Electricity Markets

ERCOT’s reserve margin climbs higher for summer 2020

The Electric Reliability Council of Texas on Dec. 5 reported that its planning reserve margin for summer 2020 is forecasted to be 10.6%, based on resource updates provided to ERCOT from generation developers and an updated peak demand forecast.

This is two percentage points higher than the 8.6% reserve margin ERCOT reported as it entered the summer 2019 peak demand season.

ERCOT released its December Capacity, Demand and Reserves (CDR) Report, which includes planning reserve margins for the next five years.

The ERCOT region continues to experience above-normal growth in peak electricity demand due to strong load growth in Far West Texas and along the coast where new industrial facilities are being constructed, the grid operator reported.

For 2020, the forecasted peak demand is 76,696 MW. ERCOT’s current system-wide peak demand record is 74,820 MW, set on Aug. 12, 2019 between 4 and 5 p.m.

Based on preliminary data from generation owners, new capacity additions from planned projects for summer 2020 total 7,633 MW. Based on ERCOT’s current interconnection queue, the majority of new generation projects are renewable and small, flexible gas-fired resources.

Since the May 2019 CDR report, two gas-fired plants totaling 1,227 MW have been canceled, and eight solar projects with a 1,056 MW capacity contribution have been delayed, ERCOT noted.

The CDR includes a Generation Resource Scenarios tab that identifies generation units that have informally announced plans to retire. Until ERCOT receives an official Notice of Suspension of Operation from the owners, these units will continue to be reflected in the CDR, it noted.

Resources totaling 1,058 MW of installed capacity have been approved by ERCOT for commercial operations since the May CDR, and a total of 4,654 MW of installed capacity became eligible for inclusion in the CDR.

ERCOT’s next seasonal assessment of resource adequacy will be released in March 2020, and the mid-year CDR report will be released in May 2020.

The CDR report includes a look forward at all currently operational and planned resource capacity as reported to ERCOT by resource developers and owners.

It provides annual projections of ERCOT’s planning reserve margins for the summer and winter seasons.

The planning reserve margin is the difference between the total generation available in the ERCOT system and the forecasted firm peak demand, with the difference expressed as a percentage of the forecasted firm peak demand.