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Texas could see brownouts, high power prices this summer

Even under normal operating and weather conditions during the upcoming summer, Texas' grid operator expects reserve generating capacity to fall below levels that would trigger brownouts and extreme prices.

The latest analysis by the grid operator provides a more detailed look at a supply-demand picture that has already driven forward power prices for the upcoming summer to record levels.

In its preliminary seasonal assessment of resource adequacy for the upcoming summer released March 1, the Electric Reliability Council of Texas forecasts a peak demand of 72,974 MW based on seasonable temperatures, which would break the all-time peak demand record of 71,110 MW set on Aug. 11, 2016.

The grid operator expects total resources of 77,658 MW to meet peak demand. Given the expected typical forced and maintenance outages of 4,349 MW, the grid operator expects to have 553 MW of reserve capacity available after meeting the forecast peak demand.

When operating reserves fall below 2,300 MW, ERCOT begins to take out-of-market action, including relying on imports from other grids and dispatching all available units, as market mechanisms send prices spiking to the $9,000/MWh cap.

If reserves fall below 1,750 MW, the grid operator deploys demand response resources and emergency interruptible load service, and blocks transfers of load to other grids.

If load reserves continue trending lower after these actions, the grid operator relies on rotating outages to maintain grid stability.

ERCOT's analysis shows that under scenarios that include extreme heat, higher-than-expected outages and lower-than-expected wind output, the reserve capacity deficit could fall between 2,013 MW and 2,844 MW.

"Our focus this summer will be on performance," ERCOT President and CEO Bill Magness said in a March 1 statement. "We expect everyone involved in the electric business in ERCOT, including ERCOT as the grid operator, along with the generation and transmission owners, retail marketers and those involved in demand response will be focused on maximizing performance as well."

In a statement the same day, the Public Utility Commission of Texas noted the ERCOT power market "is designed with a number of mechanisms and tools to incentivize increases in supply or temporary reductions in demand to maintain reliability of the system. … The ERCOT market structure provides powerful incentives for customers to reduce their consumption in response to prices."

The grid operator predicts it will have plenty of spare capacity to meet expected demand during the upcoming spring. However, the 3,793 MW of reserve capacity expected under the tightest scenario — where the grid experiences extreme load during the peak of the maintenance season — is down from the preliminary outlook's figure of 4,115 MW.