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ERCOT Energy-Only Market Again Produces Adequate Capacity

June 1, 2011
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Note: ERCOT has issued corrected numbers after releasing its initial data. The updated numbers can be found here. While there are some slight changes in the projected reserve margins, the revisions do not lead to a projected reliability violation where there was not one previously, or vice versa. The 2013 projected reserve margin is now 14.2%. The story and data below does not reflect any revisions

Unrevised ERCOT Forecast

Original Story Published 6/1/11:

ERCOT has forecast adequate reserve margins through 2013, as its energy-only market has once again led to an increase in installed capacity and an increase in reserve margins as the prompt year draws closer.

ERCOT's summer assessment (available here), projecting reserve margins 10 years out for the first time instead of five years, forecasts reserve margins as show above

Most notably, the 2013 forecasted reserve margin is now 15.1%, well in excess of the target 13.75%.  In ERCOT's December 2010 forecast, the 2013 projected reserve margin was below the target, at 13.14%.

Additionally, ERCOT's summer assessment confirms the historic trend of additional capacity appearing as the prompt years near.  Aside from the increase in the 2013 reserve margin, the reserve margins for 2011-12 have increased to in excess of 18%, versus the 15% range in the December 2010 forecast.

ERCOT said that its reserve margins for the next several years have improved due to the addition of more than 1,000 MW of generation.  Additional new and refurbished resources added since the December reserve margin forecast include:

- 565 MW from three new gas units in Jack County

- 406 MW from Greens Bayou 5, a 1973 gas unit in Harris County returning to service

- 45 MW from Lufkin Biomass, Angelina County, scheduled to be available in time for summer peak

The 2011 summer peak demand forecast is 63,898 MW, almost 2,000 MW less than last summer's record peak demand of 65,776 MW.  The demand forecast is based on long-term historical average temperatures and economic conditions as measured by employment.  

ERCOT's assessment for 2011 also includes 1,484 MW of contractually committed demand response resources and emergency interruptible loads which operators can dispatch on command.  Another 128 MW in demand reduction is anticipated this summer due to energy efficiency programs.  

The 2014-16 reserve margins indicate that more capacity is required by that timeframe to meet firm load, while, in the December forecast, 2014-2015 had been forecast as having adequate capacity.  Such projections are normal for the competitive energy-only market where load is not burdened with mandated forward purchases of capacity, and, as indicated above, new resources have always responded by the prompt year such that the reserve margin has not been violated.

The forecast changes for the out-years result from higher firm load forecasts, due to expected economic growth, as well as a delay in several units.

Potential resources not added in the report's operational generation include more than approximately 2,300 MW of generation capacity which is currently mothballed but could be brought back into service at the owners' decision.  

Other potential resources not added into the reserve margin calculation include proposed units that have initiated the final study phase of the transmission interconnection process.  Planned units in the final phase total 8,200 MW for 2012 and increase to more than 19,681 MW by 2020.

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