News Release
December 01, 2011

ERCOT 10-year outlook indicates need for additional generation

Reserve margin lowered by 5 percent

Dec. 1, 2011, AUSTIN – The Electric Reliability Council of Texas (ERCOT), the state grid operator and manager of the wholesale electric market, today released its biannual assessment for the next 10 years indicating that power reserves – the extra capacity used to avert rotating outages – will likely fall below the minimum target beginning next summer. 

The December update of the capacity, demand and reserves report indicates a decrease in available resources by more than 2,600 MW for the summer of 2012 relative to the amount expected in June 2011 for 2012, primarily due to additional announcements to mothball some generation units and several delays in planned generation, as well as a higher load forecast.

Reserve margins are currently projected to be at 12 percent at summer peak season in 2012 and 2013 – below the 13.75 percent target used in the ERCOT region to ensure reliable operation of the grid during higher-than-normal temperatures and generator outages.  

“We are very concerned about the significant drop in the reserve margin,” said CEO Trip Doggett.  “If we stay in the current cycle of hot and dry summers, we will be very tight on capacity next summer and have a repeat of this year’s emergency procedures and conservation appeals.” 

Initiatives underway to mitigate capacity shortage 

ERCOT is investigating several initiatives to address the capacity shortage for the short-term, Doggett said. 

“We are working with the Public Utility Commission on several rule changes, including expansion of our emergency demand response program to allow greater participation.” 

Additional protocol changes that will help in the longer term include improvements in generation owners’ outage scheduling and reporting requirements, raising the offer floors for non-spinning reserves, and resolution of pricing issues related to reliability deployments. 

In addition, ERCOT is working closely with transmission operators to verify the accuracy of in-service dates for generation under development and for potential projects that are currently in the final phase of the interconnection study process, Doggett said. 

“Due to our concerns about generation adequacy during the record-setting summer temperatures, concerns about the future impact from the drought, and retirements related to new environmental rules, we asked transmission operators to perform a comprehensive review of the current status of each of their assigned generation interconnection projects,” Doggett said.    “Given the current economic uncertainties and the uncertainty from proposed environmental regulations, we wanted to ensure that proposed in-service dates were as accurate as possible, based on the currently available information.” 

ERCOT has more than 59,000 MW of generation currently under review in various stages of the interconnection process, but many of those projects are speculative and may never be completed, Doggett said.  The report lists potential projects in the final phase of the interconnection study process; these range from 191 MW for 2012 to 9,000 MW in 2022. 

“ERCOT’s role in the competitive market is to inform policymakers and the market of the need for increased generation resources, energy efficiency measures, or demand response efforts, but ultimately ERCOT does not control the supply of electricity needed to meet the demands of our growing economy.” 

Changes since May assessment 

Available generation since the summer capacity, demand and reserves report decreased 2,623 MW – impacting the reserve margin by -4 percent.  The major changes include:

  • A  reduction of 2,234 MW of generation capacity due to additional units scheduled to be mothballed;
  • A reduction of 1,259 MW of planned units that have been delayed or put on hold;
  • A decrease of 681 generation from private networks, primarily due to a decision to use August 2011 actual output rather than owner surveys;
  • An increase of 1,187 MW of available mothballed generation, including the results of an owner survey of probability of returning to service. 

The firm load forecast, which is a “normal weather” estimate based on the past 15 years, increased 738 MW to 64,618 MW – impacting the reserve margin by -1 percent.  

The ERCOT peak demand forecast is based on average weather profile and economic factors including per capita income, population, gross domestic product and various employment measures.  Peak electric use in the ERCOT region is driven by high temperatures and economic conditions. 

Capacity, Demand and Reserves in the ERCOT Region

 

2012

2013

2014

2015

2016

2017

Summer firm load forecast, normal weather (MW)

64,618

65,428

68,174

71,457

73,713

75,106

Resources (MW)

   72,444

   73,327

   73,383

   73,992

   76,833

   78,136

Reserve margin (13.75% minimum target)

12.1%

12.1%

7.6%

3.6%

4.2%

4.0%

Change since May Capacity, Demand and Reserves Report

5.4

2.2

3.5

7.7

5.8

6.7

ERCOT’s minimum reserve margin target of 13.75 percent is based on a probabilistic analysis completed in 2010.  The ERCOT board increased the reserve margin target to 13.75 percent in November 2010, up from 12.5 percent which had been used since 2002.   

Additional Mothballed Units

Name

County

Fuel

Year In-Service

MW

Greens Bayou 5

Harris

Gas

1973

406

Midlothian 5

Ellis

Gas

2002

225

Monticello 1

Titus

Coal

1974

565

Monticello 2

Titus

Coal

1975

565

Sam Bertron 3

Harris

Gas

1959

230

Sam Bertron 4

Harris

Gas

1960

230

Sam Bertron T2

Harris

Gas

1967

13

Planned Units Delayed

Name

County

Fuel

MW

Sandy Creek 1

McLennan

Coal

925

CFB Power Plant

Calhoun

Coal

260

RRE Austin Solar

Travis

Solar

60

Senate Wind Project

Jack

Wind

13

One megawatt is roughly enough electricity to power 500 average homes under normal conditions in Texas, or about 200 homes during hot weather when air conditioners are running for longer periods of time. 

The ERCOT region includes 23 million people and represents about 85 percent of the state’s electric load.  ERCOT does not include the El Paso area, the Texas Panhandle, Northeast Texas and Southeast Texas. 

Also online:

The Electric Reliability Council of Texas (ERCOT) manages the flow of electric power to 24 million Texas customers -- representing 85 percent of the state's electric load. As the independent system operator for the region, ERCOT schedules power on an electric grid that connects more than 41,500 miles of transmission lines and 550 generation units. ERCOT also performs financial settlement for the competitive wholesale bulk-power market and administers retail switching for 6.7 million premises in competitive choice areas. ERCOT is a membership-based 501(c)(4) nonprofit corporation, governed by a board of directors and subject to oversight by the Public Utility Commission of Texas and the Texas Legislature. ERCOT's members include consumers, cooperatives, generators, power marketers, retail electric providers, investor-owned electric utilities (transmission and distribution providers), and municipal-owned electric utilities.

Contact
Robbie Searcy (512) 225-7213
rsearcy@ercot.com