Dive Brief:

• The grid operator for most of Texas is continuing to see strong growth in peak demand, but should be able to keep the lights on next summer amid an improved reserve margin fueled by new renewable and gas-fired resources and improved wind capacity accounting.
• The Electric Reliability Council of Texas (ERCOT) went into the 2019 summer with a reserve margin of 8.6% and at times was forced to rely on demand response resources to maintain reliability. New generation means the planning reserve margin for summer 2020 is expected to improve to 10.6%.
• ERCOT is forecasting peak demand of 76,696 MW, driven by the growth of industrial facilities in West Texas and on the coast. The current system-wide peak demand record of 74,820 MW was set during a heat wave this August.

Dive Insight:

Texas went into last summer with a thin reserve margin but expectations that it would rise quickly. That scenario is playing out, officials said Thursday.

ERCOT released its Capacity, Demand and Reserves (CDR) report, including planning reserve margins for the next five years. The report shows, based on preliminary data from generation owners, that new capacity additions from planned projects for summer 2020 total 7,633 MW.

The grid operator says its interconnection queue shows the majority of new generation projects are renewable and small, flexible gas-fired resources.

The CDR report tallies all operational and planned resource capacity, and provides annual projections of ERCOT’s planning reserve margins for the summer and winter seasons.

But there have been project cancellations and delays as well. 

Since the May 2019 CDR report, two gas-fired plants totaling 1,227 MW have been canceled, and eight solar projects with a 1,056 MW capacity contribution have been delayed. But in the same timeframe ERCOT approved 1,058 MW of installed capacity for commercial operations, and a total of 4,654 MW of installed capacity became eligible for inclusion in the CDR.

Not all of the changes to the CDR come from adding or canceling resources. ERCOT has also been working to more efficiently capture the value of resources already in place.

Peter Warnken, ERCOT's manager of resource adequacy, said the grid operator has approved new rules for how wind peak capacity contributions are counted. And it created a separate Texas panhandle zone "to capture the higher availability of those resources," he said during a call with journalists to discuss the report.

"It is a complicated situation," he said, accounting for new methodologies and rules alongside new projects, delays, cancellations and changes to capacity ratings.

The eight delayed solar projects have now been pushed to 2021, meaning ERCOT's reserve margin should be even more comfortable than previously expected. The December CDR anticipates an 18.2% reserve margin for summer 2021, compared with the 15.2% it estimated in its May report. 

In the future, ERCOT could get a boost to its peak capacity resources from energy storage. But for now, there is very little included in the report because it is not sufficiently long duration to meet peak capacity, according to Warnken.

"Most batteries on the system don't have a sustained capability, so by default we give them almost zero" capacity contribution, Warnken said. More information is needed "to assign reasonable capacity contributions."

New rules could be coming out next year, he said.

The grid operator established a Battery Energy Storage Task Force this year to identify issues surrounding integration of the resources, and is currently developing new procedures to address things like technical requirements, modeling needs and rules for incorporating batteries.

ERCOT's next Seasonal Assessment of Resource Adequacy will be released in March 2020, and the mid-year CDR report will be released in May 2020.