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PSI webinar: How do recent changes at ERCOT affect you?
 

PSI webinar: How do recent changes at ERCOT affect you?

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You need to understand how recent changes at the Electric Reliability Council of Texas (ERCOT) will affect renewable energy in Texas. ...

You need to understand how recent changes at the Electric Reliability Council of Texas (ERCOT) will affect renewable energy in Texas.

Attend this webinar to hear Texas energy expert and Principal Solar, Inc. board member Ron Seidel provide an overview of recent changes at ERCOT and how they are likely to affect solar energy development in Texas. Ron will also provide expert insights into what is happening in the Texas electricity market today.

Be sure to take advantage of this opportunity to find out how these changes might affect YOUR business by joining the LIVE webinar and participating in the live Question & Answer session following Ron's presentation.

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  • Scheduled time (:00) – Welcome to ERCOT Update. We have several people still joining the audio portion of the webinar, so we’ll get started in a couple minutes.[Start recording]Start + :02 – Hello I’m Rick Borry and will be your host today. Before we get started, I have a few housekeeping notes. This webinar is XX minutes long. All participants are muted, but if you have trouble hearing the audio, you can send a text chat to me via the chat dialog in the lower right corner of your viewer window. Also, if you have any questions you can send those to me via text chat at any time. I will collect all questions and ask them of the presenter at the end of the session. The webinar is being recorded, and it will be posted online along with a copy of the slides later today.Today’s webinar is “ERCOT Update”. This webinar is part of the Principal Solar Institute webinar series, for professional installers, developers, owners, and operators of solar systems. We thank XX and YY for sponsoring this webinar. [Host should go on mute]
  • [Unmute Host]* Have 2-3 planted questions ready. Have discussion and Q&A.Conclude – That concludes today’s webinar – thank you for attending. Once again we thank our Sponsors XXX and YYY. Please be sure to click on their logos from the Webvent page and learn more about them, or arrange a follow-up call if interested. The webinar was recorded and will be posted online along with a copy of the slides later today. You can also check our events calendar and register for future webinars of interest.[Stop Recording][Mute everyone][Leave Webex open for about 5 minutes in case people are writing down contact information, etc.][ After 5-15 minutes, the recording will be available on Webex. Change the title and description, remove all modules from view (participants, etc.) and then select “Partial Recording” to truncate the start and finish parts that don’t apply to someone viewing a recording.][Post recording URL at Webvent and send archive email][Post slides][Post discussion Q&A][Post transcription, if available]

PSI webinar: How do recent changes at ERCOT affect you? PSI webinar: How do recent changes at ERCOT affect you? Presentation Transcript

