Integrating Bitcoin Miners into ERCOT: Critical Issues Come into Focus for Large Flexible Load Task Force | Husch Blackwell LLP

On July 25, 2022, the Electric Reliability Council of Texas (ERCOT) Large Flexible Load Task Force (LFLTF) held its monthly meeting and, based on progress to date, delved deeper into addressing the core issues that need to be addressed to integrate Large Flexible Loads (LFL) like Bitcoin mining into the ERCOT system. Currently, ERCOT remains unclear how LFLs will actually behave when connected to ERCOT. And while these issues are complicated and challenging, once the LFLTF decides how to solve them and makes its recommendations to ERCOT, the broad path of how Bitcoin mining will be enabled to access ERCOT will be established. The LFLTF focused its discussion and presentations on the following questions:

Define large flexible load: LFLTF proposes that LFL should be stand-alone loads greater than 75 MW or co-located loads greater than 20 MW. Within these parameters, the LFLTF sub-groups are continuing their discussions around the proposed definitions for LFLs and are considering dividing large flexible loads into Security Limited Economic Dispatch (SCED), flexible loads (highly flexible loads) and interruptible loads (not equally dispatchable). SCED flexible loads will be routed through ERCOT’s SCED system and will be able to respond to ERCOT requests to step up or down their power usage. SCED Flexible Loads will be similar to controllable load resources (loads capable of reducing or increasing the consumption used to maintain the grid system frequency), but will not offer additional services (a service that supports energy transfer to loads). Interruptible loads will be co-located with generators, and the generators will provide continuous telemetric generation data to ERCOT. Interruptible loads would not be considered a load resource or provide additional services, would be able to interrupt load as directed by ERCOT, and could not return to normal load levels until directed by ERCOT. The LFLTF is still working to determine whether LFLs will pay nodal or zonal rates for electricity.

Registration of LFL with ERCOT: The LFLTF discussed developing a new optional ERCOT market participant registration process for LFLs that would be similar to the existing registration process for other market participants. The ERCOT Planning Guidelines will also need to be amended to address the planned changes to the ERCOT Nodal Protocols once the registration process is finalized. Task Force members also consider that ERCOT will charge a fee for LFL registration.

Expedited Interconnection to ERCOT: The LFLTF discussed whether accelerated interconnection with the ERCOT system would be provided to LFLs that register with ERCOT as an LFL market participant. Currently, while all LFLs are expected to benefit from a faster interconnection process than other large loads, due to the various processes and studies that must be submitted to ERCOT as part of the market participant registration process, the faster interconnection timeline may not necessarily be achievable. However, many LFLTF members believe that LFLs will not register under any future market participant process unless they are able to connect more quickly than they otherwise would.

Resource adequacy: Task Force members discussed the implications for resource adequacy and the Capacity, Demand and Reserves (CDR) report, which provides a 10-year forecast of planning reserve margins (representing the percentage of resource capacity, over and above fixed demand for electricity, available to cover uncertainty in future demand, generator availability and new resource access) for ERCOT summer and winter peak loads. The Task Force also discussed the Seasonal Resource Adequacy Assessment (SARA), which serves to indicate the risk that ERCOT may need to call a Level 1 Energy Emergency Alert due to insufficient operating reserves during seasonal periods of high electric demand. ERCOT will release a white paper to help thoroughly assess the impact of LFL on ERCOT’s resource adequacy planning.

LFL load shedding issues: High concentrations of LFL can result in system congestion in one area that worsens when load is dropped in other areas. Currently, LFLs can be both online and in the ERCOT market and offline and outside the ERCOT market at different times on a given day. The LFLTF is considering requiring LFLs to share in the responsibility for removing loads when conditions warrant, by allowing LFLs to register as a controllable load resource, interruptible load or as a resource providing additional services. This would allow ERCOT to instruct LFL to reduce or shut down all load during a load shedding. Alternatively, ERCOT may implement a Voluntary Load Shed Program where loads agree to be reduced during or before an emergency and will not receive compensation.

What this means for you

Bill Blevins, Chair of the LFLTF, updated the TAC on July 27, 2022 and informed the TAC that the LFLTF continues to make progress and expects to reach consensus on some of the issues raised at the July 25, 2022 LFLTF meeting August 22, 2022, LFLTF meeting. The LFLTF also sets its monthly meetings for the remainder of 2022.

[View source.]