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Texas wind and solar shined in 2020, will they this summer?

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Kent Knutson's picture
Energy Market Specialist, Hitachi Energy USA Inc.

Kent Knutson is a market specialist focusing on energy industry intelligence for Hitachi Energy.  He has more than 30 years of experience designing and developing intelligence products for some...

  • Member since 2018
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  • Aug 2, 2021

The big buildout of wind and solar resources in Texas over the past several years is having a positive impact on wholesale power prices during high electricity demand periods. How did Texas grid operator ERCOT (Electric Reliability Council of Texas) perform in 2020? We analyzed daily electricity production data compiled by Hitachi ABB Power Grids’ Velocity Suite research team to answer the question.

Last summer, on Monday, July 13, 2020, during hour 17, the ERCOT market peaked at 74.3 Gigawatts (GW), only 0.5 GW below the all-time ERCOT peak (74.8 GW) set on August 12, 2019, but a full 3.3 GW above the all-time July peak also set in 2019. During July 2020, ERCOT issued only two Operating Condition Notices (OCNs), one for extremely hot weather with forecast temperatures above 103 degrees Fahrenheit (F), and one warning that tropical storm Hanna might make landfall, which it eventually did on July 25 in southern Texas. The hurricane did not cause any reliability issues, but damage to the 138-kV and 64-kV transmission system caused congestion in the South Load Zone. During the month, there were only seven advisories for Physical Responsive Capability (PRCs) < 3,000 MW – an indicator of falling reserve margin. In comparison, during August 2019, ERCOT issued six OCNs, nine advisory PRCs, one watch for supply dipping below 2,500 MW, and two energy emergency alert level 1’s (EEA1) for reserves dipping below 2,300 MW. During the EEA1 events, market prices for electricity topped the market cap of $9,000/MWh on several occasions.

The actual 2020 summer peak occurred one month later, on August 13, when electricity demand inched slightly above the July event – peaking at around 74.3 GW. There were no Energy Emergency Alerts (EEAs) declared. 

ERCOT is one of the largest organized power markets in America. The market covers approximately 90% of the largest energy-producing state in the country. There are more than 26 million customers across the region that includes a grid with more than 46,500 miles of high-voltage transmission.  

Electric Reliability Council of Texas (ERCOT) map

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Wind and solar were big summer 2020 suppliers

Wind and solar were more significant contributors to load during summer 2020’s peak compared to 2019. On July 13, 2020, wind and solar provided 25.4% of the electricity throughout the day and 18.7% during the peak hour between 4:00 PM and 5:00 PM CT. On August 13 (2020), wind and solar provided 24.3% of the electricity through the day and 16.5% during the peak hour – wind (11.5%) and solar (5.0%). In 2020 during the peak hour, there were 8.1 GW of wind and 3.6 GW of solar capacity available – roughly 2.1 GW more than what the Final Summer 2020 SARA (Seasonal Assessment of Resource Adequacy) report projected.

ERCOT electricity generation, load (MWh) and average real-time LMP ($/MWh), hours of the day (1 thru 24)

July peak day, July 13, 2020

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Summer peak day, August 13, 2020

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In contrast, consider that during the official all-time summer peak on August 12 (2019), wind and solar provided only 17.7% through the day and only 12.9% during the peak hour. 

There was considerably more thermal power needed to meet the summer peak, and it came at a relatively high price. During the 2019 peak hour, the average real-time (RT) locational marginal prices (LMPs) averaged $4,159/MWh, while prices during the 2020 July peak hour averaged only $25.2/MWh, and during the 2020 August peak hour averaged $27.3/MWh. 

ERCOT electricity generation, load (MWh) and average real-time LMP ($/MWh), hours of the day (1 thru 24)

Summer peak day, August 12, 2019

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The big difference between 2020 and 2019 could be attributed to several factors, including adequate surplus capacity at the time of the peak, fewer transmission constraints, and fewer unscheduled plant outages. Additionally, the availability of more wind and solar power contributed to the low LMPs as the high 2020 temperatures across Texas came with gustier and sunnier conditions. Looking closer at last summer’s peak day compared to the 2019 summer peak hour, it is apparent that wind and solar resources were more extensive and more consistent power contributors. 

