ERCOT's reserve margin increased by supply not yet in commercial operation

Houston — Increases in the Electric Reliability Council of Texas' most recent reserve margin estimates partly resulted from including synchronized generation in addition to generation that is installed or has relevant commercial operation dates, stakeholders have learned.

The reserve margin for the summer of 2021, announced on May 6 as 15.7%, is up from this past December's estimate of 15.5% for the summer of 2021, and almost double the 8.1% estimate for the summer of 2019.

The reserve margin is the percentage by which forecast seasonal peakload is exceeded by the capacity of resources likely to be available at peak time. Increasing the reserve margin would tend to decrease wholesale power prices.

For example, ERCOT North Hub day-ahead on-peak locational marginal power prices averaged $83.45/MWh June through August when the reserve margin was 8.1% in 2019, and the ERCOT North Hub on-peak forwards for those same months in 2021 averaged about $58.50/MWh as of May 18, with the reserve margin at 15.7%.

"Synchronized" is the status of generation capacity that is operating at the same 60 Hz capacity as the grid, but not yet approved for commercial operation. Thus, this capacity is capable of generating power for the grid.

As of the end of April, ERCOT had 6.5 GW of wind, almost 3 GW of solar and 295 MW of battery storage nameplate capacity synchronized, but not yet approved for commercial operation.

For the final summer 2021 Seasonal Assessment of Resource Adequacy released May 6, Pete Warnken, ERCOT manager of resource adequacy, said ERCOT included "about 400 MW of newly synchronized plant capacity," compared with the preliminary summer 2021 SARA released in March. Warnken was speaking during ERCOT's Supply Analysis Working Group meeting May 18.

Distributed generation

The group also learned May 18 that distributed generation is beginning to make up a larger share of ERCOT's total capacity, albeit behind the meter and therefore considered as a potential factor reducing peakload than increasing capacity.

ERCOT estimates the systemwide distributed generation capacity at almost 2.2 GW in 2020, up from 1.7 GW in 2019, 1.4 GW in 2018 and less than 1.1 GW in 2017.

ERCOT has forecast peakload to set a new record of 77.1 GW for the summer of 2021, so the distributed generation total likely approaches 3% of load.

Almost 1 GW of that distributed generation is small-scale (less than 1 MW) rooftop solar, followed by more than 300 MW of natural gas-fired generation and more than 250 MW each of diesel-fired and large-scale (more than 1 MW) rooftop solar.