Meeting Summary - 03/20/2025 Texas Backup Power Package Program Workshop

▶️1 - Welcome & Workshop Overview

• The workshop centered on the Texas Backup Power Package (TBPP) program, which offers $1.8 billion in grants and loans for backup power at essential facilities.
• The Public Utility Commission of Texas ensures compliance with legislation and regulations related to the Texas Energy Fund. 
• The workshop aimed to discuss industry perspectives and stakeholder feedback on the Texas Backup Power Package final report by Patrick Engineering, submitted on January 23, 2025.
• Stakeholders were invited to provide input, both verbally and in writing, using project number 57236, with a deadline for submissions in April 2025. Legislative changes are not part of this workshop's agenda.

▶️2 - Instructions for Providing Public Comment

• Participants were instructed on how to provide a public comment.

▶️3.1 - Cost Offsets

3.1.1 - How can the specifications be refined to prioritize cost savings, effectiveness, and affordability for TBPPs without compromising backup power and resilience goals? 

▶️Brian Kauffman, Mainspring Energy

• Brian Kauffman from Mainspring Energy discussed the company's focus on linear generation technologies that are fuel flexible, efficient, low emission, and modular.
• Emphasized the importance of allowing custom-designed projects that can operate flexibly, not just during grid failures.
• Highlighted that grid parallel mode is permitted under statute and should not be restricted to island mode only.
• Stressed that economic benefits are a key reason for customer investment in microgrids, with significant savings identified when operating at certain price levels.
• Predicted load growth from 90 GW to 140 GW over the next four years, noting potential risks to customers, especially critical facilities.

▶️Alison Silverstein, Independent Consultant

• Introduction by Alison Silverstein, independent consultant, discussing involvement with Senator Johnson in writing the statute.
• Identified flaws in the Patrick Engineering report concerning unexplained cost estimates.
• Lack of clarification on the basis for package sizes used in cost analysis.
• Discrepancies in cost data collection timeline and received sizes from initial to final reports.
• Uncertainty about who was asked for cost estimates and the timing of these requests.
• Concern over whether cost estimates reflect individual or bulk purchases.
• Operational and design assumptions criticized as flawed, particularly regarding instantaneous islanding and switch over.
• Such assumptions lead to oversized batteries, more PV requirements, and expensive transfer switches.
• Questioned assumptions on storm anticipation, which is not mentioned in the statute.
• No statutory limits on backup power packages operating beyond grid failure or storm anticipation.
• Potential for backup power packages to operate behind the meter, providing operational cost reductions.
• Possibility of third-party aggregation without grid injection.
• Mentioned unnecessary requirement for roof mounted photovoltaics.

▶️Ned Bonskowski, Vistra

• Bonskowski expressed disagreement with a colleague from Mainspring regarding Texas backup power package policies.
• Urged the commission to establish requirements that align with the state's interests and broader policies.
• Emphasized state priorities focused on investment in generation resources on the bulk power system.
• Highlighted concerns that misuse of backup power packages could disrupt market operations and price formation.
• Noted the natural tension between the objectives of backup power use and bulk power system investment.
• Suggested that the commission ensure policies do not conflict with each other to meet objectives.
• Confirmed that customers can engage with backup power package providers for commercial uses.
• Warned against the use of state-subsidized assets that might counter other state priorities.

▶️Joel Yu, Enchanted Rock

• Supported comments by Mainspring and Alison on the need for flexibility in sizing packages for customer needs, specifically in resiliency microgrids.
• Emphasized that customer requirements vary, such as needing 99.999% of availability, requiring oversizing of packages.
• Stressed the importance of backup power packages for non-outage use cases and cost savings.
• Critical facilities have not deployed existing solutions due to expense or difficulty.
• Voiced that the net cost of solutions must be lower than existing ones for program success.
• Noted the $500 per KW incentive cap does not compete with current market solutions without behind-the-meter services.
• Acknowledged concerns about market risks and parallels to market reform discussions.
• Stressed urgency in deploying the program to protect critical facilities against extreme weather.
• Expressed willingness to work on broader solutions and reform while pushing for immediate program deployment.

