Do you know who your energy provider is? Did you know you have a choice? After all you send them money every month to keep the electricity flowing. But what’s the process behind that flow?

Enter the Texas energy grid, which is a combination of the generation, transmission and distribution of electricity.

David Brast, senior vice president of Direct Energy’s Power & Gas division, has been working with the energy grid and the Electric Reliability Council of Texas (ERCOT) for over two decades. Here he provides easy-to-understand explanations about the energy grid, how it works, and how it can help you make more informed choices.

What is the Texas Energy Grid?

According to Brast, it’s a network of things that move electricity from the supplier to the consumer. “Generation” is how electricity is made – natural gas, wind, coal, solar, etc. “Transmission” deals with how the electricity gets from the point of generation to wholesale trading hubs. And “distribution” is how retail providers get the energy from the trading hubs to your home. All of those pieces are interconnected and together make up the Texas energy grid, operated by ERCOT.

“In the early days,” says Brast, “before World War II, the grid was highly localized, largely unreliable, and had very little interconnection from one area to the another. Thanks to post-war advances in technology, though, Texas enjoyed a wave of building larger, central power stations that transmitted over longer distances and covered a greater geographic footprint.”

Not only did this increase reliability and decrease redundancy, it created the need for larger transmission lines – today’s poles-and-wires system – that in turn helped realize the economies of scale.

The Advent of Choice

Until the late 90s, utilities in Texas were still regulated, which meant people had one choice for electricity in a particular area, like it or not. Texas boldly transformed an enormous regulated industry into a model for competition. The landmark laws and rules crafted in 1999 have been studied and emulated around the world. That’s why, says Brast, opening up the market to competition in 2002 was such a good thing for both providers and consumers.

“Deregulation allowed the generation of electricity to be decided by the market rather than the government, which meant more choices for consumers. Need a basic plan? Prefer one that educates you about your energy use? Or do you want to go green? You now have a variety of customized options that fit your lifestyle and the way you use electricity.”

The Rise of Eco-Friendly Alternatives: Wind & Solar

Even though Texas has always been associated with oil and gas, the Lone Star State is now the leading producer of wind energy in the country. In fact, wind power accounted for more than 15% of the electricity generated in Texas in 2016[1]. At the beginning, the giant wind turbines were being built in the Western portions of the state – where wide open spaces are abundant – and they were generating massive amounts of energy for the grid. The only problem was, they were so far away from the larger cities (centers of population where demand was the highest), all that energy had no place to go.

Enter the transmission and distribution (T&D) portions of the grid network.

“In 2014, the T&D companies completed the Competitive Renewable Energy Zones (CREZ) project,” notes Brast. “They invested about $7 billion to build transmission lines from the West Texas turbines to the bigger cities. And that’s why many providers can now include wind power as a “green” option for eco-friendly customers.”

Brast explains further that utility-scale solar projects are appearing as well. With renewables on the rise in Texas, T&D companies and the grid operators are working on new transmission improvement projects to get more “green” power to the people.

“We’re also seeing more roof-top solar panels that are connected to batteries that can store the energy,” he explains. “There are scenarios where – if those users produce more energy than they can use – they can sell that extra power back to the market.”

Maintaining the Texas Grid

Given that the population in Texas is growing, there are centralized processes to vet the T&D investments needed to serve the increased demand. T&D companies propose improvement or new transmission projects, which is evaluated by the grid operator, ERCOT. After ERCOT’s evaluation and market participants’ discussion, final approval is given by the Public Utility Commission of Texas, after which construction starts.

Electric Providers Help Carry the Load

During times of high demand – hot summer days, for instance – the grid feels the pressure. In years past, to provide some relief, there have been “rolling blackouts” where a section of the grid is taken offline until the correct frequency is reached. When that one is restored, another section is taken off. Emergency options like this can be a burden for consumers, so providers are creating innovative new ways to help share the demands put on the grid.

“There are now programs that incentivize customers for using less electricity during specified high-demand times,” says Brast. “At Direct Energy, our program is called Reduce Your Use Rewards. We’ve also delivered technology that can help customers use less. Smart thermostats, like the Hive Active Thermostat™ available via Direct Energy’s Connect to Comfort 24 offer, let you program the temperature settings to fit your lifestyle while you are home or away. Want to save on your electricity bill? Tell your thermostat to raise the temperature a few degrees during peak-demand periods.”

What are electric providers doing to help the grid-load?

Electric providers are creating innovative ways to help the grid.  Using smart meter data, providers have created rate plans that allow consumers to benefit from using less during periods of high demand.  In some instances they will actually pay consumers to reduce their demand.

For larger consumers, they give access to the load management programs that ERCOT uses to provide reliability to the grid.

Providers have also delivered access to technology that can help consumers observe and implement changes to their behavior.  Many providers have some form of smart thermostat that consumers can program to modify their settings to raise the temperature during periods of high demand.


[1] ERCOT, Quick Facts, February 2017

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