When the Environmental Protection Agency released its Clean Power Plan, its proposal for regulating carbon emissions from existing power plants, every state got its own target for reducing emissions. The EPA's plan creates some challenges for Texas, but it also creates major opportunities for the second-biggest state.
The biggest challenge, before and after the EPA's plan: air conditioning. Texas summers are murder without it, and the state’s grid has to be ready for demand to spike quickly on hot days.
On a summer day, eight technicians manage that challenge from a huge, dim room near Austin. The silence is deafening, and the visual stimulus is overwhelming, with most of the light coming from computer monitors — 10 or so on each desk, plus the big board — 50 feet wide, with maps, charts, weather projections, all shifting in real time.
This is the control room at the Electric Reliability Council of Texas — ERCOT for short. It looks a little like something out of the TV show “24,” but a lot quieter. "It’s not as crazy, if you will, as what you would see on an episode of '24,'" says Dan Woodfin, ERCOT's operations director. "Even when things get a little hectic, you d0n't hear a lot of voices raised." When managing an electric grid that serves about 24 million people, he says, it helps to keep a cool head.
ERCOT sends signals to different power sources — coal, gas, wind and nuclear — to turn on and off at just the right time to keep the air conditioning running for those 24 million people. Each source costs a different amount to run and takes a different amount of time to turn on and off.
Near Houston, Steve Hedge watches ERCOT’s signals at a giant power plant he manages for NRG Energy. The plant has three different types of generators.
First, coal: "The coal units are low-cost generation," Hedge says. "They run all the time, 24 hours a day."
Next come some big natural gas generators. "Gas is a lot more expensive fuel than coal, right now, so it costs more to make that power," says Hedge. "Those units start and stop every day during the summertime."
But they don’t start on a dime. Three hours, minimum. So what if the temperature suddenly spikes?
That’s where another kind of natural gas generator comes in — a peaker. "This unit can respond to those short peaks," says Hedge. "Start real quick, provide the power, and then shut off." It’s less efficient and more expensive to run, but it comes in handy on hot days.
So, Steve Hedge, his counterparts at other plants and ERCOT are all working with two variables: Cost and timing.
EPA’s Clean Power Plan introduces a third: Carbon emissions. The coal generators are cheap to run because coal is cheap, but they emit more carbon dioxide.
One way or another reducing emissions will raise electricity prices, probably by some switching from coal to less-cheap gas. "About a billion dollars a year in increased costs for energy," says John Larsen, an analyst with the Rhodium Group, which issued a study on the Clean Power Plan in July. He says that billion-dollar bill, spread across Texas and three next-door states, comes with a big upside for the region: "Anywhere from two or three billion dollars a year, up to 16 or 17."
Those billions will come from pumping more natural gas, because lots of states — not just Texas — will have to do some switching from coal to gas. "That increases demand for natural gas, so parts of the country that produce natural gas do quite well," says Larsen. "In fact, Texas is one of the largest gas-producing states in the country." Meaning that Texas will see more upside than most.
A construction project behind one of Hedge’s coal generators could point to a second big advantage for Texas under the EPA's proposal. NRG is starting to build a system to capture the carbon dioxide. "We’re going to take that CO2, we’re going to put it in a pipeline, and inject it in an oilfield south of the plant," says Hedge.
The project, called Petra Nova, combines two things: First, carbon capture, the part happening here. That's technology the EPA would like to see used more, but it’s expensive.
The second part pays the bill, by putting that carbon to lucrative use in the oilfield. Pump carbon into a low-performing oilfield, and it will pump out more oil, a technique called "enhanced oilfield recovery." Arun Banskota, president of NRG subsidiary Petra Nova, says the oilfield produces about 500 barrels daily right now. "Once we get carbon into that same field," he says, "we will be producing about 15,000 barrels a day." That's 30 times as much.
Banskota hopes to repeat the process elsewhere. He says there are lots of Texas oilfields where carbon dioxide could help. To hit all of them, he says, "You need approximately one hundred projects of the type we’re doing right now. The potential is huge, and the opportunity is huge."
It's an opportunity, however, that most states don't have access to. Kentucky, for example, has lots of carbon dioxide from burning coal, but not so many oilfields.
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