Tag Archives: ERCOT

Latest ERCOT projections suggest adequate resources for next few years — buoyed by wind, gas and solar

ERCOT has recently released a series of biannual reports suggesting adequate electric resources in Texas over the coming months and years. While “resource adequacy” has been a buzzword in Texas in recent years, due in part to a series of unfortunate outages from fossil fuel plants and extreme weather events, the ERCOT reports released today suggest a healthy reserve — in normal weather situations. This is due in part to the continued use of energy efficiency and demand response, as well as significant investment in new power plants, including wind, solar and natural gas. 

According to its 10-year projection report known as the “Report on Capacity, Demand and Reserves in the ERCOT Region,” ERCOT expects that Texas will meet its current reserve target of 13.75% in 2015, 2016 and 2017. By 2018, reserves would dip under the current target, falling to 12.3%.It is important to note, however, that ERCOT — as per its current board policy — continues to discount the capacity of wind resources to only 8.75% at peak demand since wind values tend to be lower on a hot summer day. However, recent ERCOT proposals suggest that West Texas wind should be valued closer to 15%, while Coastal wind resources actually provide closer to 40% at peak times. Making those adjustments would raise the reserve margin. According to ERCOT’s latest Planning Report, also recently released, over 8,712 MWs of wind power is expected to be added over the next three-and-a-half years, bringing total wind capacity to some 19,777 MWs by 2017. That report also highlighted some 3,000 MWs of solar that is being developed in Texas, though only a few of those projects have signed interconnection agreements. 

The report also used ERCOT’s latest load forecasts, which take into account the impact of energy efficiency, while also giving credit for demand response programs run by both ERCOT, as well as transmission and wire companies. Thus, the report assumes that at least 1,900 MWs of these demand response programs will be available to the market should they be needed. 

A shorter term forecast — known as the Seasonal Assessment of Resource Adequacy — shows some concerns for the upcoming summer, however. ERCOT reports that the summer will start with tight reserves, but that six new gas and wind generating projects will add some 2,122 MWs of power by the end of the summer. ERCOT states that in normal weather there should be sufficient reserves, though in extreme weather situations, or should several large units have issues, they would need to rely on their demand response products, operating reserves and a call for additional energy conservation. 

Sierra Club believes that new generation — particularly from wind and solar — along with continued investment in demand response and energy efficiency should keep the lights on in Texas for years to come. Among our recommendations are increasing the required utility energy efficiency goals to 1% of peak demand by 2018, increasing the budget for Emergency Reserve Services, and allowing demand response companies to bid in directly into the energy market. Stay tuned for more. Click here for access to several of the ERCOT reports. 

Could Supreme Court Decision Impact ERCOT’s Reliability Needs? ERCOT latest report suggests not.

While there are a lot of what ifs, the recent Supreme Court decision to uphold the EPA’s Cross-State Air Pollutant Rule (CSAPR) at first glance could impact future generation and operating reserves in ERCOT, the Electric Reliability Council of Texas. In fact, back in 2011, in response to a request from the Texas Public Utility Commission, a preliminary analysis from ERCOT found that anywhere from 1,200 MWs to 6,000 MWs of Texas fossil fuel generation might be subject to closure or mothballing because of the impacts of the rules, putting Texas electric reliability at risk, especially at times of high demand or extreme temperatures. While the ERCOT preliminary analysis was admittedly rushed, and made some big assumptions,  it did suggest the timing of implementation of those 2011 proposed rules was going to be challenging for Texas at certain times of year. 

Well three years later, there is continued good news for development of more electric generation in Texas. Just a few days ago, ERCOT released its latest System Planning Monthly Report (March 2014), again showing there is a healthy interest in investing in Texas’s electric market. The report states that ERCOT is currently tracking 230 active generation interconnection requests totaling over 58,100 MWs of power. Again leading the way in these requests are wind — roughly 27,000 MWs in all — natural gas — at roughly the same — and solar — at some 3,300 MWs of power. In fact, the latest planning report shows that installed wind within ERCOT has already reached 11,065 MWs, and the expected amount of wind of those with signed interconnection agreements would reach 19,777 MWs by the end of 2017. 

Some are sure to paint doomsday scenarios where EPA rules — supported by the US Supreme Court — send Texas into a spiraling electric reliability crunch. Those poor coal plants just can’t meet those pollution rules and stay open they will say. While there will be challenges, and there is a need to support strong ancillary services like demand response to keep the lights on, expected investments in both gas, but especially in wind and solar, should keep Texas’ humming along economically. With implementation of CSAPR, we should also get some relief from all that coal pollution. 