Power prices remain low despite high loads

Another analysis prepared by Hitachi ABB Power Grids’ Velocity Suite research team reveals 45 hours where the system load topped 72 GW through July 2020. In contrast, there were only 31 hours topping 72 GW during the entire summer of 2019. On only one occasion did the average RT LMP price top $1,000/MWh in July 2020, while there were eight occasions during the summer of 2019 when average LMP prices in ERCOT topped $1,000/MWh. What a big difference a year makes. The average LMP price during the 72+ GW hours in July 2020 was only $145/MWh, while the average for all 72+ GW hours in 2019 was nearly 8X at $1,145/MWh.

ERCOT occurrences of hours with > 72-GW loads (MWh) and avg. RT LMP ($/MWh), comparing 2019 (blue) and 2020 (orange)

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Wind and solar on the rise in Texas

To put in perspective how rapidly both wind and solar power have grown in Texas, consider that wind and solar have increased from virtually zero capacity two decades ago, to roughly 40 GW today. Most of this growth (84.2%) has been from wind farm installations. In 2021, about 1.0 GW of wind and 1.4 GW of solar have already been energized through late July. Over the past year and a half, wind and solar capacity additions have totaled 7.9 GW with solar accounting for roughly 44% of the total new capacity. 

Texas wind and solar capacity additions by year, MW

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Wind provided 93.0 million MWh of energy production from Texas power plants in 2020 – up 11.3% from 2019, and up more than 107% since 2015. Solar is beginning to contribute as well, having grown from near zero production in 2015 to 7.9 million MWh in 2020.  During 2020, wind and solar represented 21.2% of the state’s power production – as recently as 2015, the two renewable resources accounted for just 10% of the state’s annual power production.  

Natural gas is still the mainstay for ERCOT’s generation mix accounting for 52.2% (248.8 million MWh) in 2020 while contributing a robust 56.8% of the power during the July 13 peak hour in 2020. Furthermore, during both the 2019 and 2020 peak summer hours, thermal and nuclear power combined provided 86.7% and 83.6% of total supply, respectively.

Texas electricity production by fuel, by year, MWh

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ERCOT interconnection queue dominated by cleantech

According to ERCOT’s most recent (May) Monthly Operational Overview, published on July 6, 2021, the region’s interconnection queue is flooded with wind, solar, and energy storage projects – 807 projects (157.1 GW) as of May 31, 2021. Utility-scale solar tops the queue at 91.8 GW, followed by wind at 23.8 GW, and battery storage at 33.7 GW. About 40 GW in the queue already have signed Interconnect Agreements. Additionally, as of May 31, 2021, there are $322.46 million of endorsed transmission agreements across the ERCOT footprint.

Green future bright despite lower price incentives 

Customers benefit greatly from lower market power prices, but with ERCOT’s “energy-only” market, higher price signals are necessary to support future capacity development. But even with that backdrop, the rapid and tremendous investment in solar, wind, and battery storage augmented by natural gas generation support an even ‘greener’ future for the Texas grid.

Matt Chester's picture
Matt Chester on Aug 2, 2021

Great overview, Kent. I'm wondering how the February outages will continue to impact Texas as it starts planning moving forward. Seems like one 'exceedingly rare' event will be enough to make citizens start pushing based on those, not based on the reasonable 'most of the time' forecasts-- looking at extreme potentials, rather than likely outcomes

Kent Knutson's picture
Kent Knutson on Aug 3, 2021

Matt, thank you for the comment.  Reliability and resilience are critical . . . its when the power is shut off that things get serious.  strengthening the grid through new technologies, interregional transmission expansion, and maintaining a reserve of dispatchable resources are all necessary.  The cost of failure is extreme.  When all the damages are tabulated, the Texas winter storm may be economically the costliest weather-related disaster in U.S. history.  Maintaining a reliable and resilient grid is the ultimate goal!      

Kent Knutson's picture
Thank Kent for the Post!
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