  • Principal Solar Institute “How Do Recent Changes At ERCOT Affect You? An update on the ERCOT Resource Adequacy Situation " Ron Seidel Director, Principal Solar Ron Seidel is principal of RBS Energy Consulting, working with private equity, investment banks, and government on electric energy issues primarily in the ERCOT market. Previously, he was president of Texas Independent Energy, senior vice president of Energy Supply at City Public Service of San Antonio, and an executive at TXU where he was senior vice president of Fossil Generation and Mining, president of TXU Energy Trading, and operations manager at the Comanche Peak Nuclear Plant.
  • The ERCOT System Source: ERCOT
  • Texas Ties to Mexico and the Eastern Interconnection
  • ERCOT Capacity and Energy 2012 Installed Capacity 2012 Wind 13% Natural Gas 57% Hydro, biom ass, other 1% Nuclear 6% Coal 23% 69,480 Megawatts Source: ERCOT Energy Produced 2012 Wind 9% Hydro, biom ass, other 1% Nuclea 12% Natural Gas 44% Coal 34% 325,000 Gigawatt-hours
  • ERCOT Facts & Figures 200,000 Square Miles 40,530 miles of Transmission (2012) 74,000 MW Peak Capacity 10,574 MW of wind generation 67,180 MW Peak Load (2013) – Increase of 632 MW over 2012 Peak Load (1%) – Reduction of 1,125 MW from 2011 Peak Load (-1.6%) 13.75% Target Reserve Margin Source: ERCOT
  • ERCOT Load Growth ERCOT Projected Average Load Growth 2014 – 2022 is 1.5% or ~1,050 MW per year – Down from over 2% in previous ERCOT projections Equivalent to – One nuclear plant each year – Two coal plants each year – Two combined cycle gas plants each year Sources: ERCOT , RBS Energy Consulting
  • ERCOT Reserve Margins December 2012 / May 2013 Reports 14.0 12.0 10.0 Target =13.75% 8.0 % 6.0 4.0 2.0 0.0 2013 2014 2015 2016 December 2012 Source: ERCOT 2017 2018 2019 2020 May 2013 2021 2022
  • ERCOT Capacity Reserves Increase (but are still below target after 2014) 14.0% 12.0% 10.0% Target =13.75% 8.0% 6.0% 4.0% 2.0% 0.0% 2013 2014 2015 2016 2017 2018 2019 2020 2021 -2.0% May 2012 CDR December 2012 CDR May 2013 CDR 2022
  • ERCOT Reserve Margin Actual versus Target Reserve Margin 14.00% 12.00% Target Reserve Margin = 13.75% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 2011 2012 2013
  • Why is Resource Adequacy an Issue? Low natural gas prices reduce financial viability for new resources Peak power prices have been limited, restricting revenue for generators – especially peakers Market energy prices have not sent adequate signals to incent new capacity investment Electricity demand growth in Texas is significant, creating the need for new capacity May not be an issue
  • Questions What can be done to incent the development of new capacity – especially peaking capacity? Can the current energy-only market be modified to provide the necessary incentives? Should some form of capacity market be developed to ensure adequate resources are available when needed? Are the methods used for forecasting of demand and resource growth appropriate?
  • Public Utility Commission Actions  Raised the System Wide Offer Cap (SWOC) – – – – $4500/ MWhr beginning August 2012 $5000/ MWhr beginning June 2013 $7000/ MWhr beginning June 2014 $9000/ MWhr beginning June 2015  Process for recalling mothballed units for peak months  Better pricing for ancillary services and RUC units  Increased Peaker Net Margin to $300,000 or 3 X cost of new entry  Operating Reserve Demand Curve by Summer 2014 designed to increase prices during scarcity periods  Mandatory versus target reserve margin Source: The Brattle Group
  • Mandatory Reserve Margin Decision Supported by Commissioners Marty and Nelson Opposed by Commissioner Anderson Senator Fraser opposes action – Beyond PUCT authority – Will hold a hearing First step toward capacity market? – PUCT/ERCOT auction to ensure adequate capacity – Retail Electric Providers procure capacity
  • ERCOT Activities Wind Reliability factor increased – From 8.7% to 14.2% for West Texas wind – From 8.7% to 32.9% for Coastal Wind – Added over 900 MW of reliable resources Revising Load Forecasting Methodology New Demand Response Initiatives – 30 minute Emergency Response Service Pilot – Market bid demand response on 5 minute intervals
  • Future PUCT Considerations Should the electric market in ERCOT provide the same level of reliability as currently provided under ERCOT's reliability standard? Is another standard more appropriate? – ERCOT: 13.75% target reserve margin, or – NERC: 15% reference reserve margin What should the mandatory reserve margin be and how should it be ensured?
  • Current PUCT Considerations How can ERCOT's Capacity, Demand, and Reserves report be improved? Can the CDR report be used to measure the ERCOT market's progress in achieving the planning reserve margin? Waiting on a Brattle report due February 1 Waiting on the ERCOT December Capacity, Demand and Reserves Report
  • The Players Generators and PUCT Chair Nelson support a capacity market to ensure adequate reserves Many consumers support continuing with an energy only market with improvements Commissioner Anderson argues ERCOT has adequate reserves through 2018 New Commissioner Brandy Marty, appointed in August, will likely be the swing vote and now seems to favor a capacity market
  • What is a Capacity Market? Can take many forms Typically provides generators a guaranteed revenue stream sufficient to pay their full cost of production Usually an auction – ~ Three years in advance of the delivery year – Existing and new capacity Current market has some attributes of a capacity market –
  • PUCT Chairman’s Questions What resources should participate? How far forward should procurement occur? Should load serving entities have reliability responsibility? Should there be a transition mechanism? How should an auction be structured? How should self provision by load serving entities be structured?
  • Where Do We Go From Here? More PUCT Workshops / Deliberations / Rulemakings No real capacity issue until 2015 when reserve margin drops to 11.6% 2013 Legislature did not address the resource adequacy issue. Will they in 2015? My opinion: Some form of capacity market , possibly in early 2014
  • Potential Consequences Addition of a forward capacity market – Higher costs for consumers – Minimal renewable participation – Excess capacity if reserve forecasts are inaccurate – Unanticipated and unintended consequences Continuation of an energy only market – Higher costs for consumers due to tweaks – Insufficient capacity – Unintended and unanticipated consequences
  • Renewables Competitive “…both natural gas and renewable resources are likely to be competitive across a broad range of potential future market outcomes.” -Long Term Assessment for the ERCOT Region, December 2012
  • U.S. & Texas Solar Intensity Source: NREL
  • Achievable Solar PV Energy in Texas Reference: ERCOT Peak Load ~68 GW Urban PV = 154 GW (13% of U.S. Total) Rural PV = 20,000 GW (14% of U.S. Total) Achieving just 1% of this capability would produce over 200 GW or almost three times the current ERCOT maximum load. Sources: NREL, RBS Energy Consulting
  • Solar Synergy with Load 10000 ERCOT Load 50000 8000 40000 6000 Solar Profile 30000 20000 10000 4000 Wind Profile 2000 0 0 Wind Generation Source: RBS Energy Consulting Solar Generation 23:00 System Load 22:00 21:00 20:00 19:00 18:00 17:00 16:00 15:00 14:00 13:00 12:00 11:00 10:00 9:00 8:00 7:00 6:00 5:00 4:00 3:00 2:00 1:00 0:00 Hour Generation (MW) 12000 60000 System Load (MW) 70000
  • Solar Growth There were no solar projects in the ERCOT pipeline in December 2012 Currently, there are 19 solar projects under evaluation – Total over 1300 MW – Size range from 20 MW to 200 MW All of these projects are schedule for completion by the end of 2015 Not all will be built
  • Wind Generation Growth with Renewable Portfolio Standards 14000 12000 2025 Standard 10000 2015 Standard 8000 6000 4000 2009 Standard 2000 0 2000 2002 2004 2006 Installed 2008 Planned 2010 2012 2014
  • 18000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Actual and Projected Wind and Solar Growth Actual Projected 16000 14000 12000 10000 8000 Wind 6000 Solar 4000 2000 0
  • How Do Recent Changes at ERCOT Affect You? Uncertainty will be around for some time to come.  A forward capacity market or modified energy market will result in increased customer costs for reliability. The renewable contribution will increase, bringing benefits like cleaner air and, ultimately, lower energy costs.
  • Questions and Discussion Please enter your questions into the Chat window Ron Seidel Director, Principal Solar