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ERCOT prices spike as Texas heads into a tightly-balanced summer

By: Robert Walton |

Texas continues to build clean energy resources, including solar, wind and batteries, but heading into this summer, the deregulated market is facing a tight supply-demand balance. So tight that generators that weren’t in use are being dusted off and getting back into the market.

“The strong Texas economy continues to drive demand in the ERCOT region,” the operator said in its late-April report on resource adequacy.

Texas is expecting record-breaking demand this summer, and since its preliminary Seasonal Assessment of Resource Adequacy report was released in March the operator says total generation resource capacity has increased by more than 500 MW “due to units returning from mothball status and extended outage status, as well as a planned gas-fired resource becoming available earlier than initially expected.”

The final report says anticipated record demand on peak summer days, paired with plant retirements and some delays in planned resources, “is expected to result in tight reserves that could trigger the need for ERCOT to deploy such resources as Ancillary Services and Contracted Emergency Response Service Capacity to maintain sufficient operating reserve levels.”

ERCOT also says it expects more voluntary load reductions and an increase in power sold into the market from industrial facilities in response to high prices. The final summer unit outage total is forecast at 4.3 GW.

The operator said reserve margins are expected to remain steady through 2022, and the planning reserve margin for summer 2018 has increased to 11% based on the resource updates incorporated in the final summer SARA report. The reserve margin is expected to peak in 2020 around 12.3%.