Texas Electric Grid Has Adequate Capacity for Summer/Fall 2017

ERCOT has released its latest Seasonal Assessment of Resource Adequacy for the summer months.   The organization anticipates that the Texas electric grid will have no trouble meeting the demand for electricity during the hot summer months from June – September.   The report forecasts a peak demand of 73,000 megawatts for electricity during the period.  This is based on the average demand for that same period over the last 14 years.

Against this demand, officials are projecting a peak production capacity of 83,000 MW.  Included in this total is 2,500 MW of new natural gas powered generation and 800 MW of new wind and utility scale solar generation.  Because of the intermittent nature of wind and solar energy generation, only 350 MW of peak power from wind and solar are being included in the projections of summer capacity.

There is no new coal power electricity generation included in the forecast.  Coal continues its multi-year decline across the U.S. and in Texas in particular due to a combination of environmental regulations, competition from renewable energy sources and cheap natural gas.  Cheap natural gas more than anything else has helped to keep electricity rates in Texas low for several years.

In a separate report, ERCOT looked at generation over the next five years.  The trend is unsurprising.  Summer capacity is expected to rise to over 87,000 MW hours in 2022.  Wind, Solar and Gas are expected to grow both in real terms and as a percentage of total capacity.  Coal is expected to continue to decline.

The Texas electricity market continues to be a model for the benefits of energy deregulation.  Capacity and reliability continue to improve.  This is occurring with a lower per kWh environmental impact thanks to the proliferation of renewable energy in the state.  Additionally, giving consumers the power to choose their electricity provider has led to innovations in the way electricity is sold to end users.   All of this is occurring in an environment of sustained low rates.

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Enough Electricity In Texas For Spring As Renewable Energy Surges

ERCOT, the organization responsible for maintaining the Texas electricity grid, is predicting more than adequate capacity in the spring amidst an expected surge in renewable power for the state in 2016.   In its Seasonal Assessment of Resource Adequacy, ERCOT is predicting a spring usage peak of 58,279 MW.  This is well within system capacity even with the assumption that there will be 9,482 MW of lost system capacity due to maintenance and forced outages.  This is based on historical outage data going back to 2010.  The demand estimates were made using May 2006, a hotter than normal May, as a model.

Due to the fact that Texas’ operational solar capacity recently passed a threshold of 200 MW, the methodology for determining how much solar power to include in capacity projections has changed.  This resulted in a decreased amount of solar power included in the spring projections.  However, 2016 is expected to be an exceptional year for solar energy in Texas.

ERCOT Solar

By some estimates, the state will see an additional 2 GW of installed solar capacity in 2016.  This would result in a 10-fold increase in solar electricity.  Texas has long been considered a sleeping giant when it comes to solar power. Although it has the geography and climate to be a substantial producer, it has had very little in the way of utility scale solar power.  This is changing in a big way with projects underway for both the Austin and San Antonio municipal utilities among others.  The Austin project, in particular, is notable for its low cost. The purchase agreement for that project calls for a rate of less than 5 cents per kilowatt hour.  This is cheap even when compared to natural gas.  Several years of cheap natural gas have led to low electricity rates in Texas and created a challenging environment for solar and natural gas to compete on price.

Despite this, renewables have continued to gain ground in Texas, led by wind in particular. Wind, along with solar, make up around two-thirds of the state’s additional capacity for 2016.  Of the 12,500 MW in new power expected to come online, wind will account for about 63%. 2016 will likely see wind overtake coal as the second largest source of electricity in the state.

Although coal is rapidly becoming a smaller contributor to the state’s electricity output, coal plants are still critical for keeping the lights on in Texas.  The report downplays any potential impact of compliance with the Mercury and Air Toxics Standards regulations for coal units.   With the final compliance date being April 15, 2016, planners expect generators to be in compliance.

The preliminary summer report predicts record peak electricity usage for the state with demand peaking at over 70,000 MW for the first time.  Against this, it is predicted that the system will have over 79,000 MW of available generation.

Wind Energy Provides Cheap Electricity In Texas

The U.S. Energy Information Administration, a government run agency responsible for collecting, analyzing and reporting on energy related matters, is predicting that Texas will continue to break records for electricity provided by wind power.

Peak Texas Wind Electricty

This is not a bold prediction considering that the state has recently put together a string of new all-time highs for wind energy output based on peak supplies of electricity being fed to the state’s grid.  Recent record wind days include the following:

  • October 22, 2015 – 12,238 megawatts
  • October 21, 2015 – 11,950 megawatts
  • September 13, 2015 – 11,467 megawatts
  • February, 2015 – 11,154 megawatts

There are a number of factors at play that are contributing to the recent all-time highs.  This autumn in Texas has been unseasonably warm and windy allowing for the perfect conditions to make use of the state’s large and growing portfolio of wind turbines.

Already the largest producer of wind electricity in the U.S., Texas continues to see more capacity brought online month after month.  This is thanks in large part to generous subsidies paid by the federal government to encourage investment in wind turbines.

One could make the case that the continued growth in wind power is due entirely to government subsidies when you consider that during a period in 2013 and 2014 when the subsidies were allowed to lapse, installation of new wind capacity in Texas and the rest of the country virtually ceased.  The eventual renewal of the subsidies in 2014 saw an immediate resumption of investment in new wind energy capacity in Texas.

Texas Wind Capacity

Unlike fossil fuel sources such as coal and natural gas, the production cost of electricity from wind is almost entirely front loaded in the cost of putting up the turbines.  After they are up, the incremental cost of each additional watt of electricity is negligible.   This, coupled with the bonus money paid by the government for each kilowatt of electricity produced from wind can lead to some very cheap energy for Texas consumers.  In many cases, it leads to free electricity.

To compare electricity providers who offer cheap and sometimes free electricity plans visit vaultelectricity.com

Texas Electricity: 2013 Outlook Improves

ERCOT, the agency responsible for maintaining the Texas electricity grid, has updated its 2013 forecast of supply and demand for electricity in the state.  The new outlook still shows the spread between supply and demand being uncomfortably tight, but shows an improvement over earlier projections.

Planners like to maintain a reserve margin of 13.75%.  The reserve margin is the safety cushion between the amount of available capacity in the system and anticipated demand.  Having adequate reserve margin helps protect consumers against the possibility of an unexpected loss in capacity or an unexpected spike in demand.

An example of an unexpected loss in capacity occurred in February of 2011 when a powerful winter storm brought a handful of power stations down as the frigged temperatures and ice caused equipment failure.  As a result, officials were forced to implement rolling brownouts in parts of the state including the Dallas/Fort Worth area.

An example of a spike in demand occurred late that same year when a record heat wave had air conditioners running on high from Houston to Dallas.  On this occasion, blackouts were narrowly avoided.

ERCOT projects the reserve margin will drop to 13.75% next summer.  By 2014 that number is expected to drop to 10.9%.

The state has recently undertaken several steps to try to improve the supply of electricity including raising wholesale electricity rate caps by 200%.  This move will eventually lead to retail electricity providers raising rates.  Electricity rates in Texas are near multi-year lows.

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