ERCOT: Potential power shortages possible within next decade as reserve margin shrinks

A new long-term study confirms that ERCOT could face potential electricity shortages in the next decade due to increasing demand and generation retirements.

While the report on capacity, demand, and reserves (CDR) released May 22 indicates that reserve margins in the ERCOT region are expected to be above the target reserve margin of 13.75% for the 2013 peak season, margins are expected to fall below that level, dipping to 9.8% as soon as 2014.

The 13.75% target planning reserve margin, approved by the ERCOT Board in 2010, is anticipated to ensure enough power is available to meet contingencies such as extreme weather and unplanned power plant outages.

“To ensure future electric reliability in the ERCOT region, we need to take immediate steps to address this issue — on both the supply side and the demand side of the resource adequacy equation,” ERCOT CEO Trip Doggett said in a statement accompanying the report.

The 2014 outlook includes 75,407 MW of power to serve a forecast peak demand of 68,403 MW. By 2015, projected reserves drop to 6.9%, with 76,623 MW of resources available to serve peak demand of 71,692 MW, according to the report.

The forecast is for reserve margins to continue to erode from 2016 to the end of the 10-year forecast period, with margins steadily declining from 6.5% to –0.8% in 2022, when ERCOT forecasts 80,039 MW of resources to meet a projected load of 80,694 MW.

On top of growing demand, the grid operator also cites planned generation retirement as a contributing factor.

“CPS Energy has publicly announced its plans to deactivate the two coal-fired J. T. Deely units (845 MW) by 2018,” the report stated. “Although ERCOT has not been formally notified … based on the information made available by CPS Energy, these units are assumed to be taken off-line in December 2018.”

In addition, ERCOT continues to review the potential impacts of changing environmental regulations. “It is unknown at this time if the recently finalized Mercury and Air Toxics Standard (MATS) will result in retirement of existing coal-fired capacity,” the report continued. Under the MATS standards, even new generating units could be required to have to reapply for air permits, “and as a result could further delay these projects or cause them to be cancelled,” the report said.

New generation, conservation will help

ERCOT is experiencing rapid growth in the amount of renewable energy on its system. Since the previous CDR report was released in December 2011, nearly 600 MW of new renewable power in the forms of biomass, wind, and solar has come on-line within ERCOT. By 2016, the forecast includes more than 2,000 MW of new wind power and 60 MW of solar power. New wind power will include about 600 MW of coastal wind, which historically has provided significant power to the grid late in the afternoon on hot summer days, when it is needed most.

New energy sources will also include 3,657 MW of new gas-fired capacity and approximately 900 MW of new coal-fired generation.

In addition, the grid operator will be relying upon its customers to conserve electricity when needed by raising their thermostats and taking other energy-saving measures. To get the word out more quickly when conservation measures are needed, ERCOT will soon unveil a mobile phone application that will notify subscribers when their help is needed to reduce demand.