Revised economic outlook drives up ERCOT demand forecast
Decreased planning reserve margins in revised outlook remain sufficient for reliability planning
AUSTIN, TX, Dec. 15, 2016 – The updated Capacity, Demand and Reserves (CDR) report released today by ERCOT, the electric grid operator for most of Texas, anticipates more rapid growth in electricity demand than previously projected. As a result, reserve margins in the next several years have dropped compared to earlier forecasts, but remain sufficient to support system reliability.
"Based on the information we have today and current planning criteria, we continue to see sufficient planning reserve margins through most of the 10-year planning horizon," said Sr. Director of System Planning Warren Lasher. That outlook shows planning reserve margins ranging from 16.9 percent to more than 20 percent in the next five years, the period that best reflects plans by owners and developers to add new generation resources.
ERCOT reviews its long-term load forecast annually while developing the December report and, if needed, revises the forecast to reflect any significant changes in the outlook. Specific forecasts for each weather region are used to develop the systemwide forecast.
"Thanks in large part to a healthy economic outlook, the ERCOT region expects to see customer demand grow at higher levels than previously projected," Lasher said.
Based on average weather in the past 14 years, the peak demand for summer 2017 is forecast to reach nearly 73,000 megawatts (MW), growing to more than 77,000 MW by summer 2021. The forecast includes the expected impact of a new liquefied natural gas facility currently under development on the Gulf Coast, but does not include possible impacts of the proposed addition of Lubbock Power and Light to the ERCOT system, which is being considered by the Public Utility Commission of Texas.
"While generation resource development in the next several years is expected to keep up with this growing demand, we also could see a number of existing resources retire," Lasher said.
Current information indicates ERCOT can expect more than 82,000 MW of resource capacity for summer 2017, growing to more than 88,000 MW by summer 2021. The CDR includes all existing generation resources that have not notified ERCOT of plans to cease operations, as well as planned resources that have secured interconnection agreements to connect to the transmission grid, any necessary air permits, and water use contracts where needed. Planned resources account for nearly 3,600 MW of expected resources next year and reflect more than 10,000 MW of expected capacity by 2021.
Planning reserve margins later in the 10-year planning horizon typically decrease because resource owners and developers usually do not begin the interconnection process more than three to five years prior to expected operations. As part of a joint effort by ERCOT and stakeholders to reformat portions of the report, ERCOT has moved these later years to a new "Supplemental" section, which also includes a number of alternative planning scenarios, in order to model potential impacts on reserve margins in future years.