ERCOT predicts record peak demand this summer

Dive Brief:

The grid operator for most of Texas expects to break peak demand records this summer. Though sufficient generation will be on hand, demand response and distributed generation will still play a key role on the hottest days, particularly following the retirement of older, and mostly coal-fired, generation.
The Electric Reliability Council of Texas (ERCOT) has released its final Seasonal Assessment of Resource Adequacy (SARA) report for the upcoming spring season and a preliminary assessment for summer. The operator this summer anticipates peak summer load of 72,974 MW with resource capacity of 77,658 MW.
The spring shoulder months present less of a challenge, ERCOT said. The operator anticipates sufficient generation "under a range of extreme system conditions." Adjusted spring peak load forecast is expected 59,477 MW.

Dive Insight:

Peak summer demand has been rising for years. While ERCOT avoided setting a new peak record last year, there have been several in recent history and another is expected later this year. A slate of recent retirement announcements, notably Vistra's plan to retire three coal-fired plants, raised concerns from the grid operator.

Potomac Economics, ERCOT's independent market monitor, said in October of last year that the retirements could push the reserve margin below ERCOT's target of 13.75%. In the latest report, ERCOT said it expects voluntary load reductions and an increase in power sold in the market by industrial facilities, in response to high prices set during peak demand times.

The projected peak of 72,974 MW would be higher than the previous record of 71,110 set in August 2016.The grid operator says almost 3,800 MW in new generation began operating last year and more than 14,000 MW of resources are planned to be in service by 2020.

Without a capacity market, some generators rely on critical peak pricing spikes to cover their costs. An unexpected spike in January demand, for instance, sent prices above $2,200/MWh for a brief period. The Public Utilities Commission of Texas (PUCT) noted that the coal retirements dented "excess" electricity supply. The PUCT said that with the supply-demand balance this summer tighter than in the recent past, demand reduction man also play a role in tackling demand this summer.