Texas Becoming Epicenter of Energy Demand

Texas Republicans are currently exploring the possibility of imposing minimum standards for incorporating fossil fuels into new energy production.

State Sen. Phil King spoke at a public hearing recently, asking the leaders of The Electric Reliability Council of Texas (ERCOT) and the Public Utility Commission (PUC) of Texas whether there should be a rule that puts a quota on what percentage of new generation being added to the grid should come from fossil fuels. 

In part, King said, “Should we say that from a point of interconnection that 50 percent—or some percentage of new generation—has to be dispatchable generation as opposed to just letting the market forces guide that.” Dispatchable generation specifically refers to natural gas plants, which can ramped up or down on demand.

“That would be a pretty significant policy change to have a requirement like that,” ERCOT CEO Pablo Vegas said.

But both Vegas and PUC Chairman Thomas Gleeson said there needs to be a way to provide long-term incentives for gas to get built in Texas. Unlike other grid systems, power plants interconnected with ERCOT get paid for energy they actually deliver, not solely for having energy capacity available. The grid’s market design dispatches the lowest cost resources, or the power plants with the least fuel costs, Vegas said. As solar and wind have zero fuel costs, they supply as much of the state’s energy demand as they can provide. 

What’s left is then served by the next highest cost, Vegas said, starting at the gas plants connected onto the grid and then the 15 coal plants across the state. The proliferation of solar, storage and wind onto the grid has reduced the number of hours gas plants need to run. 

“Even if we didn’t build a new megawatt of renewables in this state for the next 10 years, we have the largest fleet of renewables in the U.S.,” Vegas said. “It’s going to continue to operate.” 

Regardless of where it comes from, Texas will need to significantly ramp up energy generation in the coming years. A massive new Amazon data center is currently being constructed within the state's Pecos County requiring a near unprecedented amount of energy to run. 

According to permits, the 8000 acre plot holding the data center will be equipped with 35 natural gas turbines capable of generating up to 7.65 gigawatts of power. indecently, the plant is authorized to emit 33 million tons of carbon dioxide into the atmosphere each year, more than any other power plant in the entire country.

"Amazon believes in paying the full costs of powering our operations,” an Amazon spokesperson said in a statement. “Our new planned data center campus in Pecos County does just that: it’s powered by new on-site generation that won’t raise electricity costs for Texas families and designed to transition to grid-connected service as interconnection timelines allow.”

Despite installed capacity, the plant would still be drawing from the Texas energy grid. In fact, the governor’s office said about 90% of new requests to tap into the grid are from new data centers, which are seeking a combined total of 474 gigawatts of electricity. That amounts to five times more than the state’s peak electricity demand record.