ERCOT (Again) Forecasts Adequate Reserve Margin for Next Three Years

ERCOT's May Capacity, Demand and Reserves report has again shown an improvement in forecast reserve margins as certain delivery years draw near, and now forecasts adequate reserve margins for the next three years -- the very outcome expected under a well-functioning energy-only market.

Specifically, the forecast reserve margin under the prior February CDR and the new May CDR is below:

Year    Feb. CDR      May CDR
2014     13.0%           --
2015     15.4%         14.3%
2016     14.1%         14.1%
2017     12.8%         13.8%
2018     13.4%         12.3%
2019     10.9%          9.8%

Since ERCOT released its most recent CDR in February, NRG Energy has announced plans to keep its S.R. Bertron units, totaling 727 MW in combined capacity, in mothball status until further notice. With this change and the addition of new units this summer, the effective planning reserve margin by August 2014 will be 15.2 percent, ERCOT said.

Another planned unit has been removed from expected resources since the previous report, beginning in 2017, because it does not yet fulfill new water supply requirements for CDR inclusion. The project’s developer expects to be able to fulfill those requirements within the next several months.

Meanwhile, a new 703-MW gas-fired unit — FGE Texas 1 — has been added to expected resources for 2017, improving the expected planning reserve margin for that summer. A new 299 MW wind power facility in Floyd County also has been added, beginning in 2015.

ERCOT also released its final Seasonal Assessment of Resource Adequacy for the summer of 2014.

ERCOT expects to start this summer with tight reserves. However, by late summer, six new generating projects are expected to be in service with a combined summer capacity rating of 2,153 megawatts (MW). Four of the six projects are new combined-cycle gas-fired power plants with a combined summer capacity rating of 2,112 MW. Completion of these four projects -- Ferguson Replacement, Panda Sherman, Panda Temple I and Deer Park Energy Center -- will increase the overall planning reserve margin and significantly reduce the likelihood of scarcity conditions by late summer. The commercial operations date for the Deer Park plant is currently July 1, 2014, with both Panda plants and the new Ferguson units expected to begin commercial operations by August 1, 2014.

If an extreme system peak occurs and the full capacity of these new units is not available, those conditions could result in an Energy Emergency Alert (EEA), with corresponding public appeals for conservation. Depending on the severity of the situation and the amount of generation available during periods of highest demand, ERCOT could take other progressive steps necessary to protect overall system integrity, ERCOT said.

Link: ERCOT May CDR