Knowledge Management at Texas’ Electrical Power Grid-Texas

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The responsibility of the electricity supply in Texas lies on the Electric Reliability Council of Texas (ERCOT) that supplies about 85% of electricity use in the state (State Impact, 2013). The areas not covered by ERCOT are supplied by western connection and eastern connection. The ERCOT was created in 1970 to succeed Texas Interconnected System (TIS).

The ERCOT occupies a unique position in the sense that it is not connected to the national power grid but operates as an Independent System Operator (ISO).

The ERCOT avoided joining the national grid due to the nature of the electricity generation in Texas. Electricity supply in Texas traces its origins on the need to smelt aluminium and light towns. In this context, small power plants had sprouted to generate electricity within Texas for their specific uses in their locality.

It is these small power plants that interlinked within Texas to form TIS which was the predecessor of ERCOT. At this time, Texas was self reliant and didn’t need to import electricity from neighbouring states. By the time the federal government formulated rules governing interstate electricity transmission, Texas already had its own self reliant intrastate electricity grid and didn’t see the need to join the national grid.

Texas is a heavily industrialized state and endowed with energy intensive industries demanding high usage of electricity. In this context, Combs (2013) notes that:

Texas produces and consumes more electricity than any other state, accounting for more than one-tenth of total U.S. energy use. Texas’ energy use is tied to its large population, hot climate and extensive industrial sector. As compared to the U.S., Texas has a high concentration of energy-intensive industries, including aluminium, chemicals, forest products, glass, and petroleum refining. Industry accounts for 50 percent of all energy used in Texas, compared to a 32 percent share for the U.S. as a whole (p.1).

Texas power demand was at over 60,000 Megawatts (MWs), in the years 2009 and 2010 experiencing the second highest power demands ever at 63,400 and 65,776 MWs respectively (State Impact, 2013). Wind production of electricity has continued to form an integral part of electricity generation in Texas. Indeed, in 2006 Texas State was the highest wind producer of electricity in the US, a spot previously reserved for California State.

Power Outages in Texas

The unique position that ERCOT occupies as an ISO means that it can’t tap into the national grid as it is not connected to it (ERCOT, 2013; Texas Government, 2013). This has sometimes occasioned power outages, especially during the peak hours. In order to avoid a full power blackout, the ERCOT initiates rolling power outages on a basis of the need.

A rolling power outages refer to a situation in which the power supply company such as ERCOT shuts off power in different regions of distribution to avoid total black outs. Sometimes rolling power outages have been conceived as load shedding as it reduces the load in the power grid.

Over the years, Texas region has experienced several rolling power outages. In 2011 Texas suffered one of its worst rolling power outages that lasted for more than 8 hours (Souder, 2011; Giberson, 2011). According to Souder (2011), the rolling power outages that lasted sometimes to periods of 45 minutes were occasioned by the cold weather causing “…7000 megawatts of generating capacity to trip” (p.1). The Texas power outages are generally produced in two scenarios: very cold weather or very hot periods.

The cold weather causes some power plants to freeze and break down hence producing less energy to the Texas grid. On the other hand, a hot season leads to an increase in power demand due to increased use of fans for cooling purposes. In this context, Texas electricity outages are tied to the weather pattern. Sometimes Texas has been forced to import electricity from Mexico. This wouldn’t have been the case had Texas been linked to the national grid.

Problem Statement

There are several problems facing the ERCOT ability to avoid power outages in Texas. These problems include increasingly small power reserve margins, evolving regulation in energy sector, weather patterns and profitability of power generation amongst other issues.

According to Galbraith (2011), power reserve margin which is the “…safety buffer the state uses when there is a shortage…” is increasing under the current expanding power demands (p.1). Indeed, state impact (2013) makes the following observation in regards to growing population and the effect of the same to the electricity reserve margin.

