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Legislative Advertising Paid For by: JuliaRathgeber, Association ofElectric Companies ofTexas
1005Congress, Suite 600,Aust...
Generation Companies
AECT Companieswithinthe ERCOT competitivemarket
www.aect.net (512) 474-6725
2
Retail Electric Provide...
Steps to Competition: WholesaleMarket
www.aect.net (512) 474-6725
3
Senate Bill No. 373 enacted in May 1995
– Required uti...
Overview of ERCOT
www.aect.net (512) 474-6725
4
ERCOT: By the Numbers
• 90% of the electric load in Texas is in ERCOT
• 75...
ERCOT: Separate Companies ProvideRetail, Transmission & Distributionand
Generation Services
www.aect.net (512) 474-6725
5
...
The CompetitiveWholesaleMarket in ERCOT
www.aect.net (512) 474-6725
6
Competition Has Brought Greater Efficiency to
the Wh...
Increased Population DrivesFuture ElectricConsumption
www.aect.net (512) 474-6725
7
1980 1990 2000 2010 2020 2030 2040
Sou...
ERCOT Generation Mix: more natural Gas thanU.S. Average
www.aect.net (512) 474-6725
8
Note: Oil-fired generation is neglig...
Gas on the Margin in ERCOT Nearly Year-Round
www.aect.net (512) 474-6725
9
• Nuclear and coal-fired power plants in ERCOT ...
ERCOT WholesaleMarket Management
www.aect.net (512) 474-6725
10
System Reliability
ERCOT oversees system reliability.
ERCO...
Key Stats in the Competitive Wholesale Market
11
Long-Term Outlook for ERCOT Generation Resources
www.aect.net (512) 474-6725
12
Source: ERCOT, Report on the Capacity, Dem...
DecliningPower Prices Over Time
www.aect.net (512) 474-6725
13
Source: ERCOT real time settlement data, north zone, 2008-2...
VariableCosts Drive Market Pricing in ERCOT
www.aect.net (512) 474-6725
14
Fuel
Type
Approx. Range for “Short-run” Variabl...
EPA RegulationsImpactingFossil Fuel Generation
www.aect.net (512) 474-6725
15
Key Takeaways
www.aect.net (512) 474-6