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Unlock Hidden Value in ERCOT

Leveraging Data for Customer Success

KEY TAKEAWAYS
  • Multiple factors include both short- and long-term electricity prices.
  • Consumers in ERCOT can realize added value through various programs.
  • Electricity loads can optimize consumption and capitalize onprice fluctuations.
  • Predictive software enables loads to minimize energy consumption and maximize savings.

In addition to formal programs such as the Electric Reliability Council of Texas (ERCOT)’s Emergency Response Services and Load Resource programs, electricity loads can realize significant value through economic demand response and 4CP management. Customers are increasingly also adopting behind-the-meter generation and storage, enabling even greater utility cost minimization and energy optimization. To fully unlock the hidden value behind price fluctuations, adopting an innovative energy management solution driven by data and AI advancements is a must.


NextEra 360 comprehensive energy management software uses a data-first approach to leverage a 360°-view of energy generation and consumption data for customers in ERCOT and beyond. This AI-powered solution captures and analyzes data across a wide range of assets and sites to improve operational efficiency, reduce costs, and unlock savings.

In this webinar, you’ll discover how NextEra Energy systems enable demand charge and 4CP management, thereby minimizing utility costs and optimizing energy. You’ll also learn about project design methodologies that drive tailored solutions aligned with customer needs. The panelists discuss the value of ERCOT demand response programs that customers can enroll in to earn revenues, including Emergency Response Service, Load Resource, and economic demand response.
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Speakers

Photo of Nicholas Licht
Photo of Nicholas Licht
Nicholas Licht
Technical Sales Lead,
NextEra 360™,
NextEra Energy
Photo of Joshua Stone
Photo of Joshua Stone
Joshua Stone

Manager of Product Management,
Gexa Energy,
NextEra Energy

Photo of David Abel
David Abel
Manager of Policy & Strategy
in Energy Management,
NextEra Energy

Context

Context

The panelists shared strategies that electric loads can leverage to optimize energy consumption and capitalize on price fluctuations.

Key Takeaways

Multiple factors include both short- and long-term electricity prices.
Networked Texas Map

ERCOT is the market, grid operator, and regulatory body that governs the electricity sector in Texas. Like any market, the ERCOT market is governed by supply and demand, in the form of electricity generators and consumer electricity demand, respectively. For example, if a generator trips offline and supply is down, ERCOT makes up for that missing supply by turning on more generators and incurring unanticipated costs. Weather also causes large increases or decreases in load, leading to significant price fluctuation on a day-to-day basis. In Texas, peak demand occurs during summer as air conditioners are heavily used to combat high temperatures. Other factors influence price over a longer term, such as the cost of new generation, transmission, and even distribution, as well as the work of grid operators to ensure reliability.

Consumers in ERCOT can realize added value through various programs
Consumers in ERCOT can realize added value through various programs

Regulatory bodies and rules greatly impact how electricity prices are determined and whether loads can capitalize on electricity price changes. ERCOT employs regulatory specialists who support the development of ERCOT programs that comply with current regulations.

 

Two of those programs collaborate with electricity loads to ensure reliable and efficient operations of the electric grid through demand fluctuations:

Emergency Response Service (ERS) program
Emergency Response Service (ERS) program
Loads in conjunction with their qualified scheduling entity (QSE) can bid into the ERS program. The auction is divided by various standard contract terms (e.g., June through September), and each standard contract term is subdivided into time periods (e.g., early morning hours, late morning to early afternoon, weekend). Even if no emergency event occurs, the load is paid for its standby capacity. If a load fails to curtail during an ERS obligation, the impact is a loss of the capacity payment and potentially removal from being able to participate in the program for a future time period.
Load Resource program
Load Resource program
In the Load Resource program, loads must adhere to rigorous standards, with responsibility for telemetering real-time data to ERCOT about the state of the facilities and responding when needed at a high-frequency cadence. Load resources can provide ancillary services through curtailments that help ERCOT maintain reliability. In the Load Resource program, the load is financially responsible for any energy or ancillary services it has failed to provide. However, the financial reward for successfully meeting commitments in the Load Resource program is much higher than in the ERS program.

