ERCOT OKs retirement of 235-MW gas-fired plant, likely with little price impact

Houston — Luminant's 235-MW natural gas-fired Trinidad Power Plant can retire as planned by April 29 without impairing reliability, the Electric Reliability Council of Texas announced Dec. 23, which would tend to strengthen wholesale power prices, but this will likely be outweighed by growth in renewable and other capacity.

The Trinidad plant, about 70 miles southeast of Dallas, had a capacity factor in 2019 of less than 3.2% and its estimated operating-and-maintenance cost was almost $118/MWh, according to S&P Global Market Intelligence.

In the Market Intelligence power plant database, the Trinidad plant is the sole gas-powered facility slated for retirement in ERCOT in 2021, but Luminant's 69-MW gas-fired Wharton County Generation plant, which went into forced outage and was decommissioned permanently Nov. 30.

Under ERCOT rules, the grid operator was not required to submit the retirement of this relatively small Wharton County plant, also known as the Texas Gulf Sulphur plant, to the reliability-must-run process, through which the grid operator determines whether the facility is needed to maintain transmission reliability.

The RMR process can result in ERCOT paying for a generator to remain in service while other methods are arranged to maintain reliability.

The RMR process was required for the Trinidad plant, however, and the result was a conclusion that "this Generation Resource is not required to support ERCOT transmission system reliability; accordingly, the Generation Resource may suspend operations according to the schedule" submitted by Luminant.

ERCOT's relatively tight supply condition and relatively strong power demand growth has resulted in relatively few fossil-fuel generation retirements since 2018, when 4.4 GW of gas-fired generation and 650 MW of coal-fired generation retired, according to Market Intelligence data.

Reserve margins to improve

ERCOT's planning reserve margins – excess capacity as a percentage of forecast peak load – have been low for the past few summers:

• 2018: 11%
• 2019: 8.4%
• 2020: 12.6%

ERCOT's target minimum reserve margin is 13.75% to ensure that a forced load-shedding event due to a lack of capacity occurs no more often than one day in 10 years.

The most recent Capacity, Demand and Reserves Report, issued Dec. 16, indicated a forecast reserve margin of 15.5% for summer 2021.

Gas-fired generation representing 852 MW of capacity retired in 2019 and 985 MW retired in 2020, but the latest CDR assumes significant additions of renewables and dispatchable conventional generation will come online by summer 2021.

In particular, about 6.3 GW of wind and 3.8 GW of solar is expected to become operational by summer, providing the reliable capacity of 1.8 GW and 3 GW, respectively, at expected peak times.

Also, ERCOT expects 816 MW of non-renewable generation that is now under construction to come online by summer 2021.