ERCOT: New generation pushes reserve margins up 20% through 2025

Dive Brief:

Large amounts of generation coming online in 2017 and 2018 are expected to push Texas reserve margins above 20%, but the state's grid operator is also warning that environmental regulations could force some units to retire and impact that estimate, the Dallas Morning News reports.
The Electric Reliability Council of Texas (ERCOT) said it expects more than 5,000 MW of new generation to come online by the summer of 2017 and another 4,300 MW in 2018.
In its updated 10-year Capacity, Demand and Reserves (CDR) report, ERCOT said peak demand is expected to grow from 70,500 MW in summer 2016 to nearly 78,000 MW by summer 2025.

Dive Insight:

Texas reserve margins are on the rise, and while the impacts of new environmental regulations could cut into the final numbers, the state should easily have enough capacity to meet demand on even the hottest days. But that wasn't such an easy feat, even as recently as last year, Dallas Morning News reports. In the summer of 2014, ERCOT almost failed to meet a 13.75% minimum reserve level.

"We are seeing significant growth in planned resources to help meet growing electricity needs in the coming years," Director of System Planning Warren Lasher said in a statement. "While we currently are seeing planning reserve margins top 20% in the next several years, some of this growth could be offset by unit retirements as changing environmental rules begin to take effect."

ERCOT said it expects peak demand to reach 78,000 MW by the summer of 2025, based on a new forecasting methodology that was implemented last year.

"Our updated load forecasting methodology has performed well," ERCOT Load Forecasting and Analysis Manager Calvin Opheim said. "By incorporating growth trends in customer accounts, or premises, to project future growth in electric demand for each region served by the ERCOT grid, we have been able to provide a more accurate look at future demand and energy use."

The grid operator said its update for CDR is based on average weather spanning more than a decade and includes additional electricity demand from the Freeport liquefied natural gas (LNG) facility, which is under development on the Gulf Coast and scheduled to be fully operational in summer 2019. Of the new resources planned to come online, ERCOT said about 6,250 MW have been added to the outlook since the previous report in early May. Those include: nearly 1,600 MW of new gas-fired generation; 324 MW of storage; about 1,150 MW of utility-scale solar installations; and almost 3,200 MW of new wind generation capacity.

When adjusted for estimated summer peak availability, ERCOT believes the new wind accounts for about 590 MW. The next CDR report is planned for the second quarter of next year.