Articles
November 8, 2024
Meeting Summary – 10/01/24 Business & Commerce
Panel 1: Managing Texas Sized Growth
1.1 Jimmy Glotfelty, PUCT
- The Governor requested the PUCT to identify barriers to developing advanced nuclear plants in Texas.
- A task force has held numerous meetings on the topic, with information filed under docket number 55421.
- A report with recommendations is expected soon, addressing market design, siting, safety, and other challenges.
- Globally, only China is actively building new nuclear plants; U.S. efforts have been limited.
- New nuclear technologies are emerging, such as smaller, safer, and less expensive SMRs.
- Texas has potential for nuclear expansion with existing plants at Comanche Peak and the South Texas Project.
- Research reactors at Texas A&M and the University of Texas are educating engineers on nuclear challenges.
- Licensing by the Nuclear Regulatory Commission remains a significant hurdle.
- Texas has uranium mining and medical isotope usage, positioning it as a leader in nuclear potential.
- Several new projects in Texas include Natura at Abilene Christian and Dow Chemical-X Energy in Seadrift.
- Industry challenges include bridging gaps between licensing, construction, and operation, and managing initial high costs.
- Financial strategies and state policy direction will be necessary, particularly concerning nuclear waste and recycling.
- The goal is for Texas to lead in nuclear technology fabrication, drawing on oil and gas expertise.
- The report will outline financial incentives and policy considerations for advancing nuclear development in Texas.
1.1: Barry Smitherman, TxGEA
- TxGEA includes major oil and gas companies, utilities, and startup geothermal energy companies.
- Texas has significant geothermal resources, especially in the valley, along the coast, and around major cities like Houston, Dallas, and El Paso.
- TxGEA began in 2021 following Winter Storm Uri to promote 24/7 low carbon energy.
- Three senate bills (SB 785, 786, and 1210) were introduced to clarify heat ownership and support geothermal companies.
- Sage Geosystems announced a 3MW sustainable geothermal energy system to be operational soon.
- Sage is collaborating with the Department of Defense for power projects at military bases in Texas.
- Sage also partnered with Meta Platforms to supply clean geothermal power to technology centers.
- There are ongoing geothermal projects in Presidio County for reliability improvements.
- The US Department of Energy projects up to 90 gigawatts of geothermal power in the US by 2050.
1.1 – Doug Robinson, Natura Resources
- Doug Robinson is the founder and president of Natura Resources, with extensive experience in the Permian Basin and gubernatorial appointments on energy in Texas.
- In 2020, Natura Resources started a project to develop and deploy molten salt reactors, forming the Natura Resources Research Alliance with multiple universities.
- Recently received a construction permit from the NRC for the first liquid-fueled, advanced research reactor in the U.S. in 40 years.
- The project has supported the education of hundreds of undergraduate and graduate students across four universities.
- Privately funded with over 80 Texas-based investors, the project has achieved significant milestones independent of federal funding.
- Opened a $25 million Science Engineering Research Center, the first advanced reactor facility outside a national lab in the U.S.
- Formed a partnership with the Texas Produced Water Association for potential reactor deployment in the Permian to desalinate water and provide power.
- Conducting studies on integrating molten salt reactors with refineries to improve efficiency.
- Molten salt reactors use salt instead of water as a coolant, operate at high temperatures and low pressure, and have high burn efficiency with minimal waste.
- These reactors can also produce valuable medical isotopes for cancer treatment and imaging.
1.1: Mark Stover, TSPA
- Mark Stover introduced himself as the Executive Director of the Texas Solar Power Association (TSPA) and discussed the growth of solar power and energy storage resources.
- Battery storage is the second fastest-growing technology on the ERCOT grid. There are currently 9,000 MW installed, with an anticipated increase of 11,000 MW by 2025.
- Battery storage is highlighted as a quick-response and flexible technology, efficient in shifting grid conditions and addressing congestion issues.
- Early energy storage mainly featured 1-hour duration technologies, but now there are projects with durations up to four hours and potential for multi-day durations with new technologies.
