ERCOT Issues Long-Term Assessment Report

The Electric Reliability Council of Texas, Inc. has filed with the PUCT its December 2012 Long-Term Assessment Report

Link to ERCOT Long-Term Assessment

The report complies with a legislative directive to study the need for increased transmission and generation capacity throughout the state of Texas.

A 20-year analysis included as part of the report reached the following conclusions:

• The Houston Region will need at least one additional import path within the next ten years.

• Similarly, an additional circuit into the Lower Rio Grande Valley will likely be needed within the next ten years provided that no new generation resources are sited within this region.

• The retirement of legacy gas-fired resources in urban areas due to future market conditions or changing regulatory requirements would lead to an increased need for both expanded import capacity and dynamic reactive resources within the DFW and Houston regions.

• Higher voltage transmission solutions appear cost-effective in future scenarios with significant increases in renewable generation to connect low-cost resources that are concentrated at a significant distance from major load centers.

• Scenario analysis indicates that both natural gas generation and renewable resources are likely to be competitive across a broad range of potential future market outcomes. The prevalence of renewable generation technologies in many future scenarios indicates a need for further study of system requirements to reliably integrate variable generation. As a component of this analysis, ERCOT is currently using grant funding provided by the Department of Energy to implement a new analytical model that will assess the impact of future resource additions on the system's frequency response capability.

• Water availability analysis indicates that sufficient water resources are present within the state to allow the operation of existing and additional future thermal units in the event of extended drought. However, a consequence of extended drought conditions would likely be increased generation development in eastern Texas where surface water resources are more prevalent.

The report also identifies several planning challenges.

"Analysis documented in this report indicates that the future ERCOT resource fleet may be more dependent on natural gas than the existing generation fleet, as low natural gas prices are expected to limit the development of thermal generation using other fuel sources. This reduced diversity of dispatchable resources will increase the importance of understanding the effects of natural gas pipeline system operations on the electric grid. Increased development of renewable generation is likely under a range of future potential market conditions. The variability and forecasting limitations of these technologies can result in a need for system integration studies and adjustments to system operating procedures. Resources, both generation and demand-side, on the distribution system (non-networked circuits operated at a voltage below 69 kilovolts) may become increasingly prevalent on the system, resulting in a need to evaluate the potential impacts of distributed resources on transmission system operations. In the near future, ERCOT may be increasingly connected to other electrical grids: market participants are currently planning the development of large asynchronous ties between the ERCOT and the eastern and western interconnections. These projects will drive the need to better understand market dynamics outside of ERCOT, and to plan transmission accordingly to serve increased imports and exports," the report finds.

"The greatest challenge to planning the ERCOT system may be how to plan for the unexpected – the event or the trend that appears unlikely now, but could drive system needs more than any issue noted above. All these considerations indicate the need for a robust and dynamic suite of planning processes and toolsets -- a planning tradition that provides assessments of system needs using credible, well-vetted procedures and includes sufficient flexibility to capture a range of possible futures in which system conditions vary substantially from 'business as usual.'" the report says.

Docket: 33577