Real Estate / 4 min read
A Sneak PEAK into How Texas A&M Plan(t)s to Save the Day (and night)
The Texas A&M University System (A&M) is one of the largest higher education systems in the nation. With its extensive network including universities, state agencies, offices, and more, A&M plays a pivotal role in lighting up the state's economy and nurturing some of its brightest minds. Unsurprising to many, A&M is filling the pioneering role once again in its newest statewide venture, peaker plants.
What are Peaker Plants?
A peaker plant is exactly what it sounds like, a plant designed to provide electricity during peak demand, which is typically between the hours of 1:00 p.m. to 7:00 p.m., Monday through Friday, throughout the summer months. These plants are powered by gas turbines and are located on viable pieces of land where power lines and gas lines intersect. A&M has identified nearly thirty suitable plots of land within their ownership, where such peaker plants can be installed. Though A&M intends to house these plants strategically near A&M's campuses to ensure protection from power loss, there is potential for interested partners to maintain long-term lease agreements with them. Moreover, peaker plants are intended for short-term use, such as when the state's power grid requires additional support on very hot days or during large outage events, rather than serving as a primary power source. Nonetheless, the assertion is that the addition of these power sources will help stabilize the state's power grid overall.
How does A&M plan to get involved with Peaker Plants?
A&M is taking advantage of the Texas Energy Fund's (TEF) funding opportunities for electric generation projects. The TEF was created by the Public Utility Commission of Texas in response to Winter Storm Uri in February 2021. Texas set aside a $5 billion budget to administer programs in 2025-2026 towards the construction, maintenance, and modernization of electric facilities so that a Uri-type power failure event can be prevented in the future. As an incentive, the TEF is providing low-interest loans and financial grants to qualifying companies for four electric generation projects. Specifically, A&M plans to participate in the Electric Reliability Council of Texas Generation Loan Program (In-ERCOT), whereby the construction of new facilities will be located in, or be an extension of, the ERCOT power grid. To qualify, proposed projects must provide at least 100 Megawatts of new dispatchable generation capacity to the ERCOT grid. In its first steps to pursue this opportunity, A&M identified companies that would be interested in collaborating with them to participate in the program by showcasing that the goal of the initiative is to support and provide on-demand electrical power generation across the state, enhancing the overall reliability of the state's electrical grid. They circulated this information through a Request for Information (RFI), which required a response and a subsequent Notice of Intent to Apply (NOI), contingent upon A&M's express authorization. A&M's particular interest in participating in this program is their desire to safeguard their member campuses and agency facilities, ensuring they have a reliable power supply. This is especially important to A&M because many of their affiliated sites conduct critical research, as well as house and support students, faculty and staff members. A&M has also proactively ensured the plants will follow the Texas Division of Emergency Management's standards, paying special attention to disaster recovery and hazard mitigation, in addition to recognizing the state's needs. Moreover, they have predetermined the areas suitable for such construction within their ownership but designated to the public benefit. It is important to note that although A&M has taken preliminary steps towards project development, the project is still in its infancy, thus additional considerations are still underway to determine project practicality.
Long-Term Benefits
The new peaker plants may prove to be a positive influence on electricity prices. By the law of supply and demand, the hope is that because there is more electricity available to the grid, the surges will not be as frequent, and prices will begin to stabilize. However, many energy researchers note that, regardless of the generation of new power, the higher prices of electricity will likely continue to persist as they have for the last few years. Other energy experts in the industry have voiced their opinions on A&M's involvement in the venture, stating A&M could have catered to the needs of the state's electric infrastructure in a better way, such as through more forward-thinking modular nuclear reactors. This viewpoint is obviously not the predominant one, as evidenced by the influx of formal applications from companies, co-ops, and municipalities to participate in the TEF program. These eager participants, like many, share the belief that Texas benefits from its natural gas resources, while weather-dependent sources like wind and solar are unsuitable for addressing the state's needs. Regardless, A&M's direct participation in funding new capacity certainly "peaked" the energy community's interest.