Checking in on ERCOT

We pose this question because ERCOT recently released information on the Texas grid, reporting that there would not be any declared emergencies or scrambles for energy. It’s looking like there will be enough electrical capacity to last the rest of the year. This is of course a welcome change compared to the record-setting summer we had here recently.

According to the actual SARA report just released by ERCOT, there will be almost 84,000 MW total, with an expected peak of close to 61,000. This means that the reserve capacity will sit at a comfortable 22,900 and some change. No need to panic or call for energy-saving procedures across the state.

But as a reminder, the data and projections are compiled and forecasted using weather stats from years prior. They are not infallible, but because the weather is the definition of chaos, it’s impossible to completely know whether the grid will have enough. It’s looking safe enough to assume that Texas will be fine.

Speaking of ERCOT and predictions though, they are facing legal backlash because of their grid projections. 

Predictions Mean Hot Water for ERCOT?

ERCOT, the grid overseer for 90% of Texas’ state load, they have been in hot water because of a recent lawsuit with Panda Power. According to this source, ERCOT stated they needed much more energy generation than was really needed. Panda Power then built power plants to fulfill ERCOT’s urgent needs. As a consequence of there being plenty of electricity, Panda couldn’t generate enough revenue because supply was too abundant to cover the costs of maintaining their plants. They are suing ERCOT as a result of misleading information. 

As the aforementioned source says, Panda is “alleging that the Electric Reliability Council of Texas intentionally manipulated the projections to encourage new power plant construction and relieve the political pressure that was building on the grid manager.”

As the argument goes: because of ERCOT’s sovereign immunity status, what’s really stopping them from manipulating information whenever they want, if there are no legal repercussions for ERCOT

Natural Gas to Ensure Stronger Grid?

Lastly, this one seems to be an obvious question. With coal and nuclear being lessened across the country, natural gas will have to be ramped up to saddle the void that coal and nuclear leave behind. Renewables only account for about 11% of energy in the U.S.. 

So, as the PJM Interconnection is doing, natural gas will probably be needed to make sure that grids stay on reliably while the entire Nation’s renewable infrastructure has time to develop and catch up to always-increasing demand.

 Fracking News in Texas

With presidential nominee Julian Castro advocating for fracking to be phased out by 2035, as well as overwhelming polls around the country in favor of a fracking ban, “hydraulic fracturing” might be ousted sooner than later. 

But the energy sector might be too far reliant on fracking that any humanitarian concerns won’t guarantee any wide scale shutdown. It just might not be practical at this current phase, even if it is the driving force behind higher methane levels and higher earthquake incidence across the country, as well as health dangers for residents.

Banning fracking is not a black-and-white argument though. From a humanitarian point of view, it’s definitely troublesome. Just ask the residents of Denton, Texas, which was the first Texas city place to ban the practice, albeit unsuccessfully. But from an economic standpoint, fracking contributed heavily to the shale boom in Texas. 

In fact, fracking made it possible for the United States (and Texas) to be such a dominant force in oil production. It has also reportedly decreased greenhouse emissions, but many sources like Skeptical Science, believe that lowered CO2 rates are a result of decreased coal production. But of course, with increased fracking comes a decreased reliance on coal for energy production, so fracking probably has a role to play in that. 

For Texas in particular though, fracking is causing a lot of concern because of wastewater pollutants that residents and state policy makers are afraid might seep into nearby rivers and lakes. Texans are invoking the EPA to hopefully safeguard drinking water from the potential harms of fracking byproducts. 

Methane is on the Rise

Vox says in their article, “Fracking May be a Bigger Climate Problem Than we Thought” that a lot of rising methane was tied to “biogenic” causes, which means animal and plant wastes. This corroborated by measuring the varying weight of isotopes. Or, in other words, fracking emitted heavier methane isotopes. Or so that was the consensus for a time. 

But the overall methane picture has been complicated by Robert Howarth, who traced shale oil production as a root of increased methane levels. And as the Vox article states, this can mean that America is one of the biggest reasons why methane is so high: “Since 89 percent of the shale gas production comes from the US (Canada produced the rest), that’s a whole lot of accelerated global warming tracing right back to America’s front door. “

But there’s more than one side to the “fracking = increased global warming debate”.  The EIA shows that energy-related carbon emissions went down, but that could be correlated to less coal production.

Regardless, fracking created a lot of jobs and helped solidify the country as an oil empire. Our relationship with the practice will certainly continue to be a complex one, to say the very least.

