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Texas power grid holds up quite well through record spring heatwave

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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...

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  • May 23, 2022
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The strained Texas power grid has held up quite well over the past few weeks as an unprecedented May heatwave enveloped the state. Since the hot weather set in, Texas grid operator Electric Reliability Council of Texas (ERCOT) has issued several operational messages, including calls for conservation. Both real-time hourly (RTH) and day-ahead hourly (DAH) average location marginal prices (LMPs) were elevated but the market avoided forced outages during the heatwave. May’s final weather statistics will almost certainly reflect the highest overall May average temperatures ever recorded. On May 19 ERCOT reported an all-time electricity peak demand for May – reaching 71.2 gigawatts GW) – a figure usually seen during the hottest hours in the summer months. The all-time ERCOT system-wide peak is 74.8 GW, set in August 2019.   

Traditionally, mild weather in Texas makes the spring-shoulder months a time for power plant and grid maintenance. With demand for air conditioning surging this year, nearly all available resources were asked to defer maintenance and stay available as the system was stressed. Adding to the strain, on May 13, ERCOT posted a request for conservation when several major gas-fueled power plants were unavailable – during the hour ending 5:00 PM CT, the average RTH price reached $3,439/MWh.

During the first 16 days of May 2022, average hourly demand ran about 25% higher than the same period in 2021 – often 20 to 30 GW higher than last year’s hourly demand levels. Of the 384 hours reported over the first 16 days of May, only four hours exceeded real-time prices of $1,000/MWh on average, and only eight topped $500/MWh on average. RTH prices over the period averaged about four times the average from the same period last year, but that is to be expected given the higher electricity demand and is a strong market price signal that will help drive capacity development decisions going forward. 

ERCOT average hourly electricity demand, May 1-16 comparing 2022 with 2021, MW

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ERCOT average real-time hourly (RTH) prices, May 1-16 comparing 2022 with 2021, $/MWh

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ERCOT expects capacity to be adequate to meet demand this summer

On May 16, ERCOT released its Seasonal Assessment of Resource Adequacy (SARA) Summer 2022 report. ERCOT accounts for about 90% of total electricity demand in Texas and expects to have adequate resources to serve summer peak demands from June through September. The report considers several risk scenarios based on alternative assumptions for peak demand, unplanned thermal outages, and renewables generation output.

In the report, the grid operator forecasts the 2022 summer peak to be roughly 77.3 GW, representing an all-time system-wide summer peak. After accounting for forecast customer demand, emergency demand reduction programs, typical unplanned outages, and typical renewable energy output, ERCOT anticipates 91.4 GW of capacity will be available during summer peak demand hours. At 22.8%, the summer capacity planning reserve margin is the highest in recent years. The resource total includes 473 megawatts (MW) of additional planned gas-fired, utility-scale solar, and wind capacity. ERCOT also expects to have 2,035 MW of battery storage resources operating, including 283 MW of planned additions. Of the 91.4 GW of available capacity, ERCOT expects about 70% from thermal sources, 10% from wind, and 10% from solar. The rest will come from various resources, including switchable capacity, private use networks, non-synchronous ties, and hydroelectric contributions.

Considering hourly demand levels running nearly 25% higher on average than last year and more than 60% higher during some hours, the market has held up quite well and ERCOT appears to be well prepared for what will likely be a long and hot summer.

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Matt Chester's picture
Matt Chester on May 23, 2022

Hopefully we'll stop treating these hot summers as an unexpected event to prepare for-- this is the reality for the grid of the future!

Kent Knutson's picture
Kent Knutson on May 23, 2022

Matt, thanks for your comment.  I believe this early May event could be described as 'unexpected' . . . ERCOT loads were running 20 to 25 GW higher compared to the same time last year.  Prices were elevated and spiked on a few occasions but as I described in the article, that is to be expected given the high demand. The higher prices send price signals to potential power plant developers that there are profits to be made in ERCOT.  Avoiding rolling brownouts is the key.  It's hard to tell what the summer might bring?  When late June, July, August, and early September roll in, the resources are expected to be available based on ERCOT's SARA report.  That's good news.  Texas has and continues to be one of the fastest-growing populations in the U.S. so expect demand to be high when the temps are high.  Thx again for your comment.   

Jim Stack's picture
Jim Stack on May 23, 2022

Kent, Can you tell us why these suppossed  reliable power plants were all unavailable? QUOTE=adding to the strain, on May 13, ERCOT posted a request for conservation when several major gas-fueled power plants were unavailable – during the hour ending 5:00 PM CT, the average RTH price reached $3,439/MWh.

It's on days like that I want all my large Solar Power plants to get paid the true Net-Metering at that higher rate. In Phoenix we had a long refueling delay at the triple reactor Palo Verde site and I never got paid extra for all the clean safe power I made right during the Peak Time Of Day ! 

Kent Knutson's picture
Kent Knutson on May 24, 2022

Hi Jim, thanks for your comment.  There's not much information about the six gas-fired power plants (2,900 MW) that apparently tripped on May 13. I see some news that there was transmission congestion along with the unavailable gas facilities. 

The May loads were 20 to 25 GW above the same time last year -- that's almost unbelievable, especially being sustained for two weeks or so.  Additionally, the shoulder months represent a time when there is more scheduled maintenance.  I did some looking at the hourly load at 5:00 PM on May 13 and it revealed a tremendous amount of natural gas electricity production.  Wind was way down at that time!  That meant gas was the only resource capable of meeting demand.  It was likely taxed heavily.  I agree with you that your resources should get paid the market price . . . that makes sense to me.  But, I am not a rate or dispatch expert . . . LOL!  But, aren't high market prices necessary signals for development and investors?  I think there is plenty enough bashing of ERCOT these days and it's time to focus on solid solutions.  Texas is such a high-growth state.  It will need resources . . . both dispatchable and variable to be reliable.   thx again for your note.  

https://www.nasdaq.com/articles/texas-heat-wave-points-to-problems-with-...

 

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