Texas is experiencing a “perfect storm” of circumstances, which could lead the state to become the next major solar opportunity on the global stage. Attend this webinar to hear Texas energy expert and Principal Solar, Inc. board member Ron Seidel provide an overview of the Electric Reliability Council of Texas (ERCOT) Capacity, Demand, and Reserves December 2012 Report. He will explain what is happening in the Texas electricity market today and how this effects the conclusions of his September 2012 Solutions for the Texas Energy Shortage whitepaper (click here for a free whitepaper download) and webinar (click here to view the webinar recording). Plus, find out how to take advantage of this opportunity in YOUR business during the live Question & Answer session following Ron's presentation.

1. Principal Solar Institute
"Could Texas Become The Largest Solar
Opportunity in the World? An update on the
ERCOT Resource Adequacy Situation "
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
40,530 miles of Transmission (2012)
74,000 MW Peak Capacity
10,034 MW of wind generation
66,548 MW Peak Load (2012)
– Reduction of 1,746 MW from 2011 Peak Load
13.75% Target Reserve Margin
2012 Peak Reserve Margin 8.9%
– 2011 Peak Reserve Margin was 7.6%
Source: ERCOT

4. Texas Ties to Mexico and the
Eastern Interconnection

5. ERCOT Capacity
2011 and 2012
Installed Capacity Hydro, Installed Capacity
Hydro,
2011 biomass, 2012 biomass,
other other
1% 1%
Wind Wind
Nuclear 13% Nuclear
13%
7% 6%
Natural Gas Natural Gas Coal
Coal 57%
56% 23%
23%
69,704 Megawatts 69,480 Megawatts
Source: ERCOT

6. ERCOT Energy
2011 and 2012
Energy Produced Hydro,
Energy Produced Wind biomass,
Wind Hydro, 2012
2011 9% 9% other
biomass,
other 1%
Nuclear 1% Nuclear
12% 12%
Natural Gas Natural Gas
40% 44%
Coal
Coal
39% 34%
335,000 Gigawatt-hours 325,000 Gigawatt-hours
Source: ERCOT

7. ERCOT Reserve Margins
December 2012 Report
14.0 13.2
12.0 10.9 10.5
10.0
8.5 8.4 Target =13.75%
8.0 7.1
6.0 5.0
%
4.1
4.0 3.6
2.8
2.0
0.0
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Source: ERCOT

8. December 2012 vs. May 2012
Reserves
16.0%
14.0%
12.0%
10.0%
Target =13.75%
8.0%
December 2012 CDR
6.0%
May 2012 CDR
4.0%
2.0%
0.0%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
-2.0%

9. ERCOT Load Growth
ERCOT Average Load Growth 2013 –
2022 is 2% or 1,300 MW per year
Equivalent to
– One large nuclear plant each year
– Two large coal plants each year
– Two or three combined cycle gas plants
each year
Sources: ERCOT , RBS Energy Consulting

10. Why is there a potential shortage?
Low natural gas prices reduce financial viability for
new resources
Power prices have been capped, restricting prices in
the energy only market
Market prices do not send adequate signals to
incent new capacity investment
Electricity demand growth in Texas is robust,
creating the need for new capacity
What is being done about it??.....

11. Public Utility Commission Actions
 Raised the System Wide Offer Cap (SWOC)
– $4500/ MWhr beginning August 2012
– $5000/ MWhr beginning June 2013
– $7000/ MWhr beginning June 2014
– $9000/ MWhr beginning June 2015
 Process for recalling mothballed units (~1900MW)
 Emergency Response Service pilot
 Better pricing for ancillary services and RUC units
 Increased Peaker Net Margin to $300,000 or 3 X cost
of new entry
Source: The Brattle Group

12. Public Utility Commission
Considerations
Revise Reserve Margin target
– Mandatory versus target?
Wind Reliability factor
– From 8.7% to 14.2% for West Texas wind
– From 8.7% to 32.9% for Coastal Wind
Commissioner Anderson argues ERCOT has
adequate reserves through 2018
Operating Reserve Demand Curve
– Unlikely to be implemented prior to summer 2013

13. 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 could still address the resource
adequacy issue
My opinion: A capacity market in some form is
inevitable – an energy market will require too
much patience
Solar power can help…….

14. Renewables Competitive
“…both natural gas and renewable
resources are likely to be
competitive across a broad range
of potential future market
outcomes.”
-Long Term Assessment for the ERCOT Region,
December 2012

15. Potential Solar Capacity
2022
Long Term Assessment for the ERCOT Region,
December 2012

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

17. CREZ Transmission Supports
Solar

18. 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

19. 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

20. Achievable Solar PV Energy
in Texas
Reference: ERCOT Peak Load ~68 GW
Urban PV = 154 GW (13% of U.S. Total)
Rural PV = 20,000 GW (14% 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

21. Solar Synergy with Load
70000 12000
60000 10000
ERCOT Load
System Load (MW)
50000
Generation (MW)
8000
40000
6000
30000 Solar
Profile
4000
20000
Wind
Profile 2000
10000
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

22. 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

23. 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

24. Wind Generation Growth
with Renewable Portfolio Standards
14000
12000
2025 Standard
10000
8000 2015 Standard
6000
4000 2009 Standard
2000
0
2000 2002 2004 2006 2008 2010 2012 2014
Installed Planned

25. Summary
 ERCOT needs new capacity
 Currently over 10,000 MW of wind is in operation
 Only about 74 MW of utility scale solar PV operating with
none in the pipeline
 Texas has an enormous solar PV opportunity
 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??

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