By Patrick D. Nolan

Special to the Star-Telegram

Sunday, October 19, 2008

http://www.star-telegram.com/242/story/982072.html

Most Texans have been lucky enough during the past decade to have the luxury of viewing the news about summer brownouts and nearly avoided rolling blackouts in other states from a safe and comfortably air-conditioned distance. Few outside of the energy industry and the state government are aware that this comfortable distance is steadily shrinking.

The Electric Reliability Council of Texas, under the Texas Public Utility Commission, is charged with ensuring the reliability of the electric grid that delivers power to the consumers.

Starting in 2005, ERCOT began to forecast the encroaching crisis in a series of reports detailing something called the reserve margin. The reserve margin is the percentage of electric capacity that is available on a day-to-day basis above and beyond what might be needed if conditions and demand remain normal.

The PUC has set the minimum acceptable reserve margin at 12.5 percent. If conditions push that margin below 12.5 percent, Texas could suddenly seem like some other place altogether; like some place we have viewed all these years from a comfortable distance.

ERCOT forecasts show that the reserve margin out to 2011 could fall as low as 4.9 percent during summer. Texas’ growing wind-energy capacity is included in the calculation of this margin. However, re-starting old (and not very clean) mothballed facilities also plays a major part in the strategy to mitigate the shrinking reserve margin. There are many good reasons why this is not sound energy policy.

It appears there is a bright light on the horizon, with the PUC pledging nearly $5 billion to build the infrastructure required to get electricity produced from really big wind farms to the places it is most needed. This is a laudable sign of dedication to the promise of one form of renewable energy.

Additionally, ERCOT will very soon move the Texas grid from an outmoded system of "energy zones" to a more efficient "nodal" system. This simply means the entire Texas grid will become smarter and better able to respond to energy demand across the state. That this transformation is long past its original 2006 implementation date does not erase the fact that it is a much-needed reform that will benefit every consumer.

But neither of these very promising initiatives eradicates the problem of the shrinking reserve margin, specifically because their benefits are not ahead of the crisis. Instead, they are in lock-step with it. There is no market-ready solution to immediately solve the problem. Instead, more needs to be done at the same time and in such a way that we break the cycle of imbalance between capacity, infrastructure and demand.

Because energy used in buildings of all types (particularly during the summer in Texas) is the largest single type of energy consumption, building efficiency initiatives will continue to have a growing positive impact on demand. However, there is another solution that has been largely overlooked that could have a large positive impact on demand, the economy and the reserve margin. That solution is distributed energy.

Simply put, distributed energy involves creating energy at or near the place it is used. In the past it has most often been an industry strategy involving placement of smaller (usually diesel-powered) generators to augment and offset large demand.

In the recovery from the impending economic crisis, many experts already are pointing out that two economic engines will see much growth and provide badly needed jobs: first, the transformation of the energy sector, and second, infrastructure renewal. Distributed energy solutions could, and should, provide excellent opportunity and job growth in both areas.

Distributed energy technology is taking on many different forms.

At the forefront are wind turbines, solar panels and micro-turbine generators that burn some type of renewable or recycled fuel. An abundance of commercial and industrial-scale wind resources exist in places obviously not suited for large wind farms.

When you consider the untapped acreage of roof-top real estate that could be devoted to solar power, the combination of wind and solar solutions is more promising.

The corresponding economic growth and employment that these two alone could provide are worth consideration. Even in 2006, the renewable energy industry provided an estimated 446,000 dedicated jobs nationwide and growing, compared to 174,000 in the entire coal energy industry.

Fostering solutions in Texas that could build on that trend is necessary, desirable and responsible. The long-standing property tax credit for renewable systems is meager, does not apply to wind farms and has not grown other forms of renewable energy in Texas. Some other strong show of support is necessary, such as a tax credit on the new margins tax on Texas businesses.

Distributed energy solutions, primarily solar panels and urban wind turbines, are more than another solution to the energy crisis. Well-designed and aesthetically pleasing renewable energy systems clearly represent a visible commitment to a better community through the promise of distributed energy. They are smart energy and infrastructure strategy, and could provide thousands of new jobs.

However, to become a reality, a focused and timely commitment is required at all levels of government to foster this emerging industry.