ERCOT, the state's power grid operator, and owners of clean energy resources haven't been able to reach consensus on what to do about the problem despite months of negotiation. An industry proposal was tabled by ERCOT's board Tuesday to allow both sides to address ERCOT staff's concerns, despite protest from developers that its proposals and continued regulatory uncertainty with the delay could chill investment in Texas.
"Retroactive implementations of any market rules without any technical or commercially feasible path to compliance sends a very clear signal and chilling effect to any additional investment," Omar Martino, executive vice president of markets and regulatory for energy developer Invenergy, said at an April ERCOT subcommittee meeting on the issue.
Clean energy resources have grown rapidly on the Texas grid in recent years as technology costs have come down and federal incentives have infused billions of dollars into the industry, making them competitive with traditional fossil fuel power plants. They've been credited with lowering electricity costs, providing the grid with needed supply and helping decarbonize electricity production, the second-largest source of climate-warming emissions nationally.
As renewable energy makes up a greater share of the grid, ERCOT said it has posed new challenges too, such as power availability that depends more on weather conditions. Clean energy developers, meanwhile, have accused ERCOT of discriminatory policy before, most recently for utility-scale battery storage.
The latest debate centers around a device required by wind, solar and battery resources called an inverter. This device converts the direct-current power these resources produce to alternating-current, the electricity that comes out of a wall outlet.
When there is a voltage or frequency disturbance on the grid, caused by lightning strikes or equipment failures, ERCOT expects power generators to "ride through" the disturbances and continue producing power. But inverter-based resources such as wind, solar and batteries — especially the oldest ones — may sometimes not be able to ride through the disturbance and could "trip" offline and disconnect from the grid. This could lead to a domino effect of other generators tripping offline, which could in a worst-case scenario result in the "rapid collapse of part of or all the ERCOT system," according to ERCOT.
ERCOT has experienced a growing number of these inverter-based resource failures, particularly in West Texas. In 2021 and again in 2022, more than 1,000 megawatts of solar resources tripped offline near Odessa, prompting the North American Electric Reliability Corp. (NERC), an international regulatory authority, to recommend ERCOT rectify the risk.
"What's a future problem for most of the world is an existing problem, a current problem in ERCOT," said Dan Woodfin, its vice president of system operations, at the April subcommittee meeting.
Grid Standards
Both ERCOT and clean energy developers agree on the need to address the problem. What they disagree on is the scope to which hardware and software upgrades should be required.
ERCOT wants to impose ride-through guidance from the Institute of Electrical and Electronics Engineers, an international standards association, on wind, solar and battery storage resources that have signed an agreement to connect to the grid by June 2023. Developers argue that the effective date for the new requirements should be June 2024, or after the Public Utility Commission of Texas, the state utility regulator, approves them.
ERCOT is concerned that 20 to 30 gigawatts of resources would be exempted from the new requirements with a June 2024 effective date, leaving too much risk. Developers argue that retroactive requirements would jeopardize already-approved financing and construction plans. Developers say these newest resources pose minimal risk to the grid and that verification standards for the new IEEE guidelines are still in development.
Existing resources on the grid, meanwhile, would have to be evaluated to ensure they comply with current ride-through requirements; if not, developers would need to implement upgrades to remedy the flaws. Both sides have agreed that all software upgrades are commercially reasonable.
Ryan Quint, a former NERC engineer who was the primary author on nearly all of the organization's reports on the issue, is now a consultant working with Clearway Energy, one of the developers. In comments to ERCOT, Quint wrote that nearly 90 percent of the resources can address their issues with commercially reasonable fixes such as software upgrades, including the vast majority of solar issues in both of the Odessa events.
Disagreements remain on hardware upgrades, which developers say could cost millions for the oldest resources on the grid, potentially forcing developers to retire these assets early instead of make uneconomic investments. Clean energy developers have outlined a process to apply for exemptions, rather than exemptions granted at ERCOT's discretion. ERCOT staff, however, are wary.
"My question is, what is the point of a standard when anytime you fail it, you can ask for an exemption to set a lower standard going forward? That doesn't seem to make sense," ERCOT's Woodfin said at the April subcommittee meeting.
The rule, known as Nodal Operating Guide Revision Request 245, will be revised in ERCOT's Technical Advisory Committee before it is brought back to the ERCOT board for a vote. It then goes to the PUCT for ultimate approval.
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