The Texas Legislature recently concluded its biennial session without passing several bills that could have negatively impacted the state’s growing solar and battery sector. However, one significant law that did pass was the authorization of a $1.8 billion fund to support microgrid deployment across critical facilities in the state. The Texas Backup Power Package Program aims to enhance the state’s electricity reliability by encouraging the construction of microgrids that combine small-scale gas-fired power, solar, and batteries.
The Texas Backup Power Package Program was initially created in 2023 as part of a broader legislative package but had awaited funding until now. The goal of the program is to help Texans protect themselves against extreme weather-driven grid emergencies like the blackouts during Winter Storm Uri in 2021 and the power outages after Hurricane Beryl in 2024.
While the microgrid funding was approved this year, lawmakers failed to authorize it in 2023, opting instead for $5 billion for the Texas Energy Fund, which offers low-interest loans to developers of large-scale gas-fired power plants. However, this program has faced challenges, with some projects found to be fraudulent or denied loans, and many others dropping out due to gas turbine shortages and rising costs.
With the approval of the microgrid funding this year, Texas is set to become a leader in microgrid policy. Microgrids are seen as a crucial way to help customers save energy and maintain power during extreme weather events. These microgrids can draw power from solar, batteries, and generators during grid disruptions, ensuring continuous operation for critical facilities.
Microgrids could also address the increasing power demand in Texas, especially from data centers that are a major contributor to future load growth forecasts. The Electric Reliability Council of Texas predicts a significant increase in peak electricity demand over the next five years, driven in part by the construction of data centers in the state.
The microgrid program in Texas limits individual projects to 2.5 megawatts, significantly smaller than traditional gas-fired power plants. This focus on distributed energy resources like microgrids reflects a shift towards more resilient and sustainable energy solutions in the state. Microgrid projects may be small in size, but they are mighty in their ability to quickly provide backup power solutions. Unlike large power plants that can take years to build, microgrids can be constructed swiftly and efficiently to meet immediate demand. This is especially true when microgrids are located at data centers, where the need for reliable power is crucial.
One such example is the Texas Backup Power Package Program, which aims to support sites that cannot afford on-site backup power. Enchanted Rock, a Houston-based microgrid operator, is involved in running 500 megawatts’ worth of projects at various locations in Texas, including grocery stores, truck stops, and other large power customers. The company has also deployed gas-fired generators at water utilities and irrigation districts, enhancing overall grid resilience.
Following the devastating Winter Storm Uri in February 2021, which left millions without power for up to a week, the $1.8 billion microgrid program in Texas is a significant step towards improving resilience at critical facilities. This program opens up opportunities for customers who may not have the financial resources or expertise to invest in backup power generation on their own.
Assisted living facilities, in particular, stand to benefit greatly from state-funded microgrids, as power outages can have deadly consequences for older adults and medically compromised individuals. With more than 80,000 residents in assisted living facilities in Texas at risk from extended power outages, the need for reliable backup power solutions is evident.
Enchanted Rock, along with other backup generation providers, is part of an informal coalition called Grid Resilience in Texas (GRIT). This group is working closely with the Electric Reliability Council of Texas and the Public Utility Commission to implement the $1.8 billion microgrid program. The focus is on gas-fueled power generation systems, battery backup systems, and hybrid solutions that combine solar, batteries, and energy control systems with generators.
The Texas Backup Power Package Program allows projects to access up to $500 of state funding per kilowatt of generation capacity installed. The legislation is flexible in terms of the energy mix, allowing for different combinations of solar, batteries, and fossil gas or propane-fueled generation based on the specific needs and economics of each customer.
Overall, microgrid projects offer a cost-effective and efficient solution to meet immediate backup power needs, especially for critical facilities that require reliable electricity supply during emergencies. By leveraging state-funded programs and partnering with industry experts, more organizations can benefit from the resilience and security that microgrids provide. Many people are turning to solar panels to help lower their day-to-day utility bills. However, there are some who are more concerned with ensuring they have power during multiday winter outages. In these cases, maximizing gas-fueled generation may be the preferred option, especially when solar-charged batteries are less effective.
When it comes to creating a microgrid, there are certain limitations that need to be considered. For example, projects are restricted from participating in the grid operator’s market programs. This means that microgrid owners may face challenges when it comes to selling the power they generate or providing grid-balancing services to the market.
Despite these limitations, there is still room for customers to leverage their assets for behind-the-meter value. This could involve using solar power to offset utility power purchases, which can be crucial in making the economics of a microgrid work effectively.
Overall, it’s important to consider your specific needs and goals when deciding on the best energy generation strategy for your microgrid. Whether you prioritize cost savings or reliability during outages, there are options available to help you achieve your desired outcomes. By carefully weighing the pros and cons of different energy generation methods, you can create a microgrid that meets your needs and serves you well in the long run.
