New Report Shows Tightening In Texas Electricity Reserve Margins

“We see these types of shifts as the ERCOT market experiences cycles of new investments, retirement of aging resources, and growing demand for power…”

ERCOT, the operator of the electric grid and market serving most of Texas, today released its Capacity, Demand and Reserves (CDR) report (Excel Document Download), which includes information about existing and planned generation resources and expected electricity needs over the next 10 years.

The updated report projects a 9.3 percent planning reserve margin for summer 2018, increasing to 11.7 percent by summer 2019 as more planned generation resources begin operating.

“Planning reserve margins fluctuate over time,” said ERCOT CEO Bill Magness. “We see these types of shifts as the ERCOT market experiences cycles of new investments, retirement of aging resources, and growing demand for power.”

Compared to the previous CDR report in May, ERCOT expects a 7,200-megawatt (MW) decrease in overall generation capacity for summer 2018. The decrease is primarily due to recently announced retirements (See below), project delays beyond the summer 2018 peak demand period, and other factors considered in the report.

The update also includes almost 3,800 MW in new generation resources that began operating this year. More than 14,000 MW of resources that meet the criteria to be included in the CDR also are planned to be in service by 2020.

Systemwide peak demand in the ERCOT region is expected to grow by an average of about 1.7 percent annually over the next 10 years. The forecasted peak for 2018 is just under 73,000 MW, a 1,175-MW decrease since the May report.

The ERCOT system set its current all-time peak demand record of 71,110 MW in August 2016. During summer months in ERCOT, 1 MW is enough power to serve peak demand for about 200 homes on average.

In March 2018, ERCOT will release its final Seasonal Assessment of Resource Adequacy (SARA), a scenario-based seasonal forecast, for spring and a preliminary outlook for summer 2018, followed by the next CDR update and a final summer SARA in May.

ERCOT, the Electric Reliability Council of Texas, manages the flow of electric power to nearly 24 million Texas customers, representing about 90 percent of the state’s electric load. As the independent system operator for the region, ERCOT schedules power on an electric grid that connects more than 46,500 miles of transmission lines and 570 generation units.

ERCOT also performs financial settlement for the competitive wholesale bulk-power market and administers retail switching for more than 7 million premises in competitive choice areas. ERCOT is a membership-based 501(c)(4) nonprofit corporation, governed by a board of directors and subject to oversight by the Public Utility Commission of Texas and the Texas Legislature.