Texas Mulls the Market Power of Distributed Energy Resources
This summer, Texas grid operator ERCOT started working on ideas for opening the state’s energy markets to distributed energy resources, by allowing the grid-scale aggregation of rooftop customer-sited generators. It’s a move similar to those being taken in solar-rich states like California and Hawaii, only with Texas’ unique deregulated market flavor.
One interesting question is how to build distributed energy resource (DER) portfolios with enough flexibility to optimize their value to the grid and their owners, but not so much flexibility that companies can game the system. It’s a concern in the state that spawned Enron, and it’s part of the discussion around ERCOT’s new concept paper, released last week, that lays out a first official outline of what the state’s DER future might look like.
The white paper is for ERCOT’s Distributed Resource Energy & Ancillaries Market (DREAM) Task Force, or DREAMTF for acronym fans. The document largely hews to the three key classifications ERCOT is considering — DER Minimal, DER Light, and DER Heavy — and a description of just what will need to happen, and what future questions need to be answered, to make each version into a real-world grid product.
Roughly speaking, DER Minimal would set compensation like demand response today, at the regional market clearing price of one of Texas’ four grid zones. DER Light and Heavy, by contrast, would allow payment at prices set at the more than 11,000 nodes across the state, where prices can shift and spike more quickly to reflect local conditions, and are usually reserved to big generators. DER Heavy adds another layer: real-time dispatchability to meet fast-responding ancillary services markets.