ERCOT Developing RFP For Demand Response, Generation Capacity To Address Overloads Associated With South Texas Export Constraint

April 23, 2024

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Copyright 2010-24 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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ERCOT said in a Texas PUC filing that it is in the process of developing the framework for a possible request for proposal (RFP) for demand response and other capacity sources that could be available in time for most of the summer 2024 season to mitigate the need for possible load-shedding across the ERCOT System to avoid overloads of transmission lines associated with the South Texas Export Generic Transmission Constraints (GTC).

"In developing this framework, ERCOT is drawing upon its experience and lessons learned from the RFP issued in October 2023 for contracts for capacity for the winter 2023-24 season. That RFP was issued pursuant to ERCOT’s authority under Section 6.5.1.1 of the ERCOT Protocols, which allows ERCOT to seek offers for capacity to address an anticipated emergency condition in the current or next season. For the winter 2023-24 RFP, the anticipated emergency condition was a system-wide capacity emergency. For the RFP being developed for the South Texas Export GTCs, the anticipated emergency condition is a transmission emergency that, while correlated with very high system demand, would require a solution that is primarily designed to reduce loading on lines exporting energy from South Texas to the San Antonio area," ERCOT said

"Thus, only reductions of demand or injections of energy north of that constraint would help to address the reliability problem, and curtailments or injections in greater electrical proximity to the constraint would be more helpful than those further away from the constraint. Accordingly, the RFP solution ERCOT is exploring would seek capacity sources that are north of the constraint and in counties with higher shift factors on the constraint. Generally, these counties have shift factors ranging from 4 to 8% and are located in the San Antonio, Austin, and Hill Country areas. Initial analysis indicates that, on average, for every 125 megawatts (MW) of load reduction and/or increased generation dispatched in these counties, the loading on the constraint is relieved by 5%. ERCOT is currently studying power flows over the relevant transmission facilities during recent summers to develop a recommended amount of capacity that might be sought through an RFP," ERCOT said

"At the April 11, 2024 open meeting, the Commissioners expressed particular interest in investigating the procurement of demand response sources. ERCOT agrees that demand response should be a primary target of any RFP but expects that it may be prudent not to foreclose participation by the limited categories of generation that may be available. Because Protocols Section 6.5.1.1 contemplates that both demand response and generation could be the subject of a contract for capacity, ERCOT is presently inclined to allow as many participation options as possible, unless the Commissioners express a different opinion," ERCOT said

ERCOT is evaluating whether it may be helpful to allow participation of

• locationally optimal Generation Resources and Energy Storage Resources that are in the interconnection process and that could accelerate commissioning to be available during the summer 2024 season,

• locationally optimal Settlement Only Generators that have not previously demonstrated price-responsive export behavior, and

• generators or customers participating in Emergency Response Service.

"However, if the Commission does not favor participation of any form of generation, then ERCOT requests guidance from the Commissioners to that effect at an upcoming open meeting," ERCOT said

ERCOT is also currently considering other critical RFP features, including the following:

• procurement schedule,

• contract beginning and end dates,

• hours of potential transmission overloads,

• quantities of capacity needed to address potential transmission overloads,

• whether a QSE will be required for all participating capacity sources, and

• for the evaluation of locational benefits, whether a shift-factor cutoff or a graduated consideration of shift factor will be used.

"With respect to the procurement schedule, ERCOT is considering the possibility that it may need to send out an RFP as early as the week of May 6, 2024, with responses due mid- to late June to target a late June or July 1 beginning period," ERCOT said

"ERCOT cautions that, while it may be able to pursue an RFP for contracts for capacity, significant quantities of capacity will be needed in response, particularly given the locational limitation on those capacity sources that would have a meaningful impact on the transmission constraints. ERCOT is willing to pursue all options that may be helpful to reducing the need for load-shedding across the ERCOT System," ERCOT said

"Any budget for this proposal should be set by the Commission. ERCOT requests guidance on this proposal by the May 2, 2024 open meeting. ERCOT does not believe that a formal order, good-cause exception, or change in PUC rules would be required to pursue this RFP, as Protocols Section 6.5.1.1 already authorizes ERCOT to pursue this procurement," ERCOT said

Project 55999

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