Blog: ERCOT’s Reserve Margin Climbs for Summer 2020

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“We anticipate there will continue to be sufficient generation to meet Texas’ growing power needs.”

— ERCOT President and CEO Bill Magness

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ERCOT’s planning reserve margin for the upcoming summer season — that is, the amount of surplus electricity capacity available in the state to power its homes and businesses — should increase from the amount available last summer.

That’s the word from ERCOT, also known as the Electric Reliability Council of Texas, the organization that oversees the state’s primary power grid. The organization on Thursday released its “December Capacity, Demand and Reserves Report” that includes the new summer 2020 projections along with additional projections for the next five years.

For summer 2020, the planning reserve margin should hit 10.6 percent, according to the report. ERCOT likewise projected the reserve margin for summer 2020 will surpasses that for summer 2019, which was 8.6 percent. At the same time, electricity demand also is going up.

The bottom line: “We anticipate there will continue to be sufficient generation to meet Texas’ growing power needs,” said ERCOT President and CEO Bill Magness.

In ERCOT parlance, the “planning reserve margin” signifies in percentage terms an amount of installed generation capacity on the system beyond projected peak electricity demand. Although more expensive to maintain, comparatively higher reserve margins typically equate to comparatively lower risk for blackouts.

ERCOT analyzed data from electric generation developers as well as patterns for statewide energy use to develop its new report. Other details include:

  • New capacity additions from planned projects should total 7,633 megawatts by the summer of 2020. (A megawatt is approximately enough power to serve 200 homes during a hot summer day.)
  • Strong industrial growth along the coast as well as heightened electricity use in far West Texas is helping to drive increases in statewide energy consumption.
  • Peak demand during the summer of 2020 of 76,696 MW — if forecasts are accurate — will surpass ERCOT’s current system-wide peak demand record is 74,820 MW, set on Aug. 12, 2019.
  • Renewable and small, flexible gas-fired resources comprise the majority of new generation projects.
  • The recent cancellation of two gas-fired plants totaling 1,227 MW contributed to the new planning reserve margin figures. The delay of eight solar projects with a 1,056 MW capacity also contributed.
  • ERCOT recently approved the addition of another 1,058 MW of installed capacity to the system.

The 10.6 percent projected margin for the upcoming summer — although an improvement over last summer — remains below ERCOT’s long-standing target of 13.75 percent.

However, ERCOT’s Independent Market Monitor observed in a June 2019 report that comparatively low reserves might create fewer concerns going forward. This is because the state’s power system has grown overall and because smaller distributed generation technologies have become more common — and these new technologies should help decrease the risk of generator outages.

You can read more about that June IMM report here. And the newly released “December Capacity, Demand and Reserves Report” you can find here.

ERCOT will release its next Seasonal Assessment of Resource Adequacy in March 2020, and release its mid-year CDR report in May 2020.

 

— R.A. Dyer