▶️Matt Boms, TAEBA

• Matt Boms with the Texas Advanced Energy Business Alliance, emphasized the importance of the program.
• The program is crucial for protecting vulnerable populations, which he identifies as the state's top priority.
• The program aligns with legislative mandates, especially in response to events like Winter Storm Uri.
• Matt anticipates further discussion under item 3.1.3 on alternative ownership models.
• He highlighted the importance of demand-side management amidst load growth, underlining the need for reliability and every megawatt as the state enters a new era.
• Critical facilities with islanding capabilities and backup power are essential to ensure grid protection.

▶️Alison Silverstein, Independent Consultant

• Emphasized the importance of using Texas backup power packages at critical facilities to address behind-the-meter operations and capacity needs during emergencies.
• Suggested that ERCOT should utilize the TBPP fleet to enter islanded mode and operate on backup power to provide an extra gigawatt of power during emergency scenarios.
• Acknowledged the significance of market design and the importance of price signals and formation.
• Criticized the perceived hypocrisy of seeking subsidized gas plants while opposing small resource contributions like TBPP.
• Noted that TBPP resources do not significantly impact price formation or profits for the majority of the year.
• Highlighted that TBPP resources primarily operate for facility self-protection or to avoid high prices, and not for grid injection.
• Stressed the need for flexibility in the use of TBPP resources, arguing against restrictions that limit their use only to grid failure situations.
• Concluded that when facing an EEA2 situation, minor TBPP contributions will not meaningfully alter market prices.

▶️Zach Stephenson, TEC

• Zach Stephenson represents Texas Electric Cooperatives.
• Concerns shared with Vistra about potential market distortion due to subsidized generation resources.
• Discussion on the operation of facilities in NOIE areas if allowed to sell into the market.
• Consideration needed for vertical integration in NOIE service territories.

▶️Ned Bonskowski, Vistra

• Acknowledged the distinction between emergency operations and regular economic operations.
• Highlighted the importance of ERCOT coordination in activities outside of grid failure.
• Stressed that such coordination is crucial for managing price formation impacts.
• Emphasized supporting reliability without undermining ERCOT's market structure.
• Noted the difference in supporting reliability and resiliency versus economic uses.
• Pointed out that economic uses can conflict with the spirit of initial comments.

▶️Mandy Kimbrough, NRG

• She agreed with commenters on the aim of a program to benefit critical loads providing public safety or health benefits.
• NRG supports using backup power packages outside emergency situations to increase value and better utilize taxpayer dollars.
• The program can comply with statutes by preventing the sale of electricity into the market for energy or ancillary services and ensuring packages can immediately island.
• Mandy disagreed with the electric cooperatives representative who claimed that using packages outside emergencies is a market sale, arguing it merely offsets grid consumption and reduces bills.

▶️Brian Kauffman, Maine Spring Energy

• Noted respectful disagreement with a Vistra representative.
• Advocated for grid services and market participation where feasible.
• Discussed load reduction and demand response services.
• Highlighted challenges in efficiently modulating demand through ERCOT.
• Asserted the importance of price formation and customer power usage decisions.
• Emphasized the need to prioritize while launching a project program.
• Noted the program's potential demand is small compared to anticipated future load.

▶️Alison Silverstein, Independent Consultant

• Alison Silverstein emphasized the importance of the Texas Back Up Power projects in preventing extended power outages like those during winter storm Uri.
• The aim is not only to provide critical facilities with backup power but also to facilitate better outage management.
• Utilities should be able to rotate loads more effectively, preventing prolonged outages for customers.
• Critical facilities having backup power means utilities are not constrained by these facilities when managing power outages.
• Silverstein noted that 90% of Texas distribution feeders contain a critical facility, underscoring the need for efficient backup systems to manage outages equitably.

3.1.2 - How can the features of a TBPP provide added value for a critical facility compared to purchasing and installing a generator set? How can this value be quantified relative to the cost of additional TBPP features?