 Coal’s Influence in Texas Continues to Fall

 

Coal is continuing to fall. According to the EIA, coal shipments within the U.S. are consistently declining. As they state, “Nearly 600 million short tons (MMst) of coal was shipped to the U.S. electric power sector in 2018, the lowest level since 1983.” And specifically for electricity: “Coal shipments to the electric power sector in 2018 were 7% (47 MMst) lower than the previous year. “

It’s interesting to note that the EIA recently put out an energy flow diagram to track the total fossil fuel usage in the country. The collected data shows that in 2018 alone, “80% of domestic energy consumption originated from fossil fuels.” And as this diagram that the EIA put out shows, coal has fallen by a large amount when accounting for total fossil fuel usage in the country. 

 

Extrapolating the Data on Coal

 

If coal continues to fall, then natural gas will have to rise to make up for a dearth in coal plants. Because coal accounts for the second largest amount of electricity generation in the United States, will this also mean that the rest of the country will need more nuclear plants as well? 

Nuclear energy is close behind coal in electricity generation after all. And renewables (the most notable being Wind energy) don’t even produce half the megawatt hours as nuclear (on a national average), so it will be some time until renewables catch up or can produce on par with coal.

 

But that’s when we look at the Nation as a whole. If Texas continues to outpace coal production with wind energy, they might be more apt to adapt to a continued reduction of coal.  In Texas, ERCOT said that about 22 percent of electricity came from wind. This is just slightly higher than the 21% by coal, but it offers a snapshot into the state’s future.

 

This is all despite the fact that many experts feel that coal will stick around in the Lone Star State for quite some time. After all, coal is still a huge part of the economy.

 

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As the Houston Chronicle states, Texas has seen some of the most notable declines in coal-generated power as everyone else. Their biggest coal mine, the Kosse Mine near Waco, was down 16 percent last year, and will only continue declining as plants all over the country close down. 

 

The aforementioned Houston Chronicle article has this to say about trends in the country: “The number of active coal mines in the United States has fallen by more than half over the past decade to 671 mines in 2017 from 1,435 mines in 2008.” 

 

But as coal plants are phased out, some suppliers are worried that prices will rise as supply shortens. And they very well could rise for areas that rely more on coal, like the Midwestern and Northeastern states.  

 

Texas shouldn’t be as affected, and the reduction of coal plants will most likely follow a more gradual rate for the time being. Which means that the 3% drop in coal-generated electricity by 2020 will most likely stem from the higher concentrated areas in the Northeast. 

Environmental Emissions Bright Spots for Methane and Carbon Dioxide  

Emissions

According to the folks at Vox and data from Co2 Earth, our planet has hit an average PPM of about 410. The recommended benchmark for CO2 amount (measured by PPM) is 350. So, we are well past concerning levels for our climate.

But there seems to be a bright spot on the horizon. Moving past some of the more basic policies for curbing carbon emissions, like putting a cap on carbon, there are more involved methods that could radically reduce emissions.

Some of these methods include Carbon Dioxide Capture and Sequestration, which means that engineers take carbon from the air (the capture) and pump it into underground formations for storage (the sequestration). But as Vox states, CCS probably won’t be readily adopted because there’s not a lot of economic incentive for organizations to do so.

A way incentivize this is to use Carbon Capture for the purpose of commoditizing and eventually selling CO2 for plastics, carbonated beverages, polymers and other synthetics. 

This won’t stop rising CO2 emissions in their tracks, but can certainly help. 

Another bright spot is that methane rates have been decreasing

Methane Rates Are Dropping

As The Hill states in the aforementioned article, “methane emissions in the United States have dropped 15 percent since 1990 even as natural gas production increased more than 50 percent over that same period.” And because natural gas and methane emissions go together like ham and rye, it’s very encouraging to see such a drop.

How are they doing this though? In a similar way to the carbon capture and direct capture methods for CO2, companies are harnessing technology to capture emitted methane. The companies are transporting methane via pipeline to other organizations who then use the methane as fuel. This commoditization of what was once inevitably vented into the air has been an immense bright spot for our climate’s health.

According to The Hill as well, carbon rates have been reduced as a result of the biggest coal plants being shuttered. Or as Scientific American puts it so well, “Coal plant closures have been a feature of U.S. power markets for the better part of a decade, as stagnant demand, low natural gas prices and increasing competition from renewables have battered the coal fleet.”

So, as methane rates are continued to be locked down and controlled and renewables continue to replace coal, there are definite bright spots to glean despite the immense amount of work still to be done to keep our planet safe.

Encouraging Energy Storage Developments

Energy storage is exciting. There’s no other way to put it. Take the Energy Vault storage system, which has recently showcased the capabilities of their new technology. Essentially, it’s a giant concrete tower that uses gravity and kinetic energy for storing wind and solar energy. 

