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.

See Also: Oncor Proposes Electricity Rate Increase for Many Texans
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Texas Sets Another Record For Wind Power

Texas Wind EnergyTexas has set a new record for electricity generated from wind.  On November 27th 2016, the ERCOT system saw more than 15,000 megawatts of electricity provided to the grid from wind turbines.

The amount represented about 45% of the spot demand for power in the grid in the afternoon.

“We saw high wind output throughout the day, ranging from just over 10,000 MW during the late night hours to this peak output during the noon hour,” said ERCOT Senior Director of System Operations Dan Woodfin. “Over the years, ERCOT has taken a number of steps, such as improving renewable generation forecasts, to allow us to operate the grid reliably on days like this.”

During the period, total output from wind approach the system capacity of 17,000 MW.

See Also: Wind Energy Provides Cheap Electricity In Texas


Electricity Sales Continue Multiyear Decline

Numbers released recently by the Energy Information Administration show that electricity sales in the U.S. continue to slow.  For the 5th time since the 2008 recession retail electricity sales have actually declined.  The biggest declines were seen in the industrial sector. While the residential and commercial building sectors were more or less flat.

Electricity Usage

There is no one simple explanation for the decline in growth of electricity usage in the U.S.  Rather, it’s a result of a number of factors.  In the residential sector, the number of households has increased. Yet energy efficiency regulations and improvements the energy efficiency of newly constructed homes have offset the effect of having more households.  The EIA report also credits more aggressive federal energy efficiency standards for appliances with the slowdown in household electricity usage. For the commercial and industrial sectors the numbers reflect a continued sluggish economy and a shift of the type of manufacturing performed in the US.

While the government numbers provided no regional breakdown, a separate report by ERCOT, the agency responsible for maintaining the Texas electricity grid showed an increase in electricity usage in Texas for 2015.    Since the 2008 recession the U.S. has seen a general population shift to the South and West.  Population growth in Texas has likely offset the effect of more energy efficient building and federal energy efficiently standards and appliances.

Texas has also seen cheap electricity rates for a number of years which takes some of the pressure off of consumers to conserve energy and spend on energy efficiently efforts.  A website operated by the Texas PUC seeks to help Texas homes and businesses conserve energy with energy saving tips such as “save up to 16% by turning you’re A/C 1-2 degrees warmer”.

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.


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.

Electricity Usage In Texas Grew In 2015 Led By Renewables

ERCOT, the Texas electricity authority, reported an increase in total system-wide electricity usage for 2015.  This is due in large part to record breaking summer demand for power which saw a peak demand record of almost 70,000 megawatts.  In total, Texans served by ERCOT consumed 347.5 million MWh of electricity which constituted a 2.2% increase in demand over 2014.

2015 saw a streak of new record peaked demand periods.  The top 5 all-time peak demand records all came within a one week period in the summer.

69,877 MW — Aug. 10, 2015
69,775 MW — Aug. 11, 2015
68,979 MW — Aug.   6, 2015
68,731 MW — Aug.   7, 2015
68,683 MW — Aug.   5, 2015

Wind continued its ascendance in the Texas electricity market, surpassing nuclear to become the third largest source of power.   Wind energy accounted for 11.7% of the state’s power usage for the year.  Cheap natural gas meanwhile continued to displace coal generation.  For the year natural gas accounted for almost half of the state’s power while coal fell from 36.0% to 28.1%.

Energy usage in 2015 consistently exceeded 2014 with only the month of December seeing a decrease over the previous year due to moderate weather.

ERCOT Cheap Electricity 2015 Usage

The mild and windy December led to an impressive showing for Texas’ wind portfolio.  On December 20th Texas set a new all-time record for wind energy production with wind turbines contributing over 40% of the system-wide electricity at times.  For many, this came as proof that the state’s infrastructure can, in fact, handle the intermittent nature of wind power without causing problems for the grid.

2015 also saw the first Texas city to commit to becoming become 100% dependent on renewable energy.  What made the announcement of Georgetown all the more remarkable is the fact that the switch is driven by the desire for cheap electricity rather than purely environmental considerations.

