Dive Brief:
- Real-time energy prices at the Houston Hub skyrocketed on Tuesday as temperatures rose in the Lone Star state, with the Electric Reliability Council of Texas indicating a potential reserve shortage.
- Platts reports prices jumped above $1,000/MWh for about two hours, and briefly spiked above $2,000/MWh at the Houston Hub trading location. Load peaked around 6,000 MW higher than had been expected.
- Despite the spike in prices, Texas grid operators say they have sufficient summertime capacity. Total generation resources will be close to 82,000 MW, ERCOT indicated in a recent Seasonal Assessment of Resource Adequacy report. Summer peak demand is forecast around 73,000 MW.
Dive Insight:
Texas grid operators say they have plenty of resources to meet demand all summer, buoyed by an increasing amount of wind energy, but short-term spikes still occur in daily trading.
After the price spike, ERCOT officials told Platts that there were no issues with reliability, and that sufficient generation had been available and more was scheduled.
Summer peaks have been rising, however. A preliminary assessment by ERCOT predicted peak loads this summer rose 2.6% higher than ERCOT’s all-time peak demand record of 71,110 MW. But the grid is expected to maintain reliability, partly due to substantial wind energy buildout: ERCOT wind capacity could exceed 28 GW within three years.
As wind generation plays a larger role in its mix, ERCOT officials have indicated their summer assessment includes scenarios that combine the forecasted peak load with low wind output. The report's low-wind output level represents only 3.8% of the total installed wind capacity, compared to a historical average contribution of 19.4% of installed capacity during summer peak load hours.
Today, ERCOT expects demand to peak around 53,000 MW with more than 55,000 MW available. This morning the grid was operating with more than than 5,000 MW of reserves.