As Tech Crunch states, “Energy storage remains one of the largest obstacles to the large-scale rollout of renewable energy technologies on utility grids.” So, this tech, as well as Tesla’s new Mega Pack, has shown the massive amounts of capital that investors are pouring into this important facet of the renewable energy sector. 

Buy why has energy storage development become such a major point of interest? 

Think about it this way, if engineers and scientists continue to further technology that is capable of generating more and more electricity, there need to be just as robust technology for storing that energy when it grows excessive.

More relevant and ubiquitous is the variability of renewable energy and the overcapacity problems that plague many electrical grids across the world. Take for instance Germany and their challenges with maintaining such an aggressive renewable energy platform

 Better Batteries to Reduce Overcapacity, Intermittency and Price Volatility

Germany has ambitious plans to be at least 80% renewable by 2050. But as they continue to shut down nuclear plants to make way for more renewable energy, they face overcapacity problems. 

In short, because renewable energy fluctuates–the wind just doesn’t blow and the sun doesn’t shine enough–then coal and natural gas plants are used to safeguard against any grid shutdown. But what happens when the wind and sun suddenly pick up? The answer: overcapacity of electrical generation that can hurt the grid’s infrastructure, as well as make huge spikes in wholesale electrical prices

After all, excess energy usually means a precipitous drop in price. This is textbook energy intermittency, which of course is a challenge, but one that better batteries can help with, especially in Texas where renewable energy is such a prevalent force in our energy landscape.

Decentralized Batteries, Thermal Storage, and More

The more you look into the development of renewables, the more encouraging advancements you can find. Put enough smart and ambitious people on the task, and they will overcome climate challenges. Some new technologies which are especially promising are the following:

  • Train-powered energy storage. Yes, you read that right. Excess renewable energy pushes a train along a rail that travels up a hill. As James Conca puts it, it’s very much like the Greek Myth of Sisyphus, who spends his days pushing a giant boulder up a hill and down again for eternity. At the top of the hill, the ARES train stores energy and then unleashes gravitational energy as it descends, pushing electricity out to the grid. 
  • Another powerful storage technique is thermal energy storage, which is actually strong enough to power a reasonably-sized city for 24 hours. 
  • Lastly, even though there’s many more technologies in development out there, is gravity storage. Which means the Energy Vault that was mentioned at the beginning of this article.

 

Taking the Pulse of the Permian Basin for Natural Gas Prices

Natural Gas

Seeing that the Permian Basin is such a huge driver of the Texas natural gas market, as well as the largest oil field in the country, it’s important to periodically peer into what has been going on in that region. 

As the EIA has recently reported, Kinder Morgan recently built the new GCX natural gas pipeline, which has increased natural gas prices already, as it is close to getting some use. In that same report, the EIA says “natural gas spot prices…settled at $1.55/million British thermal units (MMBtu) on August 15, the highest price since March 2019.” 

In the Waha hub, in particular, prices have been rising. And that’s encouraging for many because prices were negative for quite some time. 

Additionally, more pipelines will be set for construction in the future, as the EIA states that at least 7 more are on the horizon. They also speculate that the Waha hub’s spot prices will stay higher as a result.

Although, some of Waha’s prices rising have to do with lowered temperatures, as the summer is cooling off after all. The rise meant record high demands as cheap natural gas was used to generate electricity across the country to accommodate the heat.

Bottlenecks and Permian Projections

According to Forbes, as well as the CEO of Exxon himself, the natural gas will grow in years to come. Growth will be driven by more pipelines being opened. And like all commodity-driven expansion, it just takes time for prices to go back up. He pegs natural gas to rise by 1.3% per year. 

More pipelines doesn’t necessarily guarantee a rise in oil prices for the major players like Exxon, but it surely helps to stave off the risk of more costly pipeline capacity constraints, which make it hard to meet the rising demand in the country. And so far, projections are looking accurate as this report from Moodys in 2018 shows how a late 2019 turnaround is the most likely considering the newer pipelines coming online.

This trend of more pipelines will only continue, as infrastructure will need to increase well into the next decade to accommodate growing production. John Coleman, who is the principal analyst for Wood Mackenzie Ltd., says that the coming years will see some of the biggest investments in pipeline infrastructure in history.

Selling Permian Oil Stocks

As Concho sells its Permian assets, and more of the bigger guys continue to buy stocks while the prices are so low, the Permian climate for oil and natural gas might look differently as Exxon and Chevron continue to accumulate more valuation in shale oil holdings. How this will affect natural gas prices despite coal’s decline and more effort towards expanding renewable energy, remains to be seen.

