Although a long-term report from the Electric Reliability Council of Texas (ERCOT) projects a negative reserve margin by 2022, the outlook for summer 2013 actually has improved since a previous report was released in December 2011, ERCOT said in a May 22 statement.
That prior report showed the reserve margin slightly above 12% by summer 2013 and in negative numbers by 2020. Since that report was released, about 1,240 MW of previously “mothballed” capacity has returned to service for the foreseeable future. Anticipated capacity now also includes 1,130 MW of coal-fired generation that is expected to eventually discontinue operations under the Cross-State Air Pollution Rule from the U.S. Environmental Protection Agency. That rule has been stayed in federal court.
“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,” said ERCOT CEO Trip Doggett about future capacity shortfalls.
The newly revised Capacity, Demand and Reserves (CDR) report shows a reserve margin of 9.8% as soon as 2014. That is well below ERCOT’s 13.75% target for electric generation capacity that exceeds the forecast peak demand on the grid. The 2014 outlook includes slightly more than 75,000 MW of power to serve anticipated 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.
The 13.75% target planning reserve margin, approved by the ERCOT Board in 2010, is set to ensure enough power is available for contingencies such as extreme weather and unplanned power plant outages.
Report looks at 10-year planning horizon
The CDR provides a 10-year outlook based on anticipated peak demand, existing and planned generation capacity, and other long-term factors. Peak electric use in the ERCOT region is driven by high temperatures and economic conditions. The mid- and long-term peak demand forecast is based on a 15-year average weather profile combined with economic factors. This report does not include the outlook for summer 2012, which was updated in a separate report released by ERCOT on May 1.
Since the last CDR report was released in December 2011, nearly 600 MW of new renewable power has begun operations within ERCOT. That includes 105 MW of biomass, 432 MW of wind power and 59 MW of solar power.
By 2016, the forecast includes 3,657 MW of new gas-fired capacity, more than 2,000 MW of new wind power, about 900 MW of new coal-fired generation 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 when it is needed most — late in the afternoon on hot summer days.
ERCOT warned that the generation outlook is based on current plans and agreements, which are subject to change within the 10-year planning period. A variety of factors, including economic conditions and evolving regulatory requirements, could affect generators’ future plans. The peak forecast in the CDR report could be conservative as the Texas economy continues to thrive in spite of slow growth elsewhere in the country and the outlook for summer temperatures remains above the 15-year average.
In recent months, ERCOT and the Public Utility Commission of Texas (PUC) have taken proactive steps, such as revising protocols and looking at scarcity pricing rules to begin improving the future outlook. New market rules related to Emergency Response Service, previously known as Emergency Interruptible Load Service, will open that program to distributed generation and possibly other types of demand response resources as well.
ERCOT in March selected the Brattle Group Inc. to examine factors that influence investment in new generation and other projects related to ERCOT’s resource adequacy goals. Brattle has been gathering and analyzing input from investors and other stakeholders to determine what incentives or other changes could improve the outlook for future electric generation and other resource adequacy solutions. Its final report is due for release June 1.
CPS Energy targets shutdown of Deely capacity
The CDR noted that CPS Energy has announced plans to deactivate the two coal‐fired J. T. Deely units (845 MW) by 2018. “Although ERCOT has not been formally notified (as required by market protocols at least 90 days prior to the proposed idling of a registered resource), based on the information made available by CPS Energy, these units are assumed to be taken off‐line in December 2018 in this assessment,” the report added.
“ERCOT continues to review the potential impacts of changing environmental regulations,” the report said. “It is unknown at this time if the recently finalized Mercury and Air Toxics Standards will result in retirement of existing coal‐fired capacity. Representatives of the Texas Commission on Environmental Quality (TCEQ) have informed ERCOT that the emissions requirements in the MATS rule for new solid‐fuel units are more stringent than those included in the finalized air permits for several new plants. This discrepancy could cause these new units to have to reapply for air permits, and as a result could further delay these projects or cause them to be cancelled. New coal‐fired capacity is included in the reserve margin calculations in this report starting in 2017.
ERCOT manages the flow of electric power to 23 million Texas customers – representing 85% of the state’s electric load. As the independent system operator for the region, ERCOT schedules power on an electric grid that connects 40,500 miles of transmission lines and more than 550 generation units.