▶️Joel Yu, Enchanted Rock

• Discussion on understanding benefits of TBPP (Temporary Backup Power Plants) versus regular generators.
• The technical performance of TBPP is dependent on criteria set by the commission including the 48-hour duration requirement.
• Enchanted Rock provides an as-a-service model offering standardized units managed by third parties with expertise, leading to increased availability.
• Advantages include overcoming challenges related to expertise and efficiencies lost when facilities manage their own backup power equipment.
• TBPP backed by long-term O&M agreements enhances operational availability.
• Mention of behind-the-meter services where non-outage run hours of gas generators ensure readiness.
• Backup generators sometimes fail during outages due to lack of regular testing, highlighting the importance of regular exercise.
• TBPP's value is also quantified through offsetting revenues generated from load management and participation in ERCOT's emergency response service.

▶️Brian Kauffman, Mainspring Energy

• Brian Kauffman emphasized the importance of running gensets more frequently during non-emergency times to utilize their features efficiently
• He highlighted that current gensets only run during emergencies, and they have high emissions.
• The TBPP features should support economical operation to reduce upfront costs and allow more operational hours.
• Running units economically could save about $140,000 per megawatt for customers on index rates.
• The value of lost load is substantially higher, making efficient operation more beneficial.
• He stressed the importance of maintenance and frequent use to ensure reliability during critical times.
• The economic and environmental benefits of using solar power as part of the microgrid were highlighted.
• Kauffman pointed out that operational cost for PV is practically zero, and it contributes to reducing emissions.

▶️Matt Baums, TEBA

• Highlighted the diversity of technologies in the Texas Backup Power Program.
• Emphasized the value of having a mix of generator, solar, and batteries within backup power packages.
• Noted past issues with gas supply during winter storms.
• Backup power provides reliability for critical facilities in various conditions.
• Mentioned electric school bus component, contributing to emergency grid support.

▶️Alison Silverstein, Independent Consultant

• The TBPP is designed as a hybrid supply source to address the extreme weather events and other threats specific to Texas.
• Texas is prone to hurricanes, floods, wildfires, and other incidents, including vehicular accidents and vandalism impacting power infrastructure.
• There are over 31,000 critical facilities in Texas, many of which are small and located in rural areas.
• Restoration services prioritize urban critical facilities, making rural areas less likely to be a priority.
• The inclusion of battery and PV systems supplements fuel sources to ensure continuous operation.
• Not all areas in Texas have a gas service, like regions served by Enchanted Rock.
• The requirement for the TBPP to operate for 48 hours without refueling ensures small rural facilities can remain functional until help arrives.
• The design aims to support small facilities crucial for community safety, providing power for two days amid emergencies.

▶️Ned Bonskowski, Vistra

• Ned Bonskowski appreciated comments highlighting multiple value streams for backup power packages beyond just economic utilization.
• There are tensions between economic utilization and investment incentives for bulk power system generation facilities.
• Frequent reliance on economic utilization of backup generation may undermine investment in large-scale generation.
• Current market design does not support parallel paths for resolving these tensions, which his company supports.

3.1.3 - How can contracts for alternative ownership models and financing mechanisms be structured to comply with statutory requirements? If these models and mechanisms are considered, what metrics could effectively measure value, performance, and compliance for the TBPP program?

▶️Zach Stephenson, Texas Electric Cooperatives

• Discussion centered around the TBPP program.
• Comments were made about the ownership model specific to NOIE territories.
• In these territories, exclusivity as service providers is essential.
• Ownership should be either member-owned by the facility itself or involve contracts negotiated with the NOIE.

▶️Joel Yu from Enchanted Rock

• Third-party ownership models, like resilience as a service, are beneficial for critical facilities by reducing capital burden and ensuring long-term performance.
• Discussion on performance metrics includes a 48-hour duration requirement and performance against actual outages.
• The ERS model is seen as helpful for establishing minimum availability metrics for backup power packages, aiming for 95% availability.
• Backup power systems combined with electric utility service can deliver 99.999% reliability for customers.
• Hybrid availability of grid service and backup power enhances reliability coverage.

3.2 - Flexibility and Applicability of Technical Specifications

3.2.1 - How can specifications include performance-based factors for design, installation, or operation without overly burdening a critical facility in installing or maintaining a TBPP?