Texas’ population is set to double over the next fifty years, and companies are flocking to set up shop in the state. By 2015, the reserve margin is set to dip below its target, even with the new generation factored in, and it isn’t clear if the new plants needed to get above the line will fire up in time for the peak of summer 2014. But the updated forecast does potentially give the market and regulators more time to come up with more solutions to the state’s power crunch beyond simply raising prices (p.1).

The solution to this particular problem lies in the construction of more power plants in order to increase the reserve margin (UPDATE 3-ERCOT sees another tight summer for Texas power supply, 2013). This way with an increased power reserve margin, the ERCOT would be in a better position to respond to the increasing power demands.

However, consumer advocacy groups have opposed such moves based on the fear that construction of more power plants would increase the prices of electricity. This has the effect of discouraging construction of power plants since they would want to recoup the finds utilized in the construction through increased prices of electricity. On the other hand, environmentalists have also joined the fray demanding energy saving measures as opposed to producing more energy.

The unique position in which Texas power grid is not connected to the national grid has also contributed significantly to the risk of outage. This is because it implies that whenever there is a need such as is the case with power demand peak, ERCOT can’t tap into the national grid in order cover its shortfall.

Increasingly regulatory directives from the federal authorities are further complicating the ability of ERCOT to adequately supply the Texas users. A good example is the Environmental Protection Agency (EPA) regulation which seeks to limit the air pollution from power plants. This has the effect of discouraging power plant construction which is what is badly needed.

Changing weather patterns and the challenges associated with them in regards to electricity production or consumption as outlined above is another challenge to ERCOT. Another emerging concern has been the water utilization that is sometimes occasioned by droughts. Coal and gas plants need massive amounts of water to act as coolant. In drought seasons the water for this may not be sufficient for cooling purposes leading to a situation where plants are not running at full capacity.

Another challenge associated with availability of water is the construction of new coal plants. Service providers are increasingly unable to supply the existing power plants and any other that may be planned. This has hugely been demonstrated by the decision of Lower Colorado River Authority not to supply a proposed power plant (White Stallion) with water.

Knowledge Management in solving Texas electricity challenges

Knowledge management is a concept that has emerged from early 1990’s. Davenport (1994) and Duhon (1998) are some of the noted authorities who have given formal definitions of knowledge management (Koenig, 2012).

Davenport (1994) as cited by Koenig (2012) defined knowledge management as “…the process of capturing, distributing and effectively using knowledge” (p.1). On the other hand, Duhon (1998) offers a more comprehensive definition. Duhon (1998) as cited as by Koenig (2012) defines knowledge management in the following way:

Knowledge management is a discipline that promotes an integrated approach to identifying, capturing, evaluating, retrieving, and sharing all of an enterprise’s information assets. These assets may include databases, documents, policies, procedures, and previously un-captured expertise and experience in individual workers (p.1).

Knowledge management is critical in resolving Texas electricity challenges in four critical ways; identifying the problem (as done above), getting an appropriate solution to the problem, implementation of the solutions and funding the programs.

Solutions, implementation and funding of the solutions to Texas electricity challenges

Several solutions can be conceptualized and implemented in order to reduce the load on the Texas electricity grid while addressing the challenges identified in the problem statement above. The ensuing paragraphs will discuss in detail the suggested solutions, the rationale for the suggested solutions, execution of the solution, as well as funding of the same. Knowledge management which involves effective management of knowledge will be used in linking the suggested solutions to similar cases practiced worldwide.

A majority of the heavy companies utilizing electricity are the industries that cause an over load to the power grid leading to power outages. In Kenya, some industries that consume a lot of electricity have opted to generate their own electricity in order to avoid the cost associated with the national grid power failure.

According to Electricity Regulatory Commission (ERC) (2012), such companies include “…James Finlay, Sotik Tea Company, Sotik Highlands Tea Estate, Oserian Development Company, Pan African Paper Mills, Unilever Tea Kenya Ltd and Tiomin” (Energy Regulatory Commission, 2012, p.1). Indeed some of these companies apart from using the generated electricity for their use are selling off the excess to the national grid.

