EnerConnex has a strong customer base throughout the United States and beyond, operating across many different ISOs (Independent System Operator). With this comes great responsibility in understanding the ins-and-outs of each ISO, how the uniqueness of each affects end-users, all while factoring in what is going on with current markets. EnerConnex proudly has extensive expertise in all ISOs and can confidently advise our customers regardless of where they are located geographically. EnerConnex’s Brian Dafferner provides an inside look at how he is advising ERCOT customers as well as other insight on topics pertaining to ERCOT.
- How are you advising customers given current market conditions in ERCOT? It is important for energy consumers to have some type of purchasing strategy in place. Be proactive, not reactive. There is extreme fear in the market. I advise my clients against acting on emotion. Unlike the previous cycle, we are now in a market of volatility and rising energy prices. There are product options that are more conducive to these market conditions – hard/soft triggers, fix and layer % of load, block index, etc. Monitor the market and pricing on a regular basis and have an internal plan in place, approved by management, so you can take action as needed.
- Do you advise customers in ERCOT differently than ones in other ISOs? If so, how? What things/factors are you considering? Yes, customers in different ISOs should be looked at separately. ERCOT is different from most ISOs in that it is not a capacity market. There are both pros and cons to this market structure. Because ERCOT is isolated without direct ties to import/export, there are limited options during situations of supply/demand imbalance. This can create more volatility in real-time. There has been significant solar and wind investment over the last 5 years. At the same time, there has been minimal natural gas generation investment and a substantial drop in coal generation as plants have been mothballed. As a result, we have seen a shortfall of recommended excess capacity requirements by ERCOT over the last few years. This has caused price spikes due to uncertainty during high demand periods. All of this must be considering when considering procurement of supply contracts.
- Does TX have enough power to ensure the lights will stay on if another Winter Storm Uri were to hit? What is being done to ensure the safety of people? ERCOT has put policies in place (weatherization, etc) to safeguard against another URI situation. The 2021 storm was an extremely rare occasion in which temperatures remained well below freezing for over a week. There will continue to be issues if we were to have another extreme weather condition in a similar fashion. Customers must rely on internal contingency plans rather than ERCOT to prepare for these events. Depending upon business type, there are various options available to do so.
- What measures is ERCOT taking to avoid future blackouts? ERCOT has been reviewing and preparing after the URI shock last February. This involves weatherization, market structure and price caps, as well as the energy generation mix. It is a work in progress.
- Texas led the country in building new renewable energy projects last year. How has this impacted the way that your customers in Texas are buying energy? The increased renewable energy mix has smoothed out pricing volatility and in some cases reduced costs in specific regions of the state, specifically West Texas. However, on a planning basis, too much of the energy mix is dependent upon solar in my opinion. Many solar projects do not come to fruition which makes it difficult to project grid capacity on a forward basis. In addition, solar cannot be ramped up during high demand periods. Many customers are now sensitive to today’s ESG metrics. There are many options available for tackling sustainability and renewable energy from a purchasing standpoint.