▶️Brian Kauffman, Mainspring Energy

• Discussion on whether to have set specifications for projects or offer custom options.
• Comparison to the energy efficiency industry where prescriptive and custom solutions exist.
• Advocacy for the Commission to include a custom option pathway alongside set designs.
• Recommendation for performance-based items involving design, installation, and operation.
• Important design elements: capability for significant runtime, low environmental footprint, and economic savings.
• Installation should include a mutually agreed upon construction and operation timeframe.
• Operational focus on generator availability, runtime per year, and cold weather preparedness.
• Incentive design should tie to both commercial operation and performance milestones.
• Discussion on limits of grants and timing of delivery, including the need for possible multiple rounds of grants.
• Comment on the issue of oversizing batteries as a significant cost factor.

3.2.2 - Should the specifications vary based on the size, type of critical facility, or other criteria? If so, how and for what reasons? How can the specifications be refined to encourage participation from or integration with existing backup facilities?

▶️Alison Silverstein

• Specifications should vary based on size but not by type of critical facility.
• The aim of the TBPP is to lower costs by standardizing and commoditizing packages.
• Standardization encourages vendor competition based on quality and price.
• Customization increases costs and risks interoperability of packages.
• Design and components will differ for various power levels, e.g., 25 kilowatt vs. 1 megawatt.
• Specifications for controls, communications, and cybersecurity should be consistent.
• A technical assessment of cyber, communications, and control specifications is necessary to ensure they meet facility needs.
• Participants are encouraged to review and comment on the adequacy of cyber and control specs.

▶️Joel Yu, Enchanted Rock

• Discussion on the need for unique evaluations for critical facilities, specifically for protecting critical loads.
• Consideration for deploying TBPP (Texas Backup Power Package) for critical facilities to back up noncritical circuits.
• Importance of flexibility in investment and application to ensure program attractiveness and cost-effectiveness for critical facilities.
• Observation that most customers prefer whole facility backup over separating critical from non-critical loads.
• Advocacy for flexibility based on unique needs and tolerances of customers related to resiliency risks.
• Discussion on standardization of communications and cybersecurity with a focus on flexibility to cater to different risk profiles and customer needs.
• Note that distributed resources are not subject to NERC critical infrastructure protection standards.
• Highlight that Enchanted Rock maintains high cybersecurity standards voluntarily to protect customers demanding such protection.
• Important to right-size investment and solutions tailored to different customer needs.

3.2.3 - Considering that access to natural gas or propane may be limited in different geographic areas of the state, how, if at all, can specifications be expanded to include alternative technologies and fuels?

▶️Brian Kauffman, MainSpring

• MainSpring's technology is centered around fuel flexibility for linear generators, capable of running on various gaseous fuels without hardware modifications.
• The technology is beneficial for reliability and environmental reasons, supporting biogas, hydrogen, propane, and natural gas.
• There is a suggestion to view running on gaseous fuels as a minimum standard, not a maximum, for technology incentives.
• MainSpring advocates for larger incentives for technologies able to run on multiple fuels, as they offer greater reliability but are more costly.
• Recommendations include considering a sliding scale for incentives based on performance goals, with different levels for varying technology capabilities.
• Clarification is needed to confirm that biogas and refined biogas (RNG) are eligible fuels under current laws.
• It's important to verify if laws require actual operation on natural gas and propane or just design capability to use these fuels.
• Ensuring clarity on fuel usage options is critical so there is no confusion over customer capabilities for backup power solutions.

3.3 - Supply Chain & Deployment

3.3.1 - Considering vendors that may utilize alternative fuel sources or other components that can meet the performance criteria, how could the Commission consider adapting the specifications to increase the number of vendors eligible to participate in the program and support other business models?

▶️Alison Silverstein

• The statute does not address vendor qualifications but instead focuses on certifying packages that meet specified requirements.
• Any vendor that can produce a compliant package should be allowed to participate.
• Vendor qualification is not the focus; rather, it's about having a good, competitively priced package with operational reliability.
• Warranty requirements should be imposed to ensure vendors support their customers.
• The goal is to promote competition among high-quality packages, not to limit the number of vendors.
• Restricting the vendor pool is against the intended purpose of the statute.

▶️Matt Boms, TAEBA

• Matt Boms sought clarification on preapproved vendors mentioned in the Patrick Engineering final report.
• Suggestion was made to encourage vendor participation in backup power packages.
• Emphasized that more competition is better for backup power packages.
• Clarified that the list of preapproved vendors was not an exhaustive list.

