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ERCOT forecasts sufficient capacity to meet demand this spring, summer

Highlights

Scarcity pricing prospects may dim

Various scenarios could drop reserves

Wind, solar capacity growing

Houston — The Electric Reliability Council of Texas on March 25 released resource adequacy assessments for this spring and summer, showing sufficient generation would be available under expected conditions despite a forecast for record-breaking summer power demand that may dim scarcity pricing prospects.

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ERCOT's final Seasonal Assessment of Resource Adequacy, or SARA, for spring 2021, which runs from March through May, retains the base peak power demand forecast of 64.5 GW that was in the preliminary SARA issued in December 2020. With typical planned and forced outages totaling almost 11.9 GW, ERCOT anticipated in its base scenario about 76.3 GW of generation, leaving 11.8 GW of capacity in reserve.

ERCOT requires a minimum 2.3 GW to be on reserve. Below that number, it can declare an Energy Emergency Alert such as occurred in February. If reserves fall low enough, ERCOT can direct transmission and distribution utilities to implement rotating outages.

February's EEA prompted ERCOT to set power prices systemwide near the systemwide offer cap of $9,000/MWh, known as the HCAP. On March 3, the Public Utility Commission of Texas directed ERCOT to use the "LCAP" as the systemwide offer cap used in EEAs, which equals the higher of either $2,000/MWh or 50 times a fuel index price for spot natural gas at the Katy, Texas, location.

ERCOT's market is typically a summer peaking system, and the grid operator forecast a record peakload of 77.1 GW in its preliminary SARA for summer 2021. ERCOT's current record is 74.8 GW, set Aug. 12, 2019. With typical planned and forced outages totaling 3.6 GW, ERCOT's expected 83.3 GW resource total would leave 6.2 GW of capacity in reserve.

ERCOT calculates the summer 2021 reserve margin as 15.5%, up from 12.6% in 2020 and just 8.6% in 2019. To maintain reliability, it has set a target minimum of 13.75%.

Scenarios sap reserves

The preliminary SARA for summer 2021 considers other scenarios. For example, the EEA that occurred in February partly occurred because of massive generation outages -- almost half of all capacity. The preliminary SARA for summer 2021 considers the following alternative scenarios:

  • An extra 2.6 GW of forced generation outages, which could reduce reserves to about 3.6 GW
  • An extra 2.9 GW of peakload, which could reduce reserves to about 3.2 GW
  • A 6.6 GW reduction in wind power output, which could result in a 417 MW reserve deficit

In the latter circumstance, ERCOT would declare an EEA, which would allow the deployment of about 2.3 GW of load resources, distributed generation, demand-response resources, and others, which could improve the reserve numbers to 1.9 GW -- still in EEA, but without necessarily requiring rotating outages.

The extreme peakload scenario would boost the number to about 80 GW, and Joshua Rhodes, a research associate at the University of Texas' Webber Energy Group, said he "would be pretty shocked to see" such a total in summer 2021.

"This SARA report has definitely upped the ante on what could be seen as the summer peak," Rhodes said in a March 25 email. "We are much more attuned to predicting summer events (every air-conditioner on at the same time) than we have been to winter, so I think the original load forecasts, closer to 77,000 MW are more reflective."

Wind output drop a concern

Although gas-fired generation dropped more capacity than wind during the Feb. 14 winter storm -- about 26 GW versus 18 GW of nameplate wind capacity -- wind output tends to weaken over the summer and be lowest at peak hours.

For example, ERCOT's minimum output level for an hour during the summer of 2020 was about 180 MW, according to S&P Global Platts Analytics. As of the end of the summer of 2020, ERCOT had about 25 GW of wind generation installed, about the same as this February.

Regarding this summer's generation outages, Rhodes doubted such large numbers would be seen among thermal generators because "we have always planned for heat."

Another factor this summer would be the anticipated solar capacity. As of the end of February, ERCOT had 4.1 GW of solar capacity, and another 361 MW that had been synchronized to the grid, meaning that it was generating power but not in commercial operation. By the end of April, ERCOT anticipates the synchronized total to grow to almost 1.8 GW.

"ERCOT will benefit from growth in generation resources, but forecasts are also showing another record-breaking summer on the demand side," said Woody Rickerson, ERCOT vice president of grid planning and operations. "Overall, power reserves are in a better position heading into this summer compared to the past few years."