How Energy Efficiency Could Help Prevent the Next Crisis, Explained
Most of the focus for solutions to prevent future blackouts is on electric supply, but electric demand is a part of the problem and should be part of the solution. Blackouts occurred as demand soared to 76.8GW, eclipsing even the extreme scenario projections of ERCOT (67GW) and the previous summer peak hit in August 2019 (74.8GW).
This peak demand is driven by leaky buildings which waste energy all year long but waste massive amounts when energy is most valuable: at times of near or actual crisis. While the focus right now is on weatherization of power plants and gas supply, there should also be a focus on weatherizing homes and buildings to save energy and increase resilience. Reducing demand is in many cases cheaper than weatherizing supply and public support for efficiency would flow to Texans rather than private energy companies.
Texas’ energy efficiency programs have cumulatively saved 2.1GW (1) over the 20 years they have existed but those programs are 80% smaller than the average state with an energy efficiency goal (2). Had the programs been average over the last two decades, conservatively we would have had an additional 6GW of savings, cutting the outages by 30% (3). Further, under a scenario where Texas was average on energy efficiency, hundreds of thousands of homes would have had more insulation which would have kept those homes warmer during the outages.
The Legislature or the PUCT could increase energy efficiency. The energy efficiency goal of the state of Texas has not increased at all in a decade which is why Texas—the first state to have an Energy Efficiency Resource Standard, pioneering a policy now adopted in 28 states—is dead last in energy efficiency among those states.
The goal was established in SB7 in 1999, and was increased three times since its adoption:
In HB 3693 by Reps. Straus, Anchia, and Phil King and Sen. Fraser in 2007
By rule at the PUCT under Governor Perry’s appointee Chairman Barry Smitherman in 2010,
In SB 1125 by Senator Carona and Rep. Anchia in 2011, following that winter storm.
Energy efficiency has multiple benefits:
Reduces demand, lowers risks of blackouts and lowers severity of blackouts when they occur.
Increases resilience in storms by keeping heat in the house in the winter and cold inside during the summer.
Lowers energy costs for all customers, especially those experiencing high energy burden. Programs have strong evaluation, measurement, and verification requirements. Every project is checked to ensure it delivers benefits. In 2019, every dollar spent on energy efficiency yielded $2.80 for consumers. (4)
In 2019, 1,800 Texans at or below 200% of poverty level participated in EE programs and saved 16% annually. (5)
There are more energy efficiency workers in Texas (169,400) than oil and gas workers (159,400) and that’s with Texas being dead last among states with an energy efficiency goal. (6)
Natural Gas Programs
Texas spends less than $1 per capita on natural gas efficiency programs; comparatively, Utah spends $25, Arkansas $26, and Florida $33 (7). If Texas were to ramp up natural gas efficiency programs, less gas would need to flow to homes during winter weather events and could flow to power plants instead, stabilizing the grid and avoiding blackouts.
Demand Response Programs
Energy efficiency programs in Texas include “load management” programs, also known as demand response. The programs achieve about 200MW of demand response annually. There have not been any reports yet showing how these programs performed during the outages. These programs could be ramped up as efficiency programs expand. Load flexibility will become more important as renewable energy expands in Texas. These programs are voluntary and customers are paid to participate. The cost is significantly less than peak power (which can reach $9000MWh under current rules).
Solar and Storage
Some utilities, including CenterPoint have solar incentives in their programs. This is a tiny amount of overall program spending but could be increased and could also include energy storage.
Bills Filed in the 87th Sessions
HB 2358 by Reynolds and SB 243 by Eckhardt would increase the state’s energy efficiency goal to 1% by 2025, a significant increase which would make a real difference in preventing future catastrophes like Texas experienced in February. This new goal would put us nearly even with the average state with an energy efficiency goal. The bills do not include natural gas efficiency goals.
Conclusion
The winter storm crisis was a problem of both supply and demand. Both sides of the equation must be addressed to ensure we avoid a repeat of the power outages in 2021.
SOURCES:
(1) http://www.ercot.com/content/wcm/lists/197379/CapacityDemandandReservesReport_Dec2020.xlsx
(2) Average state with a goal achieves 1.2% savings per NCSL: https://www.ncsl.org/research/energy/energy-efficiency-resource-standards-eers.aspx; Texas achieves 0.2% through its goal per ACEEE:
(3) The amount of load shed (power cut off to homes and businesses) at the peak of the blackout was 20GW.
(4) http://www.texasefficiency.com/images/documents/RegulatoryFilings/DeemedSavings/py2019v1.pdf p.56
(5) ibid.
(6) EE Jobs: https://www.texasadvancedenergy.org/hubfs/TX-Fact-Sheet-2020-TAEBA.pdf
O&G jobs, slide 25: https://www.dallasfed.org/-/media/Documents/research/energy/energycharts.pdf/
(7) https://database.aceee.org/sites/default/files/docs/spending-savings-tables.pdf