The new rules require “Large Computational Loads” to ride through grid disruptions without disconnecting. This can present challenges because such facilities typically are designed to protect their equipment by disconnecting or momentarily ceasing operations during grid disruptions.
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Rules requiring data centers and crypto-mining facilities operating inside ERCOT to stay stable and connected through disruptions have been approved by the Texas Public Utility Commission.
Adopted unanimously on July 9 the new rules require “Large Computational Loads” to ride through grid disruptions without disconnecting. However, this can present challenges for such facilities because they typically are designed to disconnect or momentarily or to cease operations during grid disruptions to protect their expensive equipment.
On the other hand, ERCOT can face serious reliability problems if several massive data centers or crypto loads disconnect simultaneously. As Kenteel Engineering explained in a recent blog post, when “several hundred — or several thousand — megawatts of computational load all detect the same sag and drop simultaneously, the grid experiences a sudden, large loss of demand.”
As noted in the new PUC rules, as Large Computational Loads, or “LCLs,” become more common on the grid, disruptive events would be expected to increase in magnitude and frequency. This would “lead to frequency instability and other reliability problems absent frequency and voltage ride-through requirements.”
An analysis of the new rules included in a report by Utility Dive, an online publication, notes that they don’t immediately penalize facilities that fail to ride through a qualifying event. Instead, the new rules put the operators of such facilities on the clock to report the root cause of the service stoppage within 90 days. Under the rules, such facility operators may be called upon to develop a corrective plan within 90 days of completing that investigation and implement the approved plan within 180 days.
“Overriding all of that, if ERCOT judges that continued operation poses an imminent risk to local or system reliability, it can order the [large electric load] — and keep it disconnected — until the Customer demonstrates compliance to ERCOT’s satisfaction,” according to an analysis by Kenteel Engineering, as reported by Utility Dive.
Industry Comments
In comments filed at the PUC, the Data Center Coalition, a trade group, argued that the PUC lacks statutory authority to impose the rules directly on retail customers given that such customers constitute “a category of entity that the Legislature deliberately excluded from ERCOT’s authority.”
Texas Industrial Energy Consumers filed similar comments and likewise argued that ERCOT lacks the expertise to “develop reasonable operational requirements for complex, costly manufacturing equipment.” As such, “it is completely inappropriate to give ERCOT the ability to directly regulate businesses who are not participating in the wholesale market and are not otherwise regulated entities,” the TIEC stated.
The PUC’s R. Floyd Walker, senior counsel with the commission’s market analysis division, dismissed concerns over the PUC’s authority. In a staff memo, Walker stated that commenters who asserted otherwise “seem to be working under the assumption that explicitly statutory authority is required. Staff respectfully submit that delegated authority is sufficient.”
ERCOT staff, which previously approved of the rules, noted in a market impact statement that they provide “necessary requirements to reduce the reliability risk posed by LCLs unexpectedly tripping,” according to Utility Dive.
In comments, ERCOT also noted that LCL loss wasn’t a hypothetical, and that the grid operator “has experienced 28 events involving LCL trips of at least 100 MW due to voltage and frequency excursions since the beginning of 2023.
“This risk will increase exponentially with the significant growth of LCLs expected in the ERCOT Region,” ERCOT stated.