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In a twist, Texas wind power can actually help gas generators

A surge of wind power in Texas has made predicting electricity supply more difficult, boosting opportunities for natural gas generators that have been battered by the rise of renewables.

Fluctuating renewable supplies can leave grid operators short of power and create price spikes, a phenomenon that’s set to worsen as additional wind and solar hit Texas’ grid, William Nelson, an analyst at Bloomberg New Energy Finance, said in a report. That could force grid operators to search for last minute more often, and that’s where gas plants that can start up quickly step in.

It’s a twist for Texas wind developers, which now account for about a fifth of the state’s power mix. While the renewable surge has eaten into the profits of gas generators in recent years, it’s now presenting the competition with an opportunity.

The volatility is “a silver lining on a sinking boat,” said Nelson. “It sends a clear signal that flexibility is king.”

Until the cost of storing wind and solar power in batteries comes down, renewables aren’t much help to grid managers when the sun doesn’t shine and the wind doesn’t blow. Even small factors like ice build up on a turbine’s blade can affect output, Dan Woodfin, senior director of system operations for the Electric Reliability Council of Texas, said.

The reliability council is planning a second forecasting service to make “on the fly adjustments,” and is working toward producing wind forecasts that update on five-minute intervals, Woodfin said.

In the meantime, more volatility means higher profits for gas generators, which can ramp power output up or down regardless of the weather, Nelson said.

Texas wind farms typically slightly underestimate their daily output, Nelson said. That’s because if they under-produce in a given hour, they could be charged as much as $9,000 per megawatt hour to backfill the production.

West Texas turbines are 94 percent accurate when predicting day-ahead hourly output, Nelson said. Still, the margin of error can lead to price spikes when demand surges that gas generators can take advantage of.

“Renewables seem to have been a bit of a problem for the margins in the area,” Paul Patterson, analyst at Glenrock Associates LLC, said by phone Friday. “You have a new disruptive technology being deployed.”