ERCOT wrestles with wind integration, market issues

The Electric Reliability Council of Texas (ERCOT) is wrestling with a number of issues ranging from wind integration to ensuring that its market practices ensure adequate power resources in the future, according to a recent presentation by ERCOT President and  CEO Trip Doggett.

The presentation on ERCOT challenges, dated March 7 before an engineering association meeting in Houston. The presentation came days after ERCOT warned that 2013 could be another tight summer and said consumers should plan for energy emergency alerts during the hot weather months.

The Texas energy markets are being affected by weather, climate and drought, according to the presentation. Northern and western sections of Texas have the greatest likelihood of above normal temperatures, Doggett said.

ERCOT got nearly 45% of its energy from natural gas in 2012, almost 34% of its power came from coal and roughly 12% from nuclear and 9% from wind during the year.

The energy capacity breakdown for the year was 57% natural gas; 23% coal; 13% wind and 6% nuclear. Hydro, biomass, solar and storage had 1% of the capacity and the energy level was less than that.

Texas is No. 1 in the United States in wind capacity and has twice the amount of No. 2 Iowa, according to the presentation. Projections show Texas hitting 13,000 MW of installed wind capacity by the end of 2015. “If Texas were a separate country, we’d be No. 6 in the world,” Doggett said in the presentation.

In addition, ERCOT set a new wind record last month, on Feb. 9, when wind hit 9,481 MW.

Texas residential and commercial/industrial electric markets ranked  No. 1 in competitive markets in North America for the past six years, according to one study, Doggett said.

The market was put at $34bn based on 334,000 GWh annual energy, Doggett said. There are about 240 counterparties active in the market, providing depth and liquidity. More than 1,000 active entities that generate, move, buy, sell or use wholesale electricity in ERCOT, the CEO said.

ERCOT wants to ensure that reliability steps it takes during times of extremely high demand “do not inadvertently create price signals that discourage new generation investment.”

A Brattle Group study a few months ago looked at a number of policy objectives. These include an energy-only market with a market-based reserve margin; an energy-only market with adders to support a target reserve margin; energy-only with “backstop procurement” to meet minimum acceptable reliability; or mandatory resource adequacy for load serving entities.

The Texas energy markets are being affected by weather, climate and drought, according to the presentation. Northern and western sections of Texas have the greatest likelihood of above normal temperatures, the report said.

ERCOT covers 75% of Texas land and 85% of Texas load as well as more than 40,000 miles of transmission lines and 550-plus generation units. The peak demand record was roughly 68,300 MW set in August 2011. ERCOT has an annual budget of about $170m.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.