“Approval to Energize” – Texas’s Power Grid Operator Issues New Guidance

Foley & Lardner LLP

Foley & Lardner LLPOn March 25, 2022, the Electric Reliability Council of Texas (ERCOT), Texas’s power grid operator, issued a new directive in response to the marked increase of cryptocurrency miners setting up operations in the state. The directive applies to entities that have not completed an ERCOT planning assessment and involves any of the following:

  • New loads not co-located with a Resource with total demand within the next two years of 75 MW or greater;
  • Existing loads not co-located with a Resource increasing total demand by 75 MW or greater within the next two years;
  • New loads co-located with a Resource with total demand within the next two years of 20 MW or greater; or
  • Existing loads co-located with a Resource increasing total demand by 20 MW or greater within the next two years.

The directive further requires transmission service providers to “submit interconnection studies that meet the requirements of NERC Reliability Standard FAC-002-2 for each applicable large load proposing to interconnect to the ERCOT system.” Market participants will not be allowed to register as load resources or be approved to connect to the grid until ERCOT has reviewed their interconnection studies for compliance.

This new directive is likely not the last, as Texas leaders have sought to make the state a haven for cryptocurrency-mining operations, recently adopting new statutes that legally define cryptocurrency in an effort to reduce legal and financial uncertainty for businesses in the crypto-industry, as well as those in other industries interested in incorporating the use of cryptocurrency into their operations.

However, this new focus on cryptocurrency has raised concerns about potential negative effects on Texas’s power grid and its ability to keep up with demand, especially in emergencies, such as the power outages caused by Winter Storm Uri in February 2021. Properly navigating this fast-evolving legal landscape will be critical to successful operations for crypto-focused entities.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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