The Rise of the Zero Emission Power Plant?

 

With recent declared emergencies from ERCOT, let’s talk about something a little more cheerful. According to various sources, the power plant builder Net Power recently demonstrated at their power plant in La Porte, Texas that producing electricity without CO2 emissions is possible and actually pretty scalable across the country.

As James Conca at Forbes says, “Not using air also avoids generating NOx, the main atmospheric and health contaminant emitted from gas plants.” So these net-zero plants are definitely a boon to our environment. Increased temperatures and climate change betray a large carbon footprint, and technologies like these are a telling sign that Texas is working hard to combat climate change. 

Designing Net-Zero Plants from the Ground Up

According to David Goldstein, achieving net zero (often also called ‘zero net’) production means that a power plant produces “as much renewable energy onsite as they consume in a year.” But greenhouse gas emissions can be a little trickier to reduce.

Often, plants added extra steps after the fact, which resulted in wasted, more expensive energy. But utilizing the Allam Cycle, Net Zero and other parties have designed the whole process anew and have actually lessened the cost of producing nearly zero emissions of harmful greenhouse gas. And because of this lessened cost, creating these power plants is actually less expensive than conventional plants.

And as the plant at La Porte, Texas shows, there is now no excuse to replace coal plants with these environmentally-friendly versions. Coal plants are already being phased out and not producing well, but is Net Power’s vision realistic? Or is it overly optimistic?

A Step in the Right Direction for Texas

Texas has been criticized for muddying the waters on the climate change issue. In this opinion piece by The Hill, Jeremy Symons states that the EIA data has shown Midwestern and Southeastern states are cutting the most emissions. As he says, “These states, which often had particularly high concentrations of coal-fired pollution, have benefited most from the shift to cleaner sources of electric power.” 

Seeing that Texas is the leading energy producer and consumer in the country, it’s common to expect that emissions might be highest here. But as Jeremy Symons states, the biggest changes in other states came from switching from coal plants to cleaner sources. 

If the plant in La Porte says anything about the future of energy production plants in Texas, then things are looking pretty optimistic. Hopefully this will be a strong move in making Texas a greener state.

What The Blistering Summer of 2019 Has Meant for Texas Natural Gas and Electricity Prices

The power sector has been vastly affected by this recent and unprecedented heat wave that has hit the United States. In fact, last month was historically significant as the hottest in recorded history

So, it comes as no surprise that energy demand and electricity usage soared  last month as a result, and demand is still high in August.

But as the EIA has stated in a recent report, the mixture of the high temperature and the low price of natural gas has proven to be a record-setting month for natural gas use in the country. And because Texas is already one of the leading energy consumers and producers, you can bet that this is affecting the Lone Star State heavily.

Quick Facts About Texas Natural Gas

In this overview, the EIA shows just how much oil and natural gas that Texas produces: in 2017 alone Texas accounted for 24% of the nation’s natural gas production. Additionally, the EIA has data that shows that “Texas is the largest energy-producing state and the largest energy-consuming state in the nation.” 

And as the Department of the Interior recently announced regarding the oil reserves in the Permian Basin, there is about 281 trillion cubic feet of natural gas stored there. These are technically continuous resources as well. 

Natural Gas Prices Are Extremely Low In Texas Right Now 

According to Reuters, Texas uses the most natural gas for generating power than any other state. To drive this usage up even more, there is a record-setting abundance of natural has in the Permian basin. So as demands for electricity generation increase because of the summer, cheap gas is being used to generate electricity more frequently. 

Reuters also states that “the Waha Hub in West Texas, which touched a record low of negative $9/mmBtu in April.” This is strongly correlated with the strong shift from coal to natural gas usage in recent years.

But how is this affecting electricity prices for consumers and wholesalers?

A Resultant Rise in Electricity Prices?

According to data curated by Bloomberg, “The unprecedented market rally highlights how volatile the Texas power market has become as coal-fired power plants, which have seen their profits squeezed by cheap natural gas and renewable energy resources, continue to close.”

So yes, because natural gas has been thriving, prices have been climbing. Because after all, in a July that has seen record after record, prices hit a record high this week with a 36,000% increase in wholesale electricity prices.

And this is all compounded by a smaller than usual amount of wind-generated electricity in the region. 

Overall though, with natural gas production as high as it has been this month, as per the previous EIA report, will prices continue to rise or will they soon level out? And just like the temperature, what goes up must eventually come down. Let’s hope that it’s sooner than later!