1. BI Marketing Analyst input into report marketing Report TitleElectricity in Texas Report Subtitle State profile of power sector, market trends and investment opportunities Report Code Publication DateApril 2014 Report TypeEnergy Report Size Pages41 Tables14 Figures15 Contactpennenergyresearch@pennwell.com Report Details

2. BI Marketing Analyst input into report marketing Table of Contents Figure 2.2 About the author2 Disclaimer3 Note about authors and sources3 Table of contents4 Table of tables4 Table of figures5 Summary6 Introduction6 Energy resources7 The structure of the power industry9 Installed capacity and power generation12 Transmission and distribution systems25 Demand, consumption and tariffs27 Power sector development, investment and future potential34 List of abbreviations41

3. BI Marketing Analyst input into report marketing Table of Tables Figure 2.2 Table 1: Texas, key indicators7 Table 2: Texas, installed capacity 2000 – 2012 (MW), 201313 Table 3: Texas installed capacity by type 2011 (MW), 201315 Table 4: Texas, ERCOT installed capacity 2012 (MW), 201217 Table 5: Texas, annual electricity production 2000 - 2012 (GWh), 201319 Table 6: Texas, electricity production by source 2012 (GWh), 201321 Table 7: Texas, emissions 2012 (tonnes), 201323 Table 8: Texas, ERCOT annual installed and anticipated wind capacity 2000 – 2014 (MW), 2012 24 Table 9: Texas, annual electricity sales 2000 – 2012 (GWh), 201328 Table 10: Texas, consumption by sector 2012 (GWh), 201230 Table 11: Texas, average annual tariff 2000 – 2012 ($/kWh), 201331 Table 12: Texas, tariff by sector 2012 – 2013 ($/kWh), 201333 Table 13: Texas, ERCOT predicted annual peak demand 2013 – 2022 (MW), 2012 35 Table 14: Texas, ERCOT predicted annual electricity consumption, 2013 – 2022 (TWh), 2012 37 Table of figures Figure 1: Texas, Region of Texas served by ERCOT10 Figure 2: Texas, installed capacity 2000 – 2012 (MW), 201314 Figure 3: Texas installed capacity by type 2011 (MW), 201316 Figure 4: Texas, ERCOT installed capacity 2012 (MW), 201217 Figure 5: Texas, annual electricity production 2000 - 2012 (GWh), 201320 Figure 6: Texas, electricity production by source 2012 (GWh), 201322 Figure 7: Texas, emissions 2012 (tonnes), 201323 Figure 8: Texas, ERCOT annual installed and anticipated wind capacity 2000 – 2014 (MW), 2012 25 Figure 9: Texas, the major North American Reliability Corporation interconnections 26 Figure 10: Texas, annual electricity sales 2000 – 2012 (GWh), 201329 Figure 11: Texas, consumption by sector 2012 (GWh), 201230 Figure 12: Texas, average annual tariff 2000 – 2012 ($/kWh), 201332 Figure 13: Texas, tariff by sector 2012 – 2013 ($/kWh), 201333 Figure 14: Texas, ERCOT predicted annual peak demand 2013 – 2022 (MW), 2012 36 Figure 15: Texas, ERCOT predicted annual electricity consumption, 2013 – 2022 (TWh), 2012 38

4. BI Marketing Analyst input into report marketing Table of Figures Figure 2.2 Figure 1: Texas, Region of Texas served by ERCOT10 Figure 2: Texas, installed capacity 2000 – 2012 (MW), 201314 Figure 3: Texas installed capacity by type 2011 (MW), 201316 Figure 4: Texas, ERCOT installed capacity 2012 (MW), 201217 Figure 5: Texas, annual electricity production 2000 - 2012 (GWh), 201320 Figure 6: Texas, electricity production by source 2012 (GWh), 201322 Figure 7: Texas, emissions 2012 (tonnes), 201323 Figure 8: Texas, ERCOT annual installed and anticipated wind capacity 2000 – 2014 (MW), 2012 25 Figure 9: Texas, the major North American Reliability Corporation interconnections 26 Figure 10: Texas, annual electricity sales 2000 – 2012 (GWh), 201329 Figure 11: Texas, consumption by sector 2012 (GWh), 201230 Figure 12: Texas, average annual tariff 2000 – 2012 ($/kWh), 201332 Figure 13: Texas, tariff by sector 2012 – 2013 ($/kWh), 201333 Figure 14: Texas, ERCOT predicted annual peak demand 2013 – 2022 (MW), 2012 36 Figure 15: Texas, ERCOT predicted annual electricity consumption, 2013 – 2022 (TWh), 2012 38

5. BI Marketing Analyst input into report marketing Section 1: Front Page Lead Graphic and Quote Figure 2.2 Figure 8: Texas, ERCOT annual installed and anticipated wind capacity 2000 – 2014 (MW), 2012 Figure 8 illustrates the rapid growth in wind capacity in Texas, showing annual installed wind capacity between 2000 and 2012 and predicted capacity, including plants with signed interconnection agreements, until the end of 2014. At the end of 2012 total capacity was expected to stand at 11,964MW, and by the end of 2014 it was expected to reach 12.286MW. According to the US EIA, Texas has the largest wind capacity of all US states, around 20% of the total US wind capacity, and seven of the ten largest wind farms in the USA.