Texas Renewable Energy Keeps Growing: Both Austin and ERCOT Showing it Can Be Done

Ok I’ve written about this before but the pace is getting to be mind-boggling. Every month, ERCOT releases its Monthly Status System Planning Report and the amount of proposed generation keeps growing. And in particular what appears to be winning is wind power, and increasingly solar. The February 2014 Monthly Status Report shows that ERCOT is currently tracking 219 proposed projects totaling over 55,300 MWs, about half – 26,700 MWs in all — of which is wind. The latest to sign what is known as a Generation Interconnection Agreement with the local transmission company is the Briscoe Wind Farm, a 300 MW facility located in West Texas. Just earlier this month we announced that Austin Energy had negotiated a cheap wind deal with Lincoln Renewable for 300 MWs in Castro County.

Here are the latest numbers from ERCOT.

Confidential Projects Projects under Study Projects with Signed Agreement Total
Natural Gas 3,544 11,437 9,521 24,502
Coal 0 30 240 270
Wind 5,538 12,777 8,413 26,728
Solar 1,335 1,414 198 2,947
Storage 0 874 0 874
Nuclear 0 0 0 0
Petroleum Coke 0 0 0 0
Total 10,417 26,532 18,372 55,321

What is pretty interesting is the geographic distribution of these projects. If you look at ERCOT’s five traditional load zones — Panhandle, West Texas, North Zone, South Zone and Coastal Zone, future natural gas projects dominate in the South and North Zone — where wind and solar resources are just not as strong. But from the Coastal Zone — where gas and wind split the pie — to West Texas and especially the Panhandle, wind and increasingly solar beat out gas projects.

Coal you might ask? Two projects – a tiny 30 MW proposed project in Milam County and the long-awaited IGCC project by Summit in Ector County, which has been delayed three times, and is currently scheduled for 2018.. maybe. Petroleum Coke, like those proposed Las Brisas and White Stallion projects that SIerra Club fought?  Dead. none. What about nuclear? Didn’t NRG and Luminant promise to build us new reactors? Dead.

In fact, other than gas, wind and solar, the only projects are three proposed storage facilities which could revolutionize the use of renewable energy, making it dispatchable just like gas.

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Webberville Project — three times more expensive than the new one they are talking about.

Now back to Austin Energy. While two weeks ago we told you about a deal to purchase wind at a bargain rate of $26 to $36 per MWh that City Council recently approved — a price rivaling what we pay for our dirty coal power — this Thursday Austin Energy will be proposing to City Council that they authorize negotiations over two utility-scale solar plants to be constructed by SunEdison. While the exact price can not be revealed, Austin Energy is reporting that it is between $45 and $55 per MWh, making it the cheapest solar deal in the country. The two plants will total up to 150 MWs of capacity, and be located in West Texas. If these deals come to fruition, Austin Energy would not only meet its 35% renewable energy commitment four years early by the time the plants come online in 2016, but even its 200 MW solar goal. With the Local Solar Advisory Committee recommending that Austin Energy double its goal to 400 MWs by 2020, Austin Energy’s initial negative reaction — based on a belief that solar would cost more in the $80 to $100 per MWh range — now seems well.. so last year. In fact, Austin Energy reports that they had over 125 proposals for utility-scale solar from 66 separate projects, and $100 per MWh was the very highest they got. In fact, most were in the $60 dollar range. Remember in 2009, we negotiated a deal for 30 MWs of solar for around $165 per MWh. So that means for Austin Energy solar energy prices got chopped by some 70% between 2010 and 2016 when the latest solar projects get built.

Folks, the news for renewable energy in Texas just keeps getting better. Cyrus Reed, Conservation Director, Lone Star Chapter

Texas Capacity Debate: New Synapse Report Demonstrates that Peak Demand Can Be Met Through 2023 With Modest Policy ‘Tweaks’

Improving energy efficiency and demand response will keep the lights on for Texans and insulate the state from future issues arising from extreme weather

Today, the Sierra Club, Lone Star Chapter  filed a new report with the Public Utility Commission (PUC) and ERCOT (Electric Reliability Council of Texas) that shows that Texas should have adequate capacity beyond 2020 without making any changes to its current market structure, and could ensure adequate resources just by making some slight adjustments in the resources already on the system.

The report prepared by Synapse Energy for the Sierra Club, Demonstrating Resource Adequacy in ERCOT: Revisiting the ERCOT Capacity, Demand and Reserves Forecasts, runs two different scenarios based on ERCOT’s latest load forecast.  The first scenario updates ERCOT’s more recent forecast, accounting for new generation resources, crediting wind for its contribution during peak events and better accounting for energy efficiency and demand response. This scenario,  “Counting What We Already Have,” demonstrates that the market should meet the current target reserve margin through 2023.

