Texas A&M pushing power plant development on owned land

As we near summer, we are already getting various ERCOT warnings about the Texas power grid being strained, or to voluntarily conserve to avoid some blackout catastrophe. The move to green energy has not apparently helped supplement the power supply. That has left power producers to get more and more craft in how they manage to keep the lights on. But now, Texas A&M wants to play a part in what they think will help.

The school announcing this month that they are encouraging developers to submit proposals for building a network of gas-fired power plants on their lands across the state. They are called 'peakers,' and are designed to be on for short periods when they grid is under strain. They are hoping a new state energy fund offering low interest loans to build will help keep the lights on, rain, sleet or shine.

But University of Houston energy expert Ed Hirs says really this is just leasing their land to developers.

"Nothing they have proposed changed the economics for any power plant developer or owner...and these guys cannot make a living on the Texas grid," he says.

The 'peakers' would only be able to operate for a few hundred hours of the year. Texas A&M has identified about 30 sites so far where the intersecting gas and power lines make installation at least halfway feasible.

But even low-interest loans will not be enough to move the needle and entice developers.

"The rules and regulations state these can only be used for a portion of the financing, so someone still has to take the equity risk...up to 75 percent of the financing needs to come from other sources," he says. "It will not lead to a net addition of power plants on the grid."

Even with all the right hook ups in place, it would take a minimum of two years to install one of these plants. That is assuming all things are good with the site. It could end up being four years or more.

That would be enough time to make these obsolete.

"It is not going to do anything to help us over the next four or five years...and by the fifth year, the ERCOT market will change, there will be a lot more batteries on the grid," he says. "By then, these 'peaker plants' won't be needed."

Hirs adds none of this will have a true material impact on the Texas power grid, and only equates to being a nice gesture. Texas A&M will begin accepting applications on June 1st.