▶️Brian Kauffman, Mainspring Energy

• Emphasized the importance of inclusivity by considering a range of performance abilities.
• Suggested providing incentives at different levels based on performance, e.g., microgrids with higher availability could receive higher incentives.
• Expressed concern about prescriptive requirements not aligning with customer needs or supplier capabilities.
• Shared a personal experience of being unable to participate in a program due to a single requirement after reviewing a detailed description.
• Highlighted the importance of not discouraging participants due to rigid program criteria.
• Advocated for custom projects and performance guarantees to accommodate different needs.
• Mentioned the potential positive impact on supply and demand with reduced microgrid costs and flexible approaches.

▶️Joel Yu, Enchanted Rock

• Emphasis on importance of vendor qualification and approval per statutory requirements.
• Discussion of package criteria: designed for purpose, but flexible with criteria such as 48-hour duration and three technologies capable of islanding.
• Importance of flexibility and clarification on behind meter services to attract a broad number of vendors.
• Need for certainty in claims, pricing, and solutions marketing if vendors are to recruit new critical facilities.
• Discussion on other business models enabling TBPP deployment, and implications if a critical facility exits the program.

3.3.2 - How might other business models enable TBPP deployment by reducing the potential limitations or constraints that a critical facility may face when installing or maintaining a TBPP? What would the implications be if a critical facility exits the program? 

▶️Brian Kauffman, Mainspring Energy

• Lease models are advantageous for reducing cost, installation, and maintenance, ensuring units are available.
• Concerns about project exits; ideally, projects should be operational for many years or decades.
• Suggests establishing a reasonable minimum term for projects.
• Cautions against setting overly ambitious terms with high financial penalties as they might reduce incentive levels.
• Recommends a term of three to five years as reasonable for both customers and vendors.
• Proposes an incentive distributed annually over each year of operation as more practical than upfront payments and to avoid litigation.
• References California’s SGIP program as a model with upfront incentives followed by annual incentives if performance goals are met.

▶️Alison Silverstein, Independent Consultant

• Alison Silverstein emphasizes the need for flexibility in business models for vendors to support critical facilities in acquiring backup power.
• Most critical facilities currently lack backup power due to financial and technical barriers.
• Proposals include resilience as a service, various financing arrangements, and allowing vendors to act as agents or owners of backup power solutions.
• These measures aim to make it easier for critical facilities to get backup power, improving their ability to serve communities.
• It's noted that critical facilities are more likely to go out of business than to voluntarily exit backup power programs.
• Silverstein suggests that it would not be beneficial to pursue financial penalties on struggling businesses that exit these programs.
• She advises against aggressive recovery of financial grants from facilities with larger business issues.
• The focus should be on supporting critical facilities rather than pursuing legal actions for recovering the $500 per kilowatt grants.

▶️Matt Boms, TAEBA

• Matt Boms discussed advocacy for 'resilience as a service' and lease-to-own models for the backup power program.
• Highlighted that such models are currently effective in the free market, especially for the electric school bus segment.
• Mentioned that these models help make upfront costs more accessible for critical facilities lacking resources.
• Emphasized the importance of providing technical assistance to critical facilities within grant programs.
• Suggested that technical support could help facilities choose suitable backup power packages and understand maintenance costs over time.

3.33 - How can vendors, including those with alternative business models, address supply chain disruptions to ensure timely deployment and adequate preparedness for emergencies?

▶️Brian Kauffman, Mainspring Energy

• Supply chain issues are a concern for many, and delays could lead to major events that might have been mitigated by the project.
• Mainspring Energy is not currently facing supply chain issues but acknowledges unpredictability.
• Support for finalizing the program due to potential life and cost-saving benefits.
• Advocates for flexible delivery schedules based on realistic timelines rather than rigid timelines.
• Warns against strict policies that could deter participation.
• Proposes tracking delivery metrics as performance indicators.
• Announced plans to build a $200 million manufacturing facility in Pittsburgh, Pennsylvania, expected to start in 2026.
• Expresses optimism for delivering domestically produced projects.

▶️4 - Closing

• Participants are encouraged to file further comments on the PUC interchange using project number 57236 by April.