The second scenario, “Augmenting Demand-Side Resources” examines what would happen to resource adequacy assuming two policy changes – raising the energy efficiency goal to 1.0% by 2018 and doubling the Emergency Reserve Service (ERS) program. This second scenario shows even more robust resource adequacy through 2023, adding about three percent to the reserve margin.

With Texas enjoying unprecedented growth in variable renewable resources, designing our energy market and ancillary services to maintain reliability, particularly in extreme weather is very important.  ERCOT’s load forecast assumes that our future weather trends will mirror “historical weather patterns,” using the past 12-years of weather data.  Even if the state sees the effects of increased weather variability, the policy tweaks recommended by the Synapse report would insulate the state from problems arising from excessive peak demand.  In fact, the likelihood of increased weather extremes makes these proposals all the more important.

The full report can be found here.

 

Latest Brattle Report Suggests Either Energy-Only Market or Capacity Market will keep lights on in Texas

In a long-awaited report ordered by the Public Utility Commission, the Brattle Group’s study entitled “Estimating the Economically Optimal Reserve Margin in ERCOT” was released last week and showed that Texas has many options to keep the lights on, including potentially doing nothing.

The study was ordered by PUC Chairman Donna Nelson to determine the most economic reserve margin – literally the amount of supplies over the amount of demand – in Texas. The answer? A reserve of only 10.2 % would be the most economic approach and the good news is based on normal weather patterns Texas’ market would actually provide a 11.5 percent reserve margin in the coming years. In other words, in purely economic terms, Texas’ energy-only market would provide reliable and economic electric power. In fact, in normal years, one would expect less than an hour of reliability issues out of 8760 hours in a year.

Nonetheless, the study also presented an alternative market structure, and suggested that a 14.1 % required reserve margin would be more reliable long-term though slightly more expensive to maintain. The study did suggest that in extreme weather situations – like the 2011 heatwave – the 14.1% required reserve margin would be cheaper during that year because energy prices would  volatile in any energy-only market. Thus, overall a capacity market during an extreme weather year would cost consumers $3 billion less because of lower power outages, while during a normal year, a capacity market would be about $400 million more expensive.

Table. What the Brattle Study Says about the Reserve Margin

Category Energy-Only Case Capacity Market Case Difference
Equilibrium Reserve Margin 11.5% 14.1% 2.6%
Loss of Load Events Per Average Year 0.33 0.23 (-.1)
Loss of Hours Average Year 0.86 0.23 (0.63)
Energy Price  -$/MWh $58 $48 (-$10)
Capacity Price ($/kW-yr) $0 $39 $39
Total Customer Cost ($B/YR) $35.7 $36.1 $0.4
Extreme Weather Year Energy Price $99 $65 (-34)
Extreme Weather Year Capacity Price 0 $76 76
Total Customer Cost (Hedged) $44.7 $41.5 (-3.2)

It is important to note that the Brattle report – like all economic studies – made assumptions about load growth, weather, the impact of demand response, and the amount of wind generation at peak – all of which can be challenged. As an example, the study still assumed that wind production only generates 8.7% of its total capacity during peak summer hours, a number that has been shown through repeated studies and actual data to significantly undercount the value of wind. Thus, the assumed margin are probably in reality higher than reported in the Brattle report.  But the essential message – that the energy-only market in most years would provide reliable and economic energy – at least gives policy makers breathing room and time to make any needed changes to the market.

The Sierra Club believes the answer is actually somewhere in the middle – that a required reserve margin slightly above the economically optimal reserve may be needed assuming that extreme weather events continue to face Texas. As an example, the report notes that assuring a reserve margin of 12.9% would meet the Southwest Power Pool’s reliability standards even in extreme weather events. We believe that assuring some build-out of new generation and new demand response programs – largely through expanded ancillary services — could assure this targeted reserve. Thus, the long-term solutions are not necessarily the imposition of a forward capacity market as has been imposed in markets like PJM and New England at great costs to consumers, but rather targeted programs meant to grow new resources like energy efficiency, demand response, energy storage and solar to meet Texas’s growing electric demand and supply needs. Paying older power plants a capacity payment just for being around is not the way to meet these new needs.

Texas will need to make significant investments in new transmission grids, continued smart meter development and other technologies like energy storage and demand response, while making the market work for these new technologies. It will also need to economically retire its older, dirtier power plants and transition to cleaner forms of energy. Look for our solutions soon!

In the meantime, PUC is expected to schedule a workshop on the Brattle report, as well as an additional study looking at the cost and benefit of each approach to keeping the lights on and ERCOT’s latest supply and demand projections, which are still being debated at the ERCOT Board of Directors.