6. BI Marketing Analyst input into report marketing Section 2: Introduction, market background and USPs Texas is one of the most southerly states in the USA. It is the second largest after Alaska, and has the second largest population and GDP after California. The state is unique in having a semi-isolated interconnected system entirely within its borders, which is managed by the Electricity Reliability Council of Texas, and services 75% of the land area. With little interconnection capacity with adjacent interconnected systems and no synchronous connection, the state must mostly rely on its own resources. The main source of electricity is natural gas, but the state also has a major coal-fired fleet. Over the past decade it has also seen a massive increase in wind capacity, so that it now contains more wind capacity than any other state, and over 20% of the national total. The system operator is therefore having to take measures to ensure future grid stability as renewable penetration grows. This could include energy storage. The state could see the capacity margin squeezed later in the decade. As a consequence, there is growing interest in increased intertie capacity with the two other US interconnected systems, which could eventually offer renewable generators in Texas the opportunity to export energy across the country.

7. BI Marketing Analyst input into report marketing Section 3: Key features of this report An overview of the electricity market in Texas. Power supply data covering production, imports and exports and the main production sources. Power demand data by market sector and tariff data. An overview of the structure of the electricity sector with government and private sector companies as well as the regulatory status. Power demand forecasts and the development of the power sector to meet expected growth. Transmission system expansion plans.

8. BI Marketing Analyst input into report marketing Section 4: Key benefits from reading this report What are the key energy resources in Texas for power production. How is the country overcoming the effects of power shortage? What are the key developments in electricity infrastructure? Who are the key players in market? What are the investment opportunities in the country?

9. BI Marketing Analyst input into report marketing Section 5: Key Market Issues This report is a State Profile, covering:- Power generation capacity by fuel input Electricity networks Current power market trends Generation growth Investment opportunities Future project plans

10. BI Marketing Analyst input into report marketing Section 6: Key findings of this report 1.Texas has some of the largest oil and gas reserves in the USA, and is the largest producer of both. 2.Oil reserves in Texas were recently put at 7,014m barrels (bbls), 26.4% of the US total. 3.Natural gas reserves in Texas were recently put at 2,780bn m 3, 29.4% of the US total. 4.The electricity system in Texas is fragmented to the extent that 75% of the territory is served by the semi-isolated ERCOT interconnection, while the remaining 25% is served either by providers on the Western Interconnection or by the Eastern Interconnection. 5.For most of the year the ERCOT system has a significant margin on capacity over load, but this narrows during the hottest summer months. For example, the peak load exceeded 60,000MW for 360h in 2011 and 155h in 2012. Similarly peak load exceeded 65,000MW for 74h in 2011 and 23h in 2012. Currently the ISO has a target capacity reserve margin of 13.75%.

11. BI Marketing Analyst input into report marketing Section 7: Key questions answered by this report 1.How does Texas generate its electricity? 2.What is the status of the national electricity market? 3.What are the key developments in electricity infrastructure? 4.Who are the key players in market? 5.What are the future prospects for investment in Texas?

12. BI Marketing Analyst input into report marketing Section 8: Key areas covered by the report Key products/categories profiled: Energy Electricity in Texas – State profile of power sector, market trends and investment opportunities Key regions/countries covered: USA - Texas

13. BI Marketing Analyst input into report marketing Section 9: Research methodology Methodology: Secondary research This has been conducted by Paul Breeze – an energy specialist for 30 years. He has gathered together an unique set of studies and research papers. In all, the report cites up to 10 separate sources.

14. BI Marketing Analyst input into report marketing Section 10: Author biography and contact details Name: Dr Paul Breeze Biography: Dr Paul Breeze has specialized in the electricity sector for the past 30 years. He is contributing editor for the monthly international magazine for the power industry, Modern Power Systems, and as freelance writer he has contributed to The Financial Times, The Guardian, The Daily Telegraph, The Observer and The Economist. In addition to the power sector, Paul Breeze’s interests include science and the computer industry.