Texas grid operator seeks alternatives for keeping three old gas plants operational

To avoid having to pay as much as $129 million to prevent three old natural-gas fired generators totaling 859 MW from being mothballed in March 2025, the Electric Reliability Council of Texas has issued a request for proposals for must-run alternatives such as other generation, storage or demand-response resources.

Offers for such resources must be submitted by 3 pm CT Sept. 9, ERCOT said in a July 25 notice to market participants. If insufficient must-run alternatives, ERCOT might have to contract a "reliability-must-run" agreement with CPS Energy. When ERCOT did so in 2016 to continue operating NRG Energy's 371-MW Greens Bayou 5 gas steam unit, it cost $22 million to remain available for 12 months beyond its planned retirement.

CPS energy indicate the following costs for its three units:

• Braunig 1: $3,330/hour for one year, $2,263/hour for two years
• Braunig 2: $3,222/hour for one year, $2,203/hour for two years
• Braunig 3: $4,171/hour for one year, $2,904/hour for two years

Thus, the standby costs could range from as little as $29.2 million to keep the Braunig 1 unit operational for one year to more than $129.1 million to keep all three units available for two years.

ERCOT plans a workshop Aug. 15 to discuss the RFP and answer questions, and expects to provide an amended RFP on Aug. 26 to further clarify required performance characteristics, such as maximum megawatt-hours or maximum duration per deployment.

"Following its review of all proposals, ERCOT will provide a recommendation to the ERCOT Board of Directors at its October 2024 meeting," ERCOT said.

ERCOT determined in April that it would need CPS Energy's three V.H. Braunig Power Plant gas-fired generation beyond the March 31, 2025, suspension date "because their unavailability would have a material impact on identified ERCOT system performance deficiencies."

Forwards above O&M costs

The first three units of the V.H. Braunig Power Plant started operating in 1966, 1968 and 1970, each as steam turbine units. S&P Global Capital IQ estimates their collective operating and maintenance cost to be $46.52/MWh in 2024, and their 2023 capacity factor – a measure of how much of maximum output was produced – was less than 19%.

Based on 2025 forwards as of July 26, the plants' average revenues totaling more than $63/MWh would exceed their operations and maintenance costs.

"The MRA RFP seeks proposals from Qualified Scheduling Entities (QSE) to provide one or more MRA Resources that would address the identified ERCOT System performance deficiencies in a more cost-effective way than committing one or more of the Braunig Resources through an RMR contract," ERCOT said. "Under the RFP, QSEs may offer MRA Resources for any one or more seasons during the period of April 1, 2025 through March 31, 2027. The RFP identifies different hours in which an offered MRA Resource must be available each season."

ERCOT said it would evaluate offers based on price and the ability of the resource to reduce congestion on 345-kV transmission lines "subject to the South Texas Export Interconnection Reliability Operating limits during certain specified outage conditions."