See Also:  Texas Electricity Capacity Adequate For Spring And Summer Of 2015
See Also: ERCOT Releases The 2014 Breakdown Of Electricity Generation In Texas

Texas PUC Agrees To Electricity Fee Rate Hike

Electricity Demand OutlookThe Texas Public Utility Commission has agreed to a rate hike that will affect almost every electricity user in the state.  The rate increase comes in the form of an increase in the “System Administration Fee” collected by ERCOT.  ERCOT is the entity responsible for maintaining the state’s electricity grid.

The fee isn’t charged directly to consumers.  Rather, it is assessed on every kilowatt of electricity purchased from the wholesale electricity market in the state.  Retail electric companies such as TXU, Reliant and Cirro, purchase power from the wholesale market and resell that electricity to end users in the retail market.  Any increase in the wholesale cost of electricity will ultimately be pass through to consumers.

While the Texas electricity market is the largest deregulated market in the country, parts of it are still subject to public oversite.  The PUC must approve fee increases requested by ERCOT.  The system administration fee will be going up 19.4%; taking it from 46.5 cents per megawatt to 55.5 cents per megawatt.

Although the actual impact on Texas electricity rates will be small, consumer groups are still less than thrilled to see rate increases of any kind.   The Texas Coalition for Affordable Power points out that because the fee is based on usage, an increase in the rate along with an increase in the state’s power consumption will result in a net gain in revenue for ERCOT of more than 50% in less than 10 years.

The justification given for the rate increase was the need to finance new technology, comply will new (federal) regulations, and keep pace with inflation.   ERCOT says it hopes to hold the fee steady at least through 2020.

The 3 member panel in charge of the PUC warned ERCOT against getting too comfortable with large rate increases.

“I don’t want to see double digit increases in the future,” said Commissioner Kenneth Anderson.  “This is a one-time deal.”

The increase will go into effect in 2016.

See Also: Capacity Crisis In Texas Electricity May Be Overblown



Texas Electricity Capacity Adequate For Spring And Summer Of 2015

ERCOTThe Electric Reliability Council of Texas (ERCOT) is forecasting that the state will have adequate electric capacity to meet demand for the upcoming spring and summer seasons.  This comes as good news after recent worries about the state’s electricity capacity that have trouble the Texas grid the past few years.  The, now optimistic, outlook has been brought about by both an increase in power generation within the state as well as improved forecasting methods that generally paint a more optimistic picture of future demand for power in Texas.

ERCOT’s Seasonal Assessment of Resources Adequacy (SARA) predicts a peak demand of around 62,000 MW this spring against and expected system capacity of over 76,600 MW.  This puts the reserve margin at over 19%.  Forecasts for the summer are a bit tighter but still within a comfortable range.   ERCOT is expecting a peak summer demand of around 69,000 MW with and estimated capacity of around 77,000 MW.

While the forecast is based on average weather conditions over the previous 12 years and a typical amount of capacity loss due to outages, the forecast means that the grid should even stand up to extreme conditions such as the 2011 drought.  In a repeat of such a scenario, the grid would still have around 500 MW of reserve power according to the forecast.

ERCOT is the organization responsible for maintaining the reliability of the Texas electricity market.  The Texas grid is independent from the other main grids that provide electricity to the continental United States.  Texas is also the largest deregulated electricity marketplace. Competition among electric providers in Texas helps keep electricity rates lower.


ERCOT Releases The 2014 Breakdown Of Electricity Generation In Texas

West Texas wind energyJust 10 years ago, the majority of electricity generated in Texas was derived from the burning of coal. Since then, the state has taken great strides to diversify away from the high carbon-emitting energy source.

The electricity production numbers are now available for 2014. Last year Texas generated 36% of its electricity from coal, 41% from natural gas, 12% from nuclear plants and 11% from wind.

Texas is the largest producer of wind energy in the U.S., accounting for 20% of all wind energy produced in the nation. As additional transmission lines get more of West Texas and the Panhandle connected to the ERCOT grid, that number should continue to grow.

See Also: New Transmission Lines To Bring West Texas Wind To Dallas And Austin


New Forecasts Could Change Texas Electricity Debate

The long running, often contentious debate over the future of the Texas electricity market is about to enter a new phase as both sides of the argument await a key report expected to be released by ERCOT this week.   The debate, now several years old, concerns the potential restructuring of the Texas electricity market to address capacity concerns.

