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DME presents options to add dispatchable generation; council asked staff to explore 300–600 MW acquisitions or development
Summary
Denton Municipal Electric managers reviewed system generation needs, winter/summer market risks and the economics of quick-start units, and reported council direction to explore acquiring or building 300–600 megawatts of dispatchable generation alongside battery options and an 18–24 month integrated resource plan.
Denton Municipal Electric (DME) managers told the Public Utility Board on Monday they will begin exploring options for adding dispatchable generation to reduce exposure to high wholesale energy prices and to strengthen local reliability.
Tony Pointer, DME general manager, said the city faces a growing gap between dispatchable generation and peak load and that council direction received in mid-June was to "explore options for 300 to 600 megawatts of dispatchable generation." Pointer said the council asked staff to look for acquisition or development opportunities and to consider public‑private partnerships if appropriate.
Pointer framed the discussion around market changes since summer 2023 and around winter storm exposure. He noted the utility incurred large purchase-power costs in recent years: "In August of '23, you know, certainly, we incurred $31,000,000 worth of debt," he said, and reminded the board that winter-storm borrowing from 2021/earlier remains on the books and affects long-term debt service.
Staff described three paths: 1) pursue acquisition or development of roughly 300 MW of quick-start, dispatchable generation; 2) pursue a larger 600 MW build coupled with battery storage; or 3) do nothing now and wait 18–24 months for an integrated resource plan (IRP) process to conclude and then decide on a greenfield facility if needed. Pointer said acquisition of an existing facility could shorten lead time compared with new construction but would likely carry a premium.
DME staff reviewed technology and market tradeoffs. Pointer and staff noted most battery projects in ERCOT today are one-to-two hour duration installations and that four- to six-hour battery economics remain marginal; he said many planned batteries and solar projects are private investments that change market dynamics. "The battery storage that you're seeing out there, in ERCOT today, is you're talking about 1 hour duration battery, 1 and a half hour duration battery, 2 hour duration battery," Pointer said. Staff also explained that dispatchable generation is considered more valuable in scarcity hours because it can be started quickly and capture higher prices during short market spikes.
The board and several members pressed staff about alternatives, lead times and environmental or permitting constraints. Pointer cautioned that engines, turbines or other quick-start units can have long delivery lead times if ordered new — "you're talking 2030, 2031 before you get delivery of those" if placed today — which is one reason staff is examining existing facilities and various partnership structures.
Pointer said potential acquisition targets should generally be within ERCOT's northern load zone to limit transmission exposure and that facilities inside the Denton nonattainment area could face permit constraints on run hours. He said staff will pursue options and return with recommendations and that any proposed purchase or long-term contract would require board and council approval.
On June 17 the city council gave staff direction to explore 300–600 MW of dispatchable generation and to consider public engagement; DME staff said they plan to pursue that work in parallel with the IRP, which staff estimated would take 18–24 months to complete.
