ERCOT Sets New, All-Time Hourly Load Records In Texas4 min read
The Electric Reliability Council of Texas (ERCOT) set several new, all-time record loads this August, the latest being on August 10 when load set a new record of 69,783 MW between 4 p.m. and 5 p.m. CST. This surpassed the August 2011 record of 68,305 MW by 2.2 percent.
While temperatures were not as hot in 2011, the combination of population growth and economic expansion in Texas is what drove load levels to new highs. Index prices have also increased slightly, reaching $1,000/MWh in the spot 15 minute market. In addition, the Operating Reserve Demand Curve (ORDC) has registered its highest monthly average since inception in June 2014. On the afternoon of Aug.13, ERCOT issued a Conservation Alert as 30 minute generation reserve margins dropped below 2,500 MW.
Such events are a reminder that under a scenario with strong load growth in Texas and tighter generation reserve margins in the coming years, ERCOT could be subject to significant scarcity pricing if real-time prices were to move to the price cap of $9,000/MWh.
The last time ERCOT experienced significant summer heat (+100F) for more than a week was in 2011 when the state was facing a severe drought. Growth in the Texas economy and ERCOT power load has continued over the past several years with the expansion of the manufacturing, oil and gas and service sectors, yet summer 2012-’14 were not significantly warmer than normal.
At the same time, the amount of new generation being installed in the ERCOT market declined from 2010-‘13, and a lot of the new generation that was installed was wind, which is intermittent in nature.
The end of this July into August has seen sustained above normal temperatures in Texas, which contributed to load reaching these new record levels.
As highlighted in our August Market Update, ERCOT real-time prices have averaged $41-$42/MWh this August compared to $35-$38/MWh one year ago. Prices averaged approximately $101/MWh for the entire day on August 13th, but hit 15 minute interval highs of $1,055/MWh that afternoon (HE 17), according to the RTO Insider.
The press release issued by ERCOT notes increased demand and generation outages were attributed as the contributing factor for the Conservation Alert, ultimately resulting in higher prices. In the August 17, 2015 issue of the subscription publication service Platts.com “MegaWatt Daily,” an article by Jeffrey Ryser suggests the intermittency of wind generation, which fell to low (below planned) levels during the high ERCOT demand, highlights concern about difficulty in predicting wind generation.
The article identifies there currently is 13,424 MW of wind capacity in ERCOT, but wind performance is historically weakest in the summer afternoon and further that on the afternoon of August 13, available wind resources were only 844 MW or 1.2 percent of total demand (67,713 MW).
With 30-minute reserve margins below 2,500 MW in HE 16 on August 13, ERCOT is noted as having stated that if reserve margins had declined to below 2,300 MW, they would have declared an emergency response from industrial customers.
A dip below such threshold could have triggered even higher prices in the real-time market as the ORDC charge would have escalated.
Through August 17, ORDC is currently averaging $10.93/MWh for the month of August. From June 2014 through June 2015, it has averaged less than $1/MWh for each month and averaged $1.34/MWh for July. With a break in temperatures this week in ERCOT, ORDC is likely to decline, but a possible return of 100F weather later in August could push scarcity prices higher again.
Customers should be aware that continued growth in the Texas population and economy could outpace new capacity being installed in the ERCOT market.
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