Ron Seidel, PE, principal at RBS Energy Consulting and Principal Solar, Inc. board member will discuss and answer questions about his recent whitepaper, "Solutions for the Texas Energy Shortage." Ron's whitepaper is very timely because in the summer of 2011, Texas experienced extremely low reserve margin periods throughout the state... causing average wholesale electricity prices to skyrocket to more than twice their normal level. Given that Texas is expected to add another 14 million to its population between 2010 and 2030, these shortages raise alarms about the state's ability to meet future energy demand. Success will depend upon finding the most effective way to incent the development of more capacity. Unlike many other states, Texas has had a competitive retail market for electricity since 2001, replacing the traditional cost of a service-based regulated market. The market requires customers to choose a competitive electricity supplier and allows retail suppliers to set their prices without regulatory interference. However, regulatory action has resulted in caps being placed on system-wide wholesale power prices with the intent of protecting consumers. It is these system-wide offer caps that have limited prices, reduced potential profitability for wholesalers and restrained the development of new generation. Download the complete whitepaper at www.principalsolarinstitute.org/documents.

1. Principal Solar Institute
Solutions for the Texas Energy
Shortage
Ron Seidel
Director, Principal Solar
Ron Seidel is principal of RBS Energy Consulting, working with private
equity, investment banks, and government on electric energy issues
primarily in the ERCOT market. Previously, he was president of Texas
Independent Energy, senior vice president of Energy Supply at City Public
Service of San Antonio, and an executive at TXU where he was senior
vice president of Fossil Generation and Mining, president of TXU Energy
Trading, and operations manager at the Comanche Peak Nuclear Plant.

2. The ERCOT System
Source: ERCOT

3. ERCOT Facts & Figures
200,000 Square Miles
40,500 miles of Transmission (2010)
73,492 MW Peak Capacity
10,035 MW of wind generation
68,294 MW Peak Load (2011)
13.75% Target Reserve Margin
2011 Peak Reserve Margin 7.6%
4 DC Ties, 1100 MW (to Mexico and SPP)
Stand alone system about the size of the UK
Source: ERCOT

4. ERCOT Capacity and Energy
Installed Capacity Hydro, Energy Produced
Wind Hydro,
2011 biomass, 2011 8% biomass,
other other
1%
Nuclear 1%
Wind
Nuclear 12%
13%
7%
Natural Gas
40%
Natural Gas Coal
56% Coal
23%
39%
68,251 Megawatts 335,000 Gigawatt-hours
Source: ERCOT

5. ERCOT Load Growth
ERCOT Average Load Growth 2013 –
2022 is 2% or 1,400 MW per year
Equivalent to
– One large nuclear plant each year
– Two large coal plants each year
– Three combined cycle gas plants each year
Sources: ERCOT , RBS Energy Consulting

6. ERCOT Reserve Margins
May 2012 Report
16
14
12
10
Target =13.75%
8
% 6
4
2
0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
-2
Source: ERCOT

7. Why is there a potential shortage?
Low natural gas prices reduce financial
viability for new resources
Power prices have been arbitrarily capped,
conflicting with the design of the energy only
market
Electricity demand growth in Texas is robust,
creating the need for new capacity
What is being done about it??.....

8. The Brattle Group Report – PUCT
Options
Energy only with market-based reserve margin
Energy only with adders to support a target
reserve margin
Energy only with backstop procurement at
minimum acceptable reliability
Mandatory resource adequacy requirement for
load serving entities
Resource adequacy requirement with a
centralized forward capacity market
Source: The Brattle Group

9. Where Do We Go From Here?
PUCT Workshops / Deliberations / Rulemakings
No real issue until 2014/2015 with mothballed
units in service and with normal summers
2013 Legislature may address the resource
adequacy issue
My opinion: A capacity market in some form is
inevitable – an energy market will require
patience
We could go here…….

10. U.S. & Texas Solar Intensity
Source: NREL

11. Utility Scale PV Potential
Urban areas
U.S Total: 1,218 GW 2,231,694 GWhrs 25,369 km2
Texas: 154 GW 294,684 GWhrs 3,214 km2 (<1%)
Source: NREL

12. Utility Scale PV Potential
Rural areas
U.S Total: 152,974 GW 280,613,217 GWhrs 3,186,955 km2
Texas: 20,411 GW 38,993,582 GWhrs 425,230 km2 (61%)
Source: NREL

13. Rooftop PV Potential
U.S Total: 664 GW 818,733 GWhrs
Texas: 60 GW 68,717 GWhrs
Source: NREL

14. Achievable Solar PV Energy
in Texas
Reference: ERCOT Maximum Load ~68 GW
Urban PV = 154 GW (13% of U.S. Total)
Rural PV = 20,000 GW (14% of U.S. Total)
Rooftop PV = 60 GW (10% of U.S. Total)
Achieving just 1% of this capability would
produce over 200 GW or almost three times
the current ERCOT maximum load.
Sources: NREL, RBS Energy Consulting

15. Solar Synergy with Load
70000 12000
60000 10000
System Load (MW)
50000
Generation (MW)
8000
40000
6000
30000
4000
20000
10000 2000
0 0
0:00
1:00
2:00
3:00
4:00
5:00
6:00
7:00
8:00
9:00
10:00
11:00
12:00
13:00
14:00
15:00
16:00
17:00
18:00
19:00
20:00
21:00
22:00
23:00
Hour
System Load Wind Generation Solar Generation
Source: RBS Energy Consulting

16. Capacity Value
The portion of capacity that can be counted
on for reliability purposes
Conventional resources - 100%
– nuclear, coal, natural gas
Wind - 5% to 40%
– 8.7% in ERCOT due to uncontrollability and
intermittency
Solar PV – 25% to 75%
– Synergy with load
Sources: NREL. ERCOT

17. The Brattle Group Report for
The Solar Energy Industries Association
Electricity Cost and Emissions Savings with the
addition of various amounts of solar PV in 2011
Solar PV CO2 Avoided Energy Cost Benefit
MW (tons) ($)
1000 323,000 167,900,000
2500 811,000 348,400,000
5000 1,612,000 520,300,000
Source: The Brattle Group

18. Summary
 ERCOT needs new capacity
 Currently over 10,600 MW of wind is in operation
 Only about 75 MW of utility scale solar PV operating
– Between 60 MW and 480 MW in the pipeline
 Texas leads the nation in solar PV capability
 Solar PV has a higher capacity value than wind and is
synergistic with load
 While solar PV will not displace wind or conventional
generation completely, shouldn’t it be a significant part
of the energy equation for Texas and the nation??

19. Questions and Discussion
Please enter your questions into the Chat window
Ron Seidel
Director, Principal Solar