ERCOT to hit record peak in summer 2021; solar, battery growth may help

Houston — The Electric Reliability Council of Texas expects to hit a record peakload amid worsening drought conditions in the summer of 2021, but growing solar and battery storage capacity may mitigate scarcity pricing conditions, stakeholders learned May 3.

However, Texas lawmakers and regulators have so far made no significant revisions in weatherization rules since the mid-February winter blast cut power for about 4 millions customers for as long as four days, during which scarcity conditions prompted ERCOT and regulators to set real-time systemwide prices at the $9,000/MWh estimated value of lost load.

Therefore, generators are required to make weatherization plans, and ERCOT can only report on whether generators have implemented those plans, according to a written presentation by Woody Rickerson, ERCOT vice president of grid planning and operations, posted online for the May 3 Summer Preparedness Workshop of ERCOT's Technical Advisory Committee.

ERCOT plans to release its final summer Seasonal Assessment of Resource Adequacy Thursday, spokeswoman Leslie Sopko said May 3. The preliminary SARA for summer 2021, released March 25, indicated peak demand could hit 77.1 GW, which would be well above the current record, 74.8 GW, set 4-5 pm Aug. 12, 2019.

Solar, battery resource growth

Rickerson said, however, "this will be the first summer where we anticipate some impact from battery storage devices, with almost 1,000 MW available by summer peak."

As of the end of April, ERCOT had 225 MW of battery storage installed and commercially operational and another 295 MW synchronized to the grid, which means that it can supply the grid but is not yet participating in the market as a resource. Another 100.5 MW is approved for energization, but not yet synchronized to the grid.

ERCOT's Capacity Changes by Fuel Type report, issued April 6, shows 537 MW of battery capacity for which interconnection agreements are signed and financial security is posted. That 537 MW may include some or all of the 295 MW of synchronized and 100.5 MW that had reached the final stages since April 6.

ERCOT's operational solar capacity has also grown, according to ERCOT's Generation Interconnection Queue Status report, issued May 3, including the following:

• 115 MW approved for commercial operation in Sterling County in West Texas
• 846 MW approved for synchronization, scattered around central, north, and West Texas
• 203.8 MW approved for energization in Pecos County in far West Texas

These numbers build on the April 6 report's 4.1 GW of installed solar capacity and 1.8 GW synchronized.

ERCOT's most recent Capacity, Demand, and Reserves Report, issued in December, forecast its planning reserve margin to be 15.5% in the summer of 2021, which stretches from June through September.

That reserve margin forecast is above the target 13.75%, estimated to be the minimum necessary to ensure that a capacity-related blackout occurs no more often than one day in 10 years. Therefore, this summer's reserve margin was forecast to be above the target for the first time since 2017. About 4.2 GW of fossil-fuel generation was announced for retirement over the winter of 2017-2018.

In general, as reserve margins rise, wholesale power prices decrease and vice versa. In the June-through-August period, ERCOT North Hub day-ahead on-peak prices have tended to average below $50/MWh whenever the reserve margin is at or above the 13.75% target but rise substantially above that when reserve margins are tighter.

The lowest reserve margin on record was 8.1% in summer 2019 when ERCOT North Hub day-ahead on-peak locational marginal prices averaged almost $83.50/MWh for June through August.

A hot, dry summer ahead

One exception to this trend is summer 2011 when S&P Global Platts' ERCOT North Hub day-ahead on-peak index averaged almost $129/MWh when the reserve margin was 15.9%, but this was a summer of extraordinary heat and drought.

Judging by the ERCOT North June-July-August on-peak forwards averaging almost $64.50/MWh as of April 30, the summer of 2021 could prove to be another exception.

Rickerson's presentation includes an April 29 drought assessment map indicating conditions ranging from "abnormally dry" to "exceptional drought" — the worst condition — for virtually all of the state. The worst conditions are in South and West Texas.

The National Weather Service's forecast for June, July, and August, issued April 15, indicates strong chances — 50% to 60% — for above-normal temperatures across the state, but precipitation is forecast to remain near normal.

Despite the February energy emergency and risky weather and drought conditions, Rickerson said, "generation owners and operators are not required to implement any minimum weatherization standard or perform an exhaustive review of weather vulnerability."

In response to the February 2011 winter energy emergency, which required rotating outages, the Public Utility Commission of Texas authorized "ERCOT to conduct generator site visits to review compliance with weatherization plans," Rickerson said.

"Spot checks include reviewing the weatherization plan, verifying that plant personnel is following the plan, and providing recommendations based on PUC requirements, lessons learned, or best practices," Rickerson said. "While we request and review detailed plant records, the only entity that can confirm that a plant is 'weatherized' to any particular standard is the entity that owns or operates the plant."

ERCOT plans to conduct those spot checks in May and June, Rickerson said.