Electric Demand Response Opportunities for Cotton Gins in the ERCOT Market

Cotton Gins located in south, central and southeast Texas operate during the hottest part of the year on the Electric Reliability Council of Texas (ERCOT) grid. Most of these gins are served by electric distribution companies that have been deregulated. The gin’s transmission costs are determined by the contribution of the gin’s electric demand at the time of the ERCOT coincident peak during July, August and September. To reduce the their transmission costs, most of these gins have been avoiding the ERCOT peak by turning off their gin for approximately 1.5 hours on potential peak days. By avoiding the ERCOT peak, gins can save approximately $15,000 to $30,000 or more. Due to low electric energy prices and continued growth in Texas, the ERCOT grid is forecasting lower reserve generation capacity for the next several years unless new generation is built. Demand response programs offered by the electric distribution companies historically did not offer their program to cotton gins due to their short season. This is changing now since the reserve capacity shortfalls on the ERCOT grid are growing and EDC’s are looking for all potential commercial and industrial loads that can be reduced in times of capacity constraints. Retail electric providers (REP’s) are also investigating loads in their portfolios that can be reduced when retail electric prices are at their highest. If a gin was to turn off during these times of high prices then they could share in profits realized by the REP.