Electricity loads can optimize consumption and capitalize on price fluctuations.

There are three primary ways that a load interacts with ERCOT market prices, which informs the way that loads think about how to take advantage of price fluctuations:
Bilateral forward market
Bilateral forward market
Consumers receive a fixed-price product, regardless of volume, based on a price the retail provider sets by hedging on a wholesale block.
Day-ahead market
Day-ahead market
Market clearing prices are set the day before operation based on the balance between generation bids and scheduled load quantities.
Real-time market
Real-time market
The real-time market sets the lowest prices hourly on the operating day, which are the most volatile due to the high likelihood of unforeseen situations.

ERCOT’s 4CP demand charge

Grid operators can work with retail electricity providers (REPs) to capitalize on economic demand response (economic DR). Grid operators increase prices to discourage electricity usage by loads while also signaling to generators to try and encourage additional generation.
For a load floating the entirety of its product on the real-time index, curtailing during high-price intervals adds significant value. For loads hedging their own power with a wholesale block, curtailing during high-price intervals enables them to sell the block back into the market at the higher real-time price.
4CP Season
4CP Management
Optimizing Operations
Sunny Day 21.4 kWh, Cloudy Day 5.1 kWh, chart comparison
4CP Season
The coincident peak season in ERCOT, also called 4CP season, is the moment that the entire ERCOT grid is at its highest peak demand during the summer months [June, July, August, September]. The 4CP method is utilized to allocate transmission costs in a fair manner based on system usage during peak times.
4CP Season
4CP Management
Optimizing Operations
Sunny Day 21.4 kWh, Cloudy Day 5.1 kWh, chart comparison
4CP Management
The transmission charge for customers for the following year is set based on four coincident peaks from a given season in the current year. Just as with economic DR, loads can use 4CP management to avoid paying high transmission charges by curtailing based on forecasts of when coincident peaks will occur.
4CP Season
4CP Management
Optimizing Operations
Sunny Day 21.4 kWh, Cloudy Day 5.1 kWh, chart comparison
Optimizing Operations
In addition to leveraging economic DR and 4CP management, loads are increasingly adopting behind-the-meter technologies, such as batteries and actual generators, to provide power during curtails, further optimizing their operations.
“Demand response, load resources—all of these serve a very important, significant role on the grid, both in normal operations [and] especially in emergency operations.”

– David Abel, Manager of Policy & Strategy in Energy, NextEra Analytics

Predictive software enables loads to minimize energy consumption and maximize savings.

Quantifying Value
The biggest challenge for many electricity loads is accurately quantifying the value available based on the load’s unique constraints. The best approach to implementing demand response strategies is to start simple, focusing on existing operations and partner REPs.
Telemetry and Automation
Leveraging telemetry and edge devices will help fully quantify the opportunity while engaging with an automation software partner such as NextEra Analytics removes operational complexity and ensures the rapid response required to take advantage of economic DR and 4CP.
Data Analytics

Predictive automation software uses data analytics to forecast when price fluctuations are going to occur. With more customers trying to capture the coincident peak moments and more uncertainty of when the event will occur, having automation software will help reduce the amount of curtailing that is needed to ensure capture of the event.

With automation software, loads can also implement price shed levels, meaning that when the real-time price hits a defined threshold, operational controls are immediately triggered. For example, at a certain threshold, building management systems can automatically raise set points on chillers, shut off outdoor air intake, turn on behind the meter generation such as batteries or back-up generators, or take other actions that increase the amount of power being curtailed.
“Simplifying it and automating it makes it easier to do your day-to-day operations and what’s actually making you money.”

– Nicholas Licht, Technical Sales Lead, NextEra 360 NextEra Analytics

Additional Resources

ERCOT Executive Summary

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The panelists shared strategies that electric loads can leverage to optimize energy consumption and capitalize on price fluctuations.

 

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ERCOT Webinar

In this webinar, you’ll discover how NextEra Energy systems enable demand charge and 4CP management, thereby minimizing utility costs and optimizing energy.

TBD Resource

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