- Various battery chemistries, including iron-air batteries, are expected to emerge, alongside existing lithium-ion batteries.
- A technology-neutral policy approach is advocated to let competition foster innovation, ultimately benefiting Texas consumers.
- Advanced nuclear technologies are anticipated for the 2030s and beyond, with NRC working on reducing permitting timeframes.
- There are regulatory challenges with deploying nuclear technology but improvements in licensing process are underway.
- Geothermal energy potential in Texas is promising due to existing oil and gas infrastructure and fast permitting processes.
- Geothermal technology is relatively simple and expected to reach substantial capacity by 2030.
- The timeline for extended life battery technologies is within the next five years, with an expected reduction in costs and improvements in efficiencies.
- Economics of geothermal energy are improving, with a goal to be competitive in the ERCOT wholesale market.
- Faster interconnections to the grid and supportive state and federal policies are needed for technological deployments.
- Universities in Texas are playing a significant role in research and development in geothermal and nuclear energy.
1.1: Questions for Mark Stover
- The future for solar power in Texas is promising, with significant growth in utility-scale solar capacity over the past four years.
- Current solar capacity on the grid is about 26,000 MW, with an additional 27,000 MW in late-stage development.
- Approximately 60% to 70% of late-stage projects typically reach completion, indicating substantial further growth in solar capacity soon.
- A technology-neutral approach is preferred, allowing market-driven innovation and competition.
- Mention of energy storage being increasingly added to solar projects to enhance dispatchability and operational flexibility.
- Standalone energy storage projects are also being pursued by some members.
- Offer to discuss more detailed topics related to technology drivers and other aspects offline.
- Additional resources like TCEQ are available for discussing topics such as emissions and nuclear waste.
1.1:Questions for Doug Robinson, Natura Resources
- Doug Robinson discussed that the molten salt reactor would produce 100 megawatts of electricity.
- It was clarified that there is almost no waste with molten salt reactors.
- In liquid fuel reactors, fuel and salt can be drained and used in a new core reactor vessel, extending the reactor’s lifespan.
- The salt in the reactors acts as a heat transfer fluid, not as a fuel source.
- Maintaining the cleanliness of the salt by keeping oxygen out is crucial to prevent corrosion and ensure longevity.
- The reactor at Abilene Christian will only require a single fueling, with no need for further refueling.
1.1: Questions for Jimmy Glotfelty
- The discussion focused on the use of light water reactors in military vs. civilian applications.
- Military reactors use higher uranium enrichment levels (~90%) compared to civilian reactors (<19%).
- Proliferation concerns limit civilian use of high enrichment uranium.
- The Department of Defense is exploring small modular reactor technologies for reliability.
- Dow is working with X-energy on a project in Seadrift, Texas, involving modular reactor technology.
- The project involves four units of X-energy reactors: three for steam and one for electricity, aiming for 400 MW.
- Dow’s project aims to replace an old cogeneration plant and could be replicated globally.
- Senator Kolkhorst expressed excitement about the project’s development in Senate District 18.
1.1: Questions for Mark Stover
- Battery storage projects are proliferating, with standalone assets and co-located activities.
- There is a greater number of standalone battery projects compared to co-located ones.
- Drivers for battery projects include grid congestion solutions, energy arbitrage, and resource firming.
- Arbitrage involves charging batteries when demand and prices are low, and discharging them during high demand.
- Battery farms are located near interconnection points and are developing both in remote and urban areas.
- Permitting for battery farms follows local processes, including noise ordinances and fire safety codes.
- Counties express concerns over permitting, safety hazards, tax abatements, and the lack of regulation.
- Safety incidents involving battery storage are rare, with a low failure rate compared to industry growth.
- Concerns are raised regarding rural areas’ capability, especially volunteer fire departments, to handle battery fires.
- The lack of regulation and oversight for battery storage projects compared to other energy projects is highlighted.
- The growth of disseminated battery storage facilities of the 1 MW variety is discussed, illustrating their widespread and varied deployment.
1.1: Questions for Barry Smitherman
- Discussion on geothermal storage operations using a sequence of wells for energy storage.
