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ERCOT Faces Continued Stress on Power System

SVP Government Affairs Tim Tarpley
Tim Tarpley, SVP Government Affairs & Counsel

Analysis by Energy Workforce SVP Government Affairs & Counsel Tim Tarpley

The Electric Reliability Council of Texas (ERCOT) issued a call for conservation on Tuesday because 11,000 megawatts of power generation were offline for repairs. ERCOT said the shutdowns included 8,000 MW of natural gas and coal-fired power and 3,000 MW of wind and solar capacity.

The agency forecasted lower wind-generated power due to the weather pattern causing the abnormal heat wave. ERCOT said demand could reach 73,000 MW, a record for June. Reserve capacity was down to 2,900 MW, or about 4% of total expected demand.

Over the past week, temperatures in much of the state have been three to six degrees above average for this time of the year. Even with higher temperatures, Gov. Greg Abbott and state officials should expect extreme political pressure if ERCOT is forced to employ rolling blackouts.

Last week, the Lubbock Chamber of Commerce sent a letter urging Abbott to support business by bringing more reliability to the grid. With the influx of people and businesses to Texas increasing load, businesses are beginning to factor power availability into relocation decisions. Grid reliability will be a hot political topic in the 2022 elections, as will a push to expand generation capacity with state spending on grid improvements and natural gas infrastructure.

Abbott signed two bills last week addressing grid reliability. Senate Bill 3 requires upgrades for power generators and transmission lines to protect against extreme weather events. The bill permits penalties of up to $1 million for operators that do not make the required modifications.

Senate Bill 2 changes the governance of ERCOT, the state’s main grid operator. It shrinks the agency’s board of directors from 16 to 11 and creates a selection committee to appoint eight of the 11 board members. The three-person committee would be appointed by the governor, lieutenant governor and Speaker of the House — each official would select one committee member. An outside consulting firm will select the other eight members.

Biden Administration’s Push for Electric Vehicle Transition Faces Roadblock

During a Senate Energy and Natural Resources hearing with Secretary Granholm on Tuesday, Sen. Manchin (D-WV) and others expressed concerns over the push for a transition to electric vehicles (EV) by the Biden Administration.

Secretary Granholm’s appearance before the panel was to discuss funding for hydrogen technology development in the Department of Energy’s budget. Manchin said he supports hydrogen development but indicated a need for caution with the EV transition given America’s reliance on China for the critical minerals necessary to support such a dramatic transition.

“I have grave concerns, I really do have great concerns, about our country going to the EVs,” Sen. Manchin said. “This is totally dependent on foreign supply chains.”  

With margins so close in the Senate, losing Manchin’s support on any part of the infrastructure or climate plan would make passage highly unlikely.  

The discussion in the Senate Energy and Natural Resources committee came the day after executives from U.S. renewable energy companies urged Secretary Granholm and the Administration to strengthen the domestic lithium battery manufacturing supply chain. Executives said the federal government could invest in lithium processing, manufacturing and recycling, which may not be economically feasible in the U.S. without government support.

Energy executives called for additional steps such as refundable tax credits and grants to help bring supply chains back to the U.S. Both the Trump and Biden Administrations have used section 301 tariffs to achieve this goal, but many participants in the Granholm-hosted roundtable urged additional measures. 

Supply chains are likely to be an important issue among regulators and policymakers on the Hill going forward. This debate could be a make-or-break issue for many moderates in Congress. A lack of concrete steps to ensure a domestic supply of critical minerals could represent a serious vulnerability in President Biden’s climate agenda.

For more information on the Council’s advocacy efforts or to get involved, contact SVP Government Affairs & Counsel Tim Tarpley

Tim Tarpley, SVP Government Affairs & Counsel, analyzes federal policy for the Energy Workforce & Technology Council. Click here to subscribe to the Council’s newsletter, which highlights sector-specific issues, best practices, Council activities and more.


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