Texas Faces a 'Tight' Summer, as Electric Reserve Margins Shrink

Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Keeping the lights on in Texas this summer will be no gimmie. The Lone Star State lost about 4,273 megawatts (MW) of generating capacity earlier this year when five coal-fired units at three plants were retired. Another 2,927 MW of planned generation will not be available as expected this summer, mostly due to delays in power plant construction. The state's growing economy is expected to add about 1,600 MW of new electric demand to reach a new record, officials with the Electric Reliability Council of Texas (ERCOT) (Austin, Texas) told reporters in a conference call on March 1. Offsetting these factors is the 3,800 MW of new generation that came online last year, Pete Warnken, ERCOT's manager of resource adequacy, said on the call.

"We anticipate there will be enough generation to get through the summer, but it's possible we'll have to invoke emergency measures," he continued. "We don't expect to have to take extreme measures," such as rotating blackouts, he added. "But there are some risks. We face tight conditions, but we are not concerned (about invoking emergency measures) if everyone does their job."

Those risks include unusually high electric demand caused by high heat, low output from windfarms due to low windspeed, and greater-than-expected amount of generator or transmission outages, Warnken told reporters.

ERCOT's operating reserve is expected to shrink to about 6% this summer, but the transmission operator can call on about 2,300 MW of ancillary generation, which would bring its reserve margin to about 9.3%, which still is considered tight.

The state's shrinking reserve margins have pushed up forward prices for power, Warnken noted. While he said there was the potential for "occasional price spikes," he wouldn't speculate on what that would do to the average price per megawatt-hour of electricity.

"This is Texas, and what we forecast as 'average' weather is pretty hot," he said.

His colleague, Dan Woodfin, ERCOT's senior director of system operations, said "grid reliability is not at risk."

ERCOT has the ability to import about 1,200 MW over five DC interties with other transmission organizations. Some portion of that import capacity is included in the agency's estimate of available resources, but Woodfin would not say how much of that 1,200 MW is included in the agency's resource plan. And even that number could vary: "We could get more, or we could get less," he said, depending on the availability of generators in other markets and the available transmission capacity.

In its preliminary assessment of resource adequacy for the summer, ERCOT said it expected total electric resource capacity to be 77,658 MW. The preliminary summer forecast includes a 72,974-MW summer peak load based on normal weather conditions for the previous 14 years. The summer 2018 forecast is higher than the all-time summer peak demand record of 71,110 MW set on Aug. 11, 2016. Almost 3,800 MW in new generation resources began operating in 2017, and more than 14,000 MW of resources are planned to be in service by 2020, ERCOT said in a statement.

"At ERCOT, our focus this summer will be on performance," Bill Magness, ERCOT's president and chief executive, said in that 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."

Speaking on the conference call, ERCOT officials said "there has been no discussion about bringing retired coal-fired generation back online this summer." The 4,273 MW of retired coal-fired generation represents retirements at the Monticello, Big Brown and Sandow plants. But various other options, including calling on distributed generation, invoking demand response programs and implementing targeted load curtailments of large energy users, were on the table.

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