Some of the Texas industries can be encouraged to generate their own electricity through state subsidies and offering of critical knowledge expertise from other countries and states. Some of these companies, especially the ones utilizing steams such as the smelting firms, may generate their own electricity.

They can use knowledge management from similar entities to find out how they may integrate the steam engine to generate electricity with the rest of their operations. If individual companies are in charge of their own electricity generation, this would have the effect of reducing the load from the national grid. They can also sell any excess electricity to the national grid and even to staff houses and offices.

Funding of such ventures can be construed from a cost cutting view. Companies in Kenya that have been able to generate their own electricity incur far less cost in generating the same as opposed to if they bought the same from the national grid. Thus own electricity generation is not only a means to cut costs but also to make some extra profit. Some firms have undertaken initial public offerings in order to construct their own power plants.

Ultimately construction of more power plants leads to a direct solution to the electricity shortage in Texas. Given the consumer advocacy group concerns on the possibility of passing the costs to the consumers, there is need for a new way to fund such constructions. There is need to fund the construction from sources that will not necessitate passing such costs to customers.

One such way is through an infrastructure bond that enables getting funds from the public and the public owing the constructed power plants. In this context, the consumers will eventually be charged a high price for the consumption of the power plants but they will also gain through dividends derived from the profitability of the power plants.

Infrastructure bonds would be ideal for this particular kind of expansion due to several advantages. Infrastructural bonds are a long term debt instrument that entitles the investors a certain returns on a periodic basis. Power supply generation is a product with ready consumption.

By the virtue of public participation through infrastructural bonds, power supply generation is likely to be prudently managed. In this context, by having the local community to participate by pricing the bonds in affordable prices per share there is likely to be less resistant to construction of more plants.

In the context of the concerns from the environmentalists, there is need to give incentives to power plants that produce clean energy. In this context, power plants that generate power from non renewable energy and other energy forms that pollute the environment ought to be adequately penalized. In this context, the penalties in monetary terms would be used to promote activities that clean out the environment and fund environment friendly initiatives.

There is also an increasing need for Texas to link its own power grid to the rest of the nation in order to tap from the power grid should there be need. Texas need to actively reconsider to what extend linking to the rest of the national grid would impact on the power supply of the state.

While the same will put the state electricity supply under federal electricity regulatory authorities, there is need to re-examine on what would be the dangers of doing the same. This discussion need to be put in the public arena with the view of determining on whether the shortfall in electricity during peak hours can be adequately catered by the national grid. This would be with a view of understanding on whether the same is a better deal than having to buy electricity from Mexico as has been the case.

Conclusion

Knowledge management is thus critical in examining the viable options of action given a detailed analysis of the concerns available in relation to the electricity problems. Disseminating the information to the public after an internal discussion with various stakeholders enables the public to buy into the ideas producing a win-win situation.

References

Combs, S. (2013). Texas energy quick facts. Web.

Energy Regulatory Commission. (2012). Electricity supply industry in Kenya. Web.

EROCOT. (2013). Erocot. Web.

Galbraith, K. (2011). Electric Grid in Texas faces multiple challenges. New York Times. Web.

Giberson, M. (2011). Texas Power Outages: A Preliminary Analysis (Cold snap brings failure–isolated ERCOT an issue). Web.

Koenig, P. (2012). What is KM? Knowledge management explained. Web.

Souder, E. (2011). ERCOT may initiate more blackouts Wednesday night, Thursday morning. Dallas News. Web.

Texas Government. (2013). Electric Reliability Council of Texas. Web.

UPDATE 3-ERCOT sees another tight summer for Texas power supply (2013). Reuters. Web.

What Is the Electric Reliability Council of Texas (ERCOT)? (2013). State Impact. Web.

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