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ERCOT facing low reserve margins to meet peak electricity demand this summer

By: Jaclyn Brandt |

The Electric Reliability Council of Texas (ERCOT) may have to issue Energy Emergency Alerts to address resource shortfalls during periods of peak electricity demand this summer, according to the North American Electric Reliability Corporation’s (NERC) 2019 Summer Reliability Assessment.

ERCOT’s anticipated reserve margin for summer is 8.5 percent, according to NERC’s report, which is the lowest reserve margin of any system operator studied in the report.

NERC found reserve margins of 19.3 percent for the Midcontinent Independent System Operator (ISO), 24.8 percent for New York ISO, 24.9 percent for Florida Reliability Coordinating Council, 28 percent for the SERC Reliability Corporation, 28.7 percent for the Western Electricity Coordinating Council, 29 percent for PJM Interconnection, 30.7 percent for ISO-New England, and 31.8 percent for Southwest Power Pool.

According to the U.S. Energy Information Administration (EIA), the news is not irregular for ERCOT, who “typically has one of the lowest anticipated reserve margins in the country.” The summer of 2018 anticipated reserve margin was 10.9 percent.

According to Dr. Ross Baldick, a professor in the Department of Electrical and Computer Engineering at the Cockrell School of Engineering with the University of Texas, system operators plan for two different reserve margins: a planning reserve margin and an operating reserve margin.

The anticipated reserve margin, or planning reserve margin, is “the amount by which the planned total capacity exceeds the forecast total demand (possibly reduced by demand-response).”

The operating reserve margin is the generation capacity being used now or very near in the future, or the “amount by which the actual capacity available exceeds the actual total demand.”

“Generally, operating reserve margin is lower than planning reserve, since at any given time, some generation units are not available,” said Baldick.

In May, ERCOT announced “above-normal growth in electric demand,” and that the system-wide growth rate was expected to be 2.5 to 3 percent through 2022.

“Electric demand growth remains especially strong in far West Texas due to oil and gas development and along the coast where new industrial facilities are being constructed,” ERCOT explained at the time.

According to Baldick, in several markets across the country, load-serving entities are responsible for procuring capacity to meet the planning reserve margin.

However, “in ERCOT, there is no required planning reserve margin imposed,” Baldick explained. “There are guidelines, which have been slowly decreasing over time, in part because the system operator has more distributed and demand side and other resources at its disposal to handle, [for example] unexpectedly tight supply conditions. In such a market, the system operator does not take responsibility for the planning reserve margin. The system operator does ensure that the operating reserve margin will be enough so that any given subsequent failure will not result in a widespread blackout. In extremis, this might require rolling blackouts of limited regions, as happened in 2011.”

The decreased reserve margin for ERCOT year-over-year is due to “load growth, delays in new sources of electricity generation, and the announced mothballing (i.e., removal from operating service) of the 470-megawatt Gibbons Creek coal-fired plant,” according to NERC.

ERCOT’s anticipated resources grew between 2018 and 2019 with transmission improvements to a new 250 MVAr STATCOM in the Far West Texas region, which was planned to be in service by summer, as well as a new 345 kV line in Central Texas. Delay of these transmission projects could add additional concerns for reliability.

ERCOT is also planning to add 1,300 megawatts (MW) peak hourly electricity demand to the all-time peak demand record set in July 2018, bringing it to 74,853 MW. However, ERCOT has plans to issue an Energy Emergency Alert to ask ratepayers to temporarily reduce their electricity use.

“ERCOT is prepared to use the tools and procedures that are in place to maintain system reliability during tight conditions,” ERCOT President and CEO Bill Magness said in a May written statement.

In ERCOT’s final Seasonal Assessment of Resource Adequacy, the EDR for summer 2019 increased from the first drafts of the report due to potential wind and solar projects — of which 733 MW capacity has been approved for construction.

Meeting the reserve margin can be even trickier with the number of renewables introduced to the system.