a variety of other places.
Texas seeks to harness the power generated by renewable energy installations distributed through out local areas. The trouble is that it’s complicated by concerns about capacity, reliability, and of course paying the owners a fair rate. Yet, with residential solar installations getting cheaper and energy efficiencies getting better, there’s more surplus electricity gradually becoming available. And that makes distributed generation even more attractive to grid managers.
The big problem with distributed generation is that it features a wide variety of intermittent generation resources, such as wind and solar, that produces power at fluctuating amounts and not always when it’s needed. All of which makes them difficult to rely upon for meeting demand. There are also physical constraints in some cases where the transmission capacity might not be able to handle an areas’ surplus DG output. For example, let’s say on a good day, our DG solar and wind installation kicks out 1 MW. Unfortunately, the transmission line from the substation servicing our area is only rated to handling 345 kW. To get the power out, the transmission line capacity needs to be improved. But, if ERCOT doesn’t know enough about the the nature of this concentration of DG, that transmission capacity isn’t likely to change.
Currently, ERCOT estimates that it has 1100 MW of DG in its foot print with >80% of that is diesel, natural gas or landfill gas. Earlier on June 27, 2016, ERCOT calculated that renewable installations in the 1MW to 10 MW capacity put out 86 MW while those under 1MW capacity put out 138 MW. Renewable DG output at the end of 2015 added up to 224 MW. That capacity, along with fossil fuel powered capacity is expected to grow by 10% a year.
To begin planning for eventual inclusion of DG into the grid, ERCOT’s Distributed Resource Energy and Ancillaries Market Task Force (DREAM) determined that in order to develop market rules for incorporating DG, a lot of information was needed, especially:
- Types and capacity of DG systems in an area. As mentioned, this not only helps predict supply and demand for the Day Ahead Market, but also manages energy output.
- Type and capacity are also important to plan for reliability. The less reliable the intermittent generation is, the more need to contract with a power plant to provide ancillary services as back up. That can be expensive — over $3100/hour to pay one generator to stand ready just in case.
- For decades, DG has been paid at the zonal load price even after the ERCOT system had switched over to nodal or locational marginal pricing (LMP). To update that, DG locations need to be identified in relation to grid access points and substations to settle pricing at point of grid injection according to the closest locational marginal pricing (LMP) bus.
Your Home as a Distributed Generation Producer
Currently, ERCOT’s rules define DG as those that produce less than 10 MW but more than 1 MW, with voltage connecting at voltage 60 kilovolts (kV) or less. Resources this size are required to register with ERCOT so that their capacities can be aggregated to accurately fit into the market. DG’s greater than 1MW define “a premise with DG” (for purposes of settlement) by a single meter. For the most part, these are commercial businesses and apartment buildings that use their DG to lower their consumption during peak hours which also cuts their demand charge —which can be substantial over the course of a year.
Smaller DG installations are not required to register because their individual capacities are too small to use for planning what the grid needs. These include the residential systems typically less than 50 kW (kilowatts) and their owners use these to offset their normal usage.
Setting up your home with your new solar panel installation requires you to contact your local TDU. Throughout Texas owners of residential or commercial, solar arrays must go through the interconnection application and inspection process with their TDU. For example, both CenterPoint Energy and ONCOR have interconnection requirements even if your system will not be injecting electricity into the grid. You will need to fill out an application, followed by an inspection with your TDU. If you do want to sell your surplus to the grid, you will need to change your load profile with ERCOT.
The PUC prohibits the use of single meters that subtract out-flow from in-flow within the meter. Instead, meters measure the in-flow and out-flow energy in separate channels and these amounts are reported to the TDU every 15 minutes. These amounts are reported to your REP. The problem with the system in place right now is that not all REPs are required to purchase your surplus. Only a few REPs offer surplus power purchase programs.