Energy Blockchain: Microgrids could whet the big appetite for clean energy in Texas

They say everything is bigger in Texas. As a leading state focused on renewable energy growth, that statement would appear to be true, but is it?

With Texas aggressively lowering its reliance on oil production thanks to advances in renewables, more growth from wind and solar power will require modern power grid infrastructure. Rather than simply relying on building transmission lines over long distances to battle the state’s oversupply of renewables, Texas may be served better in the long run by thinking smaller and advancing local microgrids. The strategy could help it more appropriately balance grid power and become more sustainable, and it would make the Lone Star state a possible hotbed for testing blockchain-backed peer-to-peer (P2P) energy market technology, similar to what the Brooklyn Microgrid (BMG) is pushing forward in New York.

Let’s face it. Texas gets a lot of wind. In fact, the state sees more than double the amount of wind than does California. This may be why the Electric Reliability Council of Texas (ERCOT), the independent system operator of electric power to 24 million Texans or a whopping 90 percent of the state’s electric load, has seen electricity generated from wind jump to more than 20 percent from 1.4 percent since 2005. 

Putting the amount of wind resources in Texas into perspective, according to a 2014 report (PDF) from Texas Wide Open for Business, "If Texas were a country, it would rank No. 6 globally for installed energy capacity." As wind power energy consumption continues to boom in Texas from the current 20,321 megawatts (MW) of installed wind power capacity to a potential of 1.3 million megawatts, the state must explore ways it can put all those megawatts to use considering the state’s Competitive Renewable Energy Zone (CREZ) can only sustain 18,500 MW.

Shouldn’t companies in the Texas area be planning for even a more powerful renewable presence? It definitely seems so.

At present, while the average energy prices in the state are below the national average, the Texas Coalition for Affordable Power (PDF) reported last summer that Texans in deregulated areas are actually paying more for electricity. Therefore greater transparency is needed: despite the state largely being energy independent, residential energy prices still largely remain high even when compared with other states in the West South Central and West North Central Regions. This is costing consumers nearly $25 billion in lost savings and proves Texas does not have an efficient electricity market. So what should happen?

Renewable energy can yield more predictive pricing than oil and gas. Predictive pricing can help make a better business case for sustainability in Texas if prices can be better managed, even lowered thanks to advances in technology. It then comes down to the need for better transmission infrastructure that can support further renewable energy development. Increasing exposure to renewables can help Texas businesses maximize resources — it also may result in more cost-effective and more affordable energy consumption.

While consumers stand to capitalize on the advancement of a P2P energy market, this is also an idea that could benefit companies operating in Texas that are focused on procuring cleaner energy, advancing their corporate social responsibility (CSR) agenda and listening to shareholders who are demanding corporations move away from fossil fuels.

Companies could leverage a P2P energy market, backed by encrypted blockchain, to be more in control of their energy. They also could monetize excess solar power generated by on-site resources and help shape cities that are more sustainable, because energy can be produced and consumed closer to the source. This sort of investment could help fuel job growth in Texas communities and add prosperity to local economies, because savings from energy could be redirected back into local commerce.

By engaging stakeholders in projects such as smaller renewable energy zone (REZ) developments, similar to those seen as a result of the CREZ initiative, companies and consumers could help broaden the case for clusters of intelligent microgrids in the geographically diverse state of Texas.

This seems a better alternative than building new high-voltage transmission lines, which many local communities oppose. Not only are high-voltage transmission lines at risk from extreme weather, they take years to permit and build and aren’t necessarily conducive to maximizing renewables output. Conversely, REZs can be built in locations where there is strong capacity for wind and solar. 

Wind curtailment is also an option for Texas but the expense to curtail output pushes wind installation paybacks further out, something investors may protest. Smaller REZs can reduce network congestion and greatly decrease the need for wind curtailment. Exporting oversupplied power across state lines is a strategy that has merit, but why export if you don’t necessarily have to? The greening of the Texas grid means production and consumption of energy closer to the source also should help fade higher costs seen in deregulated areas. It will help level the playing field — literally.

Some may suggest that Texas, already the biggest deregulated electricity market in the country, is the ideal place to test energy storage solutions, but the reality is innovation on that front is many years away and it will take some time for this technology to support the energy needs of large communities or cities. Time of use (TOU) plans and demand response are a means to offset high power demand but changing consumer behavior is challenging. 

This leads me to suggest that the best way forward for Texas is to further encourage decentralized microgrid development and to focus on creating a true P2P energy market that could reward consumers for excess renewable energy generation and also help balance the power grid should outages occur.

With clean microgrids, the power supply is controlled closer to the source of generation. This gives locals an opportunity to trade energy with local neighbors, monetize excess supply, help stabilize the power grid from a local lens and keep it from overheating thanks to oversupply. 

By: John Licata, Speaker, Content Storyteller and Communications Lead, Blue Phoenix Inc. 

This article first appeared in GreenBiz