ERCOT’s Board of Directors on Feb. 25 approved staff’s recommendation to pursue use of 15 mobile generators as an alternative to extending the life of two aging gas-fired units slated for retirement in South Texas.
Staff said during a special board meeting that, based on current cost estimates, LifeCycle Power’s generators and their combined capacity of 450 MW will be more cost effective in mitigating the “relevant reliability risks” in the San Antonio area posed by CPS Energy’s planned retirement of the three units at its V.H. Braunig plant.
Nathan Bigbee, ERCOT’s chief regulatory counsel, said continuing to operate Braunig Units 1 and 2 for two more years beyond their 2025 retirement date is budgeted to cost $59 million, including expected fuel costs and incentive factors or adders. The two units went into service in 1966 and 1968 and have a combined summer maximum rating of 392 MW, according to a CPS update.
In contrast, LifeCycle’s generators are projected to cost $54 million, including fuel costs and incentives. They can reach full output in 10 minutes, faster start times than the three Braunig units. ERCOT and CPS signed an RMR contract on Feb. 24 for Braunig Unit 3, which has a summer max rating of 400 MW.
The age of units 1 and 2 creates additional risks in extending them RMR contracts, Bigbee said. He said the budgets for the two units have increased 8% since November.
“These are both 60-year-old units, so they’re very old generators,” he said. “CPS Energy has told us that these are going to need lengthy outages and expensive inspections and repairs to ensure that they can be safely operated.”
The two units would have to be inspected consecutively, potentially pushing the inspections past the high-demand summer season. They would also have to wait until CPS completes its 60-day inspection of Braunig Unit 3, which begins March 3.
“That just shows you that this is subject to a lot of variability,” ERCOT General Counsel Chad Seely said.
The generators are leased by Houston utility CenterPoint Energy, which has agreed to release its obligation to LifeCycle for two years without compensation. CenterPoint leased the generators and several smaller ones after the deadly 2021 winter storm, but the large generators have sat unused ever since. (The utility says it plans to resize its generator fleet to address future hurricane outages.)
CPS has said it can interconnect the generators in batches to its substations, starting in June and ending by September. The generators will be registered as generation resources and would be the last resources deployed by ERCOT during actual or anticipated emergency conditions, as are RMR units.
One sticking point is the diesel-fired generators’ emissions permitting. Bigbee said the resources might not meet nitrogen oxide gas emissions limits. Staff are working with LifeCycle and the Texas Commission on Environmental Quality to “identify an appropriate solution under the current regulatory framework.”
The board’s decision also begins a 90-day clock for ERCOT to come up with an exit strategy from operating Braunig and the mobile generators. Staff said that involves accelerating three transmission projects south of San Antonio to alleviate the constraint causing the congestion. Two of the projects are scheduled to come into service in 2027 and a third in 2029.
In the meantime, ERCOT and the market are on the hook for $45.85 million under the terms of Braunig 3’s RMR contract. That is the budgeted amount, which ERCOT said is a 33% increase since the first submission from CPS in November.
The RMR contract is ERCOT’s first since 2016, when it entered into an agreement with NRG Texas Power over a previously mothballed gas unit near Houston. The RMR contract ended in 2017, thanks partly to transmission facilities that increased imports into the region. (See ERCOT Ending Greens Bayou RMR May 29.)
CPS told ERCOT in 2024 that it planned to retire the Braunig units in March 2025. However, ERCOT said the plant’s retirement would lead to reliability issues in the San Antonio area until the transmission constraint is resolved. (See ERCOT Evaluating RMR, MRA Options for CPS Plant.)
