Dive Brief:
- The Texas electric grid is "more reliable than it has ever been before," the state's top energy regulator said Tuesday, just days after the grid's operator called on residents to conserve energy as temperatures soared and more than a half dozen generators tripped offline.
- The summer capacity planning reserve margin in the Electric Reliability Council of Texas service area is forecasted to be 22.8%, the grid operator said in its most recent Seasonal Assessment of Resource Adequacy, released Monday. Reserve margins in Texas have been rising for several years as more resources have been added, and in 2019 were in the single digits.
- Grid operators across much of the U.S. are anticipating warmer than normal temperatures this summer, but PJM Interconnection and Southwest Power Pool both recently said they can reliably meet peak demand. However, the Midcontinent Independent System Operator is projecting a 5 GW shortfall in firm generation this summer.
Dive Insight:
Grid operators around the country are preparing for the hottest months of the year, when cooling loads can send power demand soaring and challenge reliability. Market reforms and a "conservative" approach to grid management will help keep the lights on this summer, Public Utility Commission of Texas Chairman Peter Lake said Tuesday.
"Our reforms are working. Our transition from a crisis-based business model to a reliability-based business model is showing results," Lake said in a press conference alongside ERCOT's interim President and CEO Brad Jones.
Winter Storm Uri caused blackouts across Texas in February 2021, setting off an overhaul of the state's wholesale energy markets to ensure sufficient reliability.
"We feel very confident about our position this summer," Jones said. He noted that Texas has been expanding its summer reserve margin in recent years, from 8-9% in 2019 to 15-16% last year and now almost 23%.
The most recent seasonal assessment issued by the grid operator predicts peak summer demand of 77,317 MW, including load reductions from rooftop solar. "This would be a new system-wide peak demand record for the region," the report noted. More than 91,000 MW of resource capacity is expected to be available during summer
peak hours.
The summer assessment examines seven risk scenarios, including two in which capacity reserves could be depleted by higher peak loads, unplanned generator outages or low wind output. Jones called those "very unlikely scenarios."
However, all three of those factors came into play over the weekend, as unseasonably warm temperatures around Texas drove demand higher.
On Friday, six generation facilities supplying 2,900 MW of power tripped offline close to the system's peak, "as well as a few smaller ones that we haven't mentioned so far," Jones said. Details on those failures will be available Thursday on ERCOT's web site, he said.
Voluntary conservation helped reduce ERCOT load by 300-400 MW, Jones said.
"This past week was an example of ERCOT doing what ERCOT needs to do to prepare for these types of events," Jones said. "We're having an extraordinary May — what may be the all-time hottest May on record."
While Texas grid officials credit "conservative" grid operations for assisting with reliability — at times asking more generators to be ready to come online on short notice — there is some concern that the approach could drive costs higher and stress older plants.
The strategy “means forcing thermal plants to be ready to run more than they would have in past years,” energy analyst and Stoic Energy President Doug Lewin noted in a tweet, while potentially raising costs $1 billion annually.
Asked whether keeping generators at the ready could lead to more failures, Lake said he had "no concerns at all."
"We will continue to maintain that margin ... but we're also continuously working with our generators to ensure they can take adequate maintenance outages," Lake said. The cost of the additional reserves amounts to about $1 per Texas household per month, he said.
Lake also said he had "no concerns at this time" regarding the potential for market manipulation. In December, the commission adjusted ERCOT's scarcity pricing mechanism, lowering the high systemwide offer cap to $5,000/MWh from $9,000/MWh after last year's winter storms drove some customer bills to extreme levels.
SPP, PJM expect reliable summer operations
Outside of Texas, most grid operators also say they can meet higher demand this summer.
Southwest Power Pool on Thursday said it expects summer demand will peak at 51.1 GW, while "its diverse fleet of member utilities’ conventional and renewable generating resources will be prepared to serve at least 55.5 GW, taking both planned and a margin of unplanned outages into consideration."
The previous all-time peak on SPP's grid was 51 GW, which occurred last summer,
PJM Interconnection on May 11 said it forecasts summer peak demand of 149 GW, but has performed reliability studies at loads up to 157 GW and has approximately 185 GW of installed generating capacity resources.
PJM’s all-time peak demand is more than 165 GW, which it saw in the summer of 2006.
So far, only the Midcontinent ISO has said it heads into the summer with insufficient firm generation. The operator faces a 5 GW shortfall and said in April that it is working with member companies “to prepare for the worst-case scenarios.”
MISO forecast a summer peak of 124 GW, with about 119 GW of “projected regularly available generation.”
