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Wind, solar, gas near commissioning stages

Cancellations up from August

Houston — Generation developers canceled 15 projects totaling 3,204 MW of capacity in September, a new Electric Reliability Council of Texas Generation Interconnection Status report shows, but a 100-MW natural gas plant and a 184-MW wind farm were approved for commercial operation.

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One industry observer Friday indicated that the report's strong showing in renewables and incremental gas project development reflects a trend that may result in lower wholesale power prices over time, while another said the report contained little new information affecting next summer's power supply.

The report released Tuesday shows continuing growth in solar capacity development over the past 13 months, while wind and natural gas projects have diminished. Solar projects with nameplate capacity totaling 64.3 GW were in the interconnection queue this September, more than double the 31.7 GW in the queue last September.

In contrast, 34.6 GW of wind capacity was in the queue this September, down from 40.3 GW in September 2018, and just 7.4 GW of natural gas-fired capacity was in the queue this September, down from 8.6 GW a year ago.

Mike Jacobs, senior energy analyst at the Union of Concerned Scientists, noted that continued growth in the solar and wind fleet - now totaling 1,878 MW and 22,244 MW, respectively - is likely to result in lower wholesale power prices.

"Because of the additions of solar, and the repowering of wind projects, the patterns of renewable energy production will spread out over more hours," Jacobs said Friday. "The new wind turbines, on taller towers with longer blades, produce more energy in lower wind speeds than the plant they replaced. The cumulative effect of more hours of the year with renewable energy production means lower market clearing prices in those hours, everything else being equal."

The report also indicates that two wind projects, one with a nameplate capacity of 300 MW and another -- a repower of an existing wind farm -- with a nameplate capacity of 7.2 MW, have been approved by ERCOT for synchronization, while yet another, a 100-MW solar project, has been approved for energization.

NEARING COMMISSIONING STAGES

The latest report shows 8,858 MW of wind projects as having completed studies and interconnection agreements, which is the last stage before the commissioning process, which includes energization, synchronization and final commercial operation. That total is down from the 9,073 MW in the previous month's GIS report.

Also, 3,531 MW of solar was reported this week as having completed studies and interconnection agreements, up from 3,283 MW in the previous month's report.

The report also shows 725 MW of gas-fired generation as having completed studies and interconnection agreements, which is up from the previous month's total of 608 MW.

"I think these are the general trends we are going to see for the near future, heavy on the renewables with incremental gas," said Joshua Rhodes, a University of Texas Energy Institute research associate.

PROJECT CANCELLATIONS

Of the 3,204 MW of generation canceled in September, 2,491 MW was solar and 713 MW was gas-fired. Manan Ahuja, S&P Global Platts Analytics manager of North American Power analytics, noted that the number of projects canceled was not unusual, exactly equal to last September's project cancellations.

"In general, we find that despite the high summer prices in 2019, the forward curve hasn't moved a whole lot," Ahuja said Friday. "The 2020 and 2021 forwards have moved up, but not much beyond that. This also means that the longer dated curves are not high enough to spur investment in large natural gas projects. Hence the cancellation of gas-fired projects is not a surprise. The solar cancellations -- though [they] look like a lot, they are still a smaller percentage of what's in the queue for solar."

UT's Rhodes saw no cause for concern in the solar cancellations, as much of the solar or wind projects were submitted for generation interconnection to ensure they would be eligible for federal production tax credits or investment tax credits.

"Some of the lightening of the queue was to be expected as many projects were in to try to safe harbor the PTC/ITC, and it was known that not nearly all of it was going to get built," Rhodes said Thursday.

Of the 2,173 MW of projects canceled in August, 1,227 MW was natural gas, 621 MW was solar and the remaining 325 was storage.

Travis Whalen, a Platts Analytics power analyst, noted that only one of the projects canceled in September had a planned in-service date before next summer, the 363-MW Toland natural gas-fired plant slated for construction near Corpus Christi on the Gulf Coast.

"The latest GIS has no appreciable drop in projects slated for commercial operation between now and next August, and that totals more than 8 GW," Whalen said Friday. "Obviously very little of that is actually going to come online, but I wouldn't say that many of the cancellations were highly likely to contribute in any case."

-- Mark Watson, markham.watson@spglobal.com

-- Edited by Bill Montgomery, newsdesk@spglobal.com