- Pilot project results: one well can produce 200 kW for 18 hours and 1 MW for 30 minutes utilizing the earth’s heat.
- Potential of using earth pressure and heat for long-term energy storage during shortages.
- San Miguel project working on a 3 MW geothermal basis.
- Geothermal storage installations on small land areas, example of 10 wells on 15 acres.
- Mention of turbines installed within the 15-acre geothermal site.
- Comparison of land usage and power density with nuclear technologies, noting nuclear’s efficiency.
- Acknowledgment of oil and gas industry’s influence on power technology advancements.
- Speculation on future energy landscapes including the potential of MSRs to reduce the necessity for batteries in energy storage.
- Discussion about creating a fund for abandoned battery projects similar to the orphan well program to prevent community burden.
- Concerns raised about battery storage impacting groundwater and how these projects are perceived as gaming the system.
- Discussion about battery farms not necessarily creating more energy but used for storing excess energy to sell later for higher prices.
- Concerns regarding the potential risk of fires in battery storage projects and the burden on local fire departments.
- Acknowledgment of existing decommissioning laws for wind and solar projects in Texas and the potential for similar laws for battery storage in future.
- Discussion about lifecycle management for battery storage and how it could mirror wind and solar decommissioning laws.
- Interest in continuing lifecycle conversations regarding battery storage before the next legislative session.
- Exploration of geothermal energy technologies and how they measure and manage resources efficiently using different water methods.
- Acknowledgment of clean and reliable energy future for Texas through diverse energy sources.
- Reference to Senate Bill 1290 mandating TCEQ to study battery storage effects, revealing ongoing evaluations.
- Discussion on protections for landowners in battery storage projects, with current practices and potential statutory changes mentioned.
1.1: Questions for Barry Smitherman Cont.
- Barry Smitherman discussed production costs of geothermal electricity, which are currently high.
- There is uncertainty in estimating geothermal production costs compared to wind, solar, or natural gas.
- Geothermal efficiency is relatively high with current turbine technology and steam reclamation.
- Today, geothermal is too expensive for merchant operations and likely to partner with co-ops, municipalities, and the federal government.
- Consideration of a price factor on energy reliability, which isn’t currently implemented.
- Use of non-potable water for replenishing geothermal hot rocks helps reduce water usage.
- Potential reduction in capital costs over time could make geothermal more economical, similar to nuclear plants.
- Comparison to Iceland and California, where geothermal is cheaper due to surface heat, unlike Texas where drilling costs are significant.
- Advancements in drilling technology are continuously reducing costs and time.
1.1: Questions for Mark Stover
- Counties with populations of 250,000 or more must adopt certain regulations, such as fire codes.
- These regulations are often influenced by international or national standards.
- Requirements include permitting processes related to fire safety, noise, and road use agreements.
- Differences exist between solar facility and battery storage regulations.
- Options for financial security in solar and wind farms include surety bonds, letters of credit, or investment grade ratings.
- The security mechanism choice is often driven by landowner preferences.
- Legislation and requirements for battery farms are still being developed.
- Questions about decommissioning of renewable resources, like old wind turbines, reflect ongoing environmental concerns.
- Texas leads the nation in solar and wind energy production and is nearing leadership in battery storage.
- Ongoing studies and legislative efforts aim to address various issues related to renewable energy infrastructure.
1.1: Questions for Doug Robinson / Jimmy Glotfelty
- Discussion on molten salt reactors and their benefits, including no water usage and potential for industrial heat use.
- Partnership with Texas produced water consortium for desalinization and water management, particularly in the Permian region.
- Challenges in battery backup systems’ runtime and their potential to extend discharge periods from 1 to 4 hours.
- Discussion on firming requirements and grid reliability, with considerations of battery usage for cooling and climate control.
- Analysis of the resource mix and energy capacity in Texas, including the impact of renewable energy sources like wind and solar.
- Emphasis on future planning for Texas to potentially export power to other states and the need for infrastructure to support that.
- Dialogue on the reliability factor’s economic value for Texas’ generation fleet.
