Managing distributed generation — that is, power produced at the level of individual customers from such sources as diesel generators and solar panels — raises all sorts of complex issues for ERCOT, the state’s primary electric grid operator.
How should distributed generation be deployed on the grid — especially given that not all distributed generation units behave in a similar fashion? And how should DG prices be calculated in ERCOT’s complex wholesale energy spot market?
A special task force charged with examining these issues and more released its final report April 28 to ERCOT’s Technical Advisory Committee — a panel that reports directly to the ERCOT board. Optimistically named the “DREAM” task force (short for “Distributed Resource Energy Ancillary Services Market”), the special panel did not offer final solution but rather identified important questions for the management of distributed generation and teased out long-term and short-term goals for settling those questions.
ERCOT (also known as the Electric Reliability Council of Texas) has responsibility for grid reliability and ERCOT stakeholders help set rules for the state’s complex real-time wholesale electricity market.
Of particular interest is the question of how distributed generation should be priced in that market. In ERCOT, wholesale power generators typically receive payments calculated at discrete nodes on the power grid. There are thousands of these nodes, and prices there are calculated every five minutes. However, load — that is, electricity users on the ERCOT grid — are charged prices that are averaged across much broader zones.
More than 550 megawatts of distributed generation exist at more than 7,600 discrete nodes within ERCOT, according to reports. But given that DG resources share characteristics of both power generation and power load, how should those resources receive payments? Should they be calculated at discrete nodal points, or at the broader zonal level? These are among the issues teed up by the DREAM task force.
Another question relates to the “Congestion Revenue Rights” system at ERCOT. Holders of Congestion Revenue Rights receive payments that serve as financial hedges against the extra grid costs that can accrue due to power line congestion. But how should the Congestion Revenue Rights system handle DG resources?
Although the DREAM task force did not resolve these thorny questions, it did set the stage for high-stakes deliberations in the months to come. Those deliberations almost certainly will involve representatives of consumer groups, transmission and distribution providers, generators and other ERCOT stakeholders — and may eventually require action by the Public Utility Commission. With the issuance of its final report, the DREAM task also was dissolved by the Technical Advisory Committee.
Kenan Ögelman, ERCOT’s vice president of Commercial Operations, said DG is growing in ERCOT and will continue to impact its operations. “We would like to sit down with everybody, and get a very clear picture of concerns and capabilities,” he said.
R.A. Dyer is a policy analyst for TCAP, a coalition of more than 160 cities and other political subdivisions that purchase electricity in the deregulated market for their own governmental use. Because high energy costs can impact municipal budgets and the ability to fund essential services, TCAP, as part of its mission, actively promotes affordable energy policies. High energy prices also place a burden on local businesses and home consumers.