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Trial and Error in Texas


A hard year puts deregulation to the test.

Fortnightly Magazine - January 2009

on a lot of units that you don’t need, which is costly. It’s a real balancing act. We need to get a lot better about forecasting the wind output.”

Toward that end, ERCOT has been testing a state-of-the-art wind forecasting system from AWS Truewind, and expects to implement such a system when it converts to a nodal market. Further, the Texas PUC has come to be seen as the best-practices leader on the question of assuring enough electric transmission capacity to bring renewable energy from its often-remote production areas to the big population centers where it’s needed.

Under the Texas solution, known as the CREZ model (Competitive Renewable Energy Zones) and implemented by a PUC order in October 2007, the state follows a top-down process that begins by mapping out geographic areas most suitable for wind energy development, and then conducts region-wide planning to get new grid lines in place—ideally before the wind developers come forward with new projects and find themselves waiting in a lengthy interconnection queue for permission to hook up to the grid.

The Texas CREZ model has won praise as a logical way to break the chicken-and-egg impasse that can force delays in wind project development for lack of transmission capacity. California, the nation’s acknowledged leader in renewable energy development, has sought to emulate the Texas CREZ model under its Renewable Energy Transmission Initiative  (see

Nevertheless, as always, the devil is in the details, and the details almost always have to be worked out in practice. But despite the difficulties, the solutions that emerge in Texas might show more about what’s right with ERCOT than what’s wrong with it.

“Deregulation in Texas hasn’t been a slam dunk,” Kiesling says. “There’s been price volatility. Every time you turn over a stone you find a new set of complex issues. But communicating price signals from the consumer all the way back to the generator part is partly how you get more efficient resource use, lower environmental impact, and reductions in cost.

“That’s the integration of retail and wholesale markets,” she says, “an important idea that’s reflected in the Texas market design.”