- Importance of maintaining a diversified fuel mix to avoid over-reliance on a single energy source.
- Consideration of environmental and economic implications of renewable energy sources such as solar panel and battery lifecycles.
- Discussion on the ratio of intermittent to dispatchable energy sources needed for a reliable grid.
1.2 – Panel 2: Managing Texas Sized Growth
1.2: Pablo Vegas, ERCOT
- Pablo Vegas is the President and CEO of ERCOT.
- ERCOT is focusing on managing Texas’s rapid growth and unique challenges with large loads and ensuring grid reliability through transmission planning.
- Texas’s electricity demand is rising due to population and economic growth, particularly from industries like data centers.
- Data centers have a persistent, non-price-responsive electricity load and typically have extensive on-site backup power.
- ERCOT is updating forecasting models to keep pace with load growth and incorporating House Bill 5066 requirements.
- House Bill 5066 changes transmission planning by requiring more comprehensive load forecasts and attestation from transmission service providers.
- The summer peak load forecasts from 2024 to 2030 show significant growth, especially due to officer-attested forecasts.
- Developing high voltage transmission will enhance flexibility in power distribution and improve electricity line loss efficiency.
- Plans aim to address congestion costs due to transmission constraints, reducing costs for consumers.
- Stakeholder input will be necessary before finalizing high voltage transmission strategies.
1.2: Haynes Strader, Skybox
- Haynes Strader is the Chief Development Officer for Skybox Data Centers, a major data center developer, operator, and owner in Texas.
- Skybox operates a 1400 megawatt pipeline, with largely 1000 megawatts in Texas.
- Key active locations include northeast Austin, Pflugerville, Hutto, Katy, South Dallas, and Lancaster.
- Skybox differentiates from cryptocurrency mining, focusing on critical internet infrastructure.
- Data centers are crucial for the internet, economy, and new technologies like AI.
- Reliability on the electric grid is paramount for data center site selection.
- Data centers represent significant long-term investments, with leases typically spanning 15 years.
- Texas data centers employ around 60,000 direct employees, with additional indirect job creation.
- The partnership with utilities is vital, requiring collaboration to avoid being a grid problem.
- Suggestions for improving the queue process include requiring engineering deposits and dynamic load modeling.
- Data centers take a similar amount of time to build as natural gas plants, offering a chance to increase Texas’s baseload.
- Skybox aims to align with Texas in leading global data center and energy development.
1.2: Todd Staples, TXOGA
- Todd Staples represents the Texas Oil and Gas Association, whose members produce 90% of Texas’s crude oil and natural gas.
- Thanks ERCOT for their leadership in managing Texas’s electricity generation and transmission needs.
- Acknowledges House Bill 5066 as a bold step in improving application times for new transmission facilities and focusing on underserved areas.
- Commends the adoption of the Permian Basin reliability plan by the PUC.
- Supports an optionality approach for 345 kv implementation, allowing data collection and legislative review.
- Stresses importance of ensuring Texas remains open for business and encourages new technologies and developments in Texas.
- Advocates for advanced planning with Transmission Service Providers (TSPs) for new technologies.
- Notes industry conducted evaluations for the Permian Basin’s transmission and electricity generation needs, aiding House Bill 5066’s passage.
- Recommends assessing financial assurance for new technology entrants based on load demand, investment level, employment, and power contribution.
- Expresses concern that excessive changes in Texas’s electricity market rules may deter investment.
- Supports Texas’s model for spreading new transmission costs across users according to usage.
- On demand-side response programs, stresses the need for scrutinizing their actual grid reliability and market efficiency contributions.
- Proposes frequent reviews of ERCOT’s forecasting methodology and ancillary services for increased transparency.
1.2: Mark Bell, AECT
- Mark Bell represented AECT, highlighting the growth in electric demand due to new large electric consumers wanting to connect to the Texas grid.
- Legislation in 2021 and 2023 revised how electric growth is evaluated, aligning with industry observations of increased interconnection requests.
- Utilities report hundreds of interconnection requests across various sectors, many exceeding 1 GW of load.
- Texas, with its business-friendly environment and competitive electricity market, attracts data centers, semiconductors, and industrial projects.
- ERCOT’s innovative approach reduces interconnection wait times compared to other ISOs, making Texas appealing for data centers and large consumers.
- The state has competitive electricity rates, with data showing Texas having the 6th best industrial rates in the U.S., and the lowest among large states.
- Coordination and collaboration are emphasized to integrate growth reliably and affordably into the electric system.
- Data centers require robust transmission capacity and offer long-term power purchase agreements, supporting other industries.
- Growth is also seen in hydrogen, LNG, industrial sectors, and oil and gas electrification.
- Current load growth projections signal necessary investments in transmission and generation, with the industry committed to powering Texas’ economic engine.
1.2: Questions for Haynes Strader
- Discussion on the predicted demand increase for data centers in Texas over the next six years, with a focus on whether the demand will reach the projected 30 gigawatts.
- Haynes Strader notes global demand is high but emphasizes the importance of distinguishing between good credit customers and startups.
- Reference to McKinsey’s updated study showing U.S. data center load could increase from 25 to 85 gigawatts nationwide, implicating significant growth potential for Texas.
- Data centers related to Skybox are operational 24/7 and have Triple-A credit industries, mainly participating in emergency demand response programs.
- Mention of diesel generators being used during emergencies, such as during URI, due to their reliability over natural gas.
- Discussion on regulatory challenges with TCEQ regarding air permits for generators used during emergency demand response.
- Ongoing dialogues between data center industries, TCEQ, and ERCOT to address scaling demand response practices and regulations.
1.2: Questions for Todd Staples
- Discussion on future energy demand, including data centers, crypto, hydrogen, industrial, oil, and gas sectors.
- Oil and gas remain vital; electrification in West Texas is a small fraction of overall demand.
- Hydrogen development is promising but uncertain due to unresolved federal subsidies and economic incentives.
- Concerns over infrastructure readiness and ratepayer costs associated with transmission projects.
- Focus on strategically improving infrastructure connectivity within Texas, particularly along the coast and West Texas.
- Need for investment in high voltage lines to support economic growth in Texas, currently lagging in adoption.
- Opportunity for Texas to lead in high voltage transmission, enhancing efficiency and reducing environmental impact.
1.2: Questions for Mark Bell
- Discussion on the uniformity and validity of forecasting methodologies among TDU companies like Oncor, AEP, and CenterPoint, acknowledging that while processes are similar, they are not identical.
- Emphasis on substantial growth in interconnection requests and the need to streamline processes, with several companies keen to interconnect.
- Lack of 765 high voltage lines in Texas, with discussions around the benefits and expediency of building infrastructure to support growth, especially in the Permian region.
- Cost concerns and addressing potential single points of failure and new technology risks with 765 kV lines, noting their long-term benefits and established technology.
- Shift in overall ownership cost projections, recognizing that initial investments in 765 kV lines are high, but cost-efficient in the long term.
- Potential resiliency benefits of a more robust high-voltage network, particularly against extreme weather events, emphasizing the reduction of power loss and congestion.
- Interest toward understanding and quantifying the benefits and costs of migrating to a 765 kV system to inform investment decisions.
- Discussion on the spread of transmission costs using the ‘postage stamp’ methodology, with considerations of fairness across different user demographics like senior citizens versus high-consumption industries.
- Concerns raised about communication and unexpected future energy demands, urging proactive sharing of information to stay ahead of infrastructure needs.
- Advocacy for early planning and collaboration to manage substantial forecasted growth, highlighting the enabling role of TDUs and industry.
- Challenges with initial requests from TDU customers and proposed solutions including nominal financial requirements.
- Concerns over long-term energy usage forecasts, ensuring that incoming data centers and industrial growth are met with adequate and timely infrastructure.
Related meeting(s):10/01/24 – LEGE – Business & Commerce
Related controls: 55421 – 88R-SB1699 – 88R-HB5066
Keyword Tags: PUCT