By: Mark Watson |
The Electric Reliability Council of Texas market blew through its all-time record peakload by about 1.3 GW on Monday and set quadruple-digit real-time prices for more than two hours, as a heat wave sent Texas temperatures into triple digits in most major population centers.
ERCOT on Sunday had forecast peakload to hit 75,072 MW on Monday, but by about 9:30 am had increased that forecast to 75,109 MW. As of about 4:30 pm CDT Monday, ERCOT’s real-time system conditions showed actual system demand as 74,576 MW. ERCOT previously set a peakload record of 73,259 MW on July 29, 2018. ERCOT has forecast a new record to be set Tuesday at 75,610 MW.
SHRINKING RESERVES
About 5 am Monday, ERCOT issued an operating condition notice to the market that it was projecting a reserve capacity shortage for the hours from 1 pm to 6 pm CDT, and before 2 pm, ERCOT issued an advisory that its Physical Responsive Capability had fallen below 3,000 MW.
As of 3:15 pm CDT, reserves had fallen to 2,854 MW. When reserves fall below 2,000 MW, ERCOT can begin implementing Energy Emergency Alerts. However, ERCOT declared the system to be in “normal conditions” at that time.
ERCOT’s real-time systemwide average locational marginal prices jumped past $100/MWh around 1 pm CDT, past $1,000/MWh around 2 pm and hit as high as $6,537.45/MWh as of 3 pm before subsiding to a range of $2,300 to $2,500/MWh for the next hour.
“High demand and low reserves should produce high prices,” said William Hogan, a global energy policy professor at Harvard University, in an email Monday. “This is how the system is intended and designed to work.”
Terry Bartifay, president of Veritas Retail Energy, a Houston-based retail electricity provider, noted that June and July prices “settled far below crazy bullish forecasts laid out earlier in 2019.”
“August however has been far choppier which I expected,” Bartifay said in an email Monday. “Although LMPs [are] trading now at just below $1,000 per MWh, as long as the stronger-than-expected wind keeps blowing in the west we shouldn’t see anything too crazy happen today.”
As of about 4 pm, wind output was around 6.9 GW, which was slightly above ERCOT’s forecast of about 6.8 GW at that time, up from an expected low of 5.8 GW at 2 pm.
Net load — total load minus wind capacity — was expected to hit a high of 67.9 GW at 4 pm, but it was actually about 67.5 GW. More wind output, which has near-zero marginal cost, would tend to diminish upward pricing pressure.
Looking ahead, Travis Whalen, an electricity market analyst at S&P Global Platts Analytics, noted that net load is expected to be higher on Tuesday, although absolute peakload had been forecast to be higher Monday.
SETTING RECORDS
ERCOT set August records last week and new weekend records on Saturday and Sunday. The August record first fell Wednesday at 73,092 MW and then again Friday at 73,115 MW. The weekend record fell Saturday at 61,646 MW, then again on Sunday at 71,864 MW.
ERCOT’s natural gas power burn topped 7 Bcf/d beginning August 7 and was expected to continue on Tuesday before falling to the range of 6.5 to 6.9 Bcf/d through August 25, according to Platts Analytics.
Temperatures hit or topped 100 degrees Fahrenheit in Dallas on Wednesday and then from Friday through Monday, according to timeanddate.com, with CustomWeather forecasting another triple-digit day Tuesday.
Temperatures in San Antonio, in South Texas, have hit 99 degrees F or higher since Tuesday, and are forecast to top 100 degrees through Thursday.
Temperatures hit 99 degrees F or higher in Houston, in East Texas, on Thursday, Friday, Sunday and Monday, and are forecast to hit 98 degrees Tuesday.
Noting on Friday that real-time prices pushed past $1,000/MWh for more than an hour on Friday afternoon, Joshua Rhodes, a University of Texas Energy Institute research associate, said, “This will be very helpful for generators in the market.”