As the state’s economy and population continue to grow, more and more demands are being put on the state’s electric grid.  As the populous demands more electricity, producers are struggling to build out new capacity to meet that demand.  This has resulted in a reserve margin that is too close for comfort for many.  The reserve margin is essentially the amount of extra capacity that can be held in reserve to meet unexpected spikes in demand or the unexpected loss of power plants due to weather or mechanical failure.

Past reports by ERCOT have showed increasingly bleak forecasts with anticipated new capacity not being enough to keep up the anticipated growth in demand.  This has led to a proposal for a so-called “capacity market” for electricity in Texas.  Under a capacity market, producers are paid extra money to have extra capacity available even if that electricity isn’t ultimately used by the grid.  Many people see this as corporate welfare paid by the Texas electricity consumer to power producers.  Not, surprisingly, most of the state’s largest power consumers are opposed to the idea of a capacity market.

Flawed Forecasts

The debate has be further complicated by the unreliability of the forecast models used by the state’s electricity planners in the past.  Forecasts in recent years have greatly overestimated the increase in electricity demand that has accompanied the economic and population growth of Texas.  The new report about to be released by ERCOT uses a revised methodology for forecasting future demand growth.  The new methodology loosens the correlation between economic growth and the growth in electricity demand.  The result should show a better picture with regard to the state’s reserve margin in the coming years.

These new numbers have the potential to turn the debate, leaving proponents of a capacity market in Texas with less ominous data to back their arguments.  This could, in turn, be good news for electricity rates in Texas.  Cheap electricity rates have been blamed for creating the condition where power producers are unable or unwilling to build new power plants to handle future demand.   A capacity market would be specifically designed to inflate electricity rates in order to make it more attractive for energy companies to build power plants in Texas.

See Also: Microsoft Makes Large Texas Wind Power Purchase
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Capacity Crisis In Texas Electricity May Be Overblown

The debate about the possibility of a capacity market for electricity in Texas may have just changed.  An updated model for forecasting future electricity demand in the state has been put forth by ERCOT.  The new numbers substantially reduce the growth projections for electricity demand in Texas over the coming years.

In recent years there has been a great deal of hand wringing concerning the ability of the Texas electricity grid to keep up with future demand growth.  This has led to the “capacity market” proposal that would see an overhaul of the state’s deregulated electricity market.  It would lead to higher electricity rates and guaranteed capacity payments to producers of electricity in the state.

The impetus behind the proposed changes is the prediction that the state’s reserve margin for electricity would fall below acceptable limits.  The state targets a reserve margin of 13.75%; meaning that the state’s actual electricity capacity would exceed the expected peak demand by that amount. This is intended to insure against unexpected events that could lead to potential power outages such as unusual weather events or power plant failures.

The state’s most recent projection from May of last year showed the reserve margin falling below target by next year and continuing a downward trend to the single digits over the next few years.  When the new growth projections are plugged in to the May 2013 projection, a different story emerges.  The reserve margin sits at 16.69% in 2015, and grows to 17.88% in 2017 before trending lower again.

Year   Reserve Margin
2014      16.75%
2015      16.69%
2016      17.23%
2017      17.88%
2018      16.35%
2019      13.61%
2020      12.27%

Revised reserve margins based on new methodology.
Source: Energy Choice Matters

ERCOT’s new forecast methodology loosens the correlation between economic growth and increased electricity demand.  This is in response to the fact that recent projections have missed the mark by overestimating the amount of growth in electricity demand in relation to the economic growth the state has experienced.

According to ERCOT, “While peak demand growth has slowed to about 1 percent annually, the economic forecasts and non-farm employment statistics used in recent load forecasts have resulted in growth forecast estimates of 2 to 3 percent in the two- to three-year outlook.”

Although the old model projects a total demand growth of just over 8% in the next 3 years, the new method results in a demand growth projection of just over 4%.  This is a significant difference in a grid the size of the one in Texas.

The proposed new methodology is still subject to a final approval but it’s already been enough to shake up the debate on a capacity market in Texas.  As it stands, the state’s 3 member PUC committee seems to be leaning toward the adoption of a capacity market in some form while Commissioner Ken Anderson stands alone on the committee as a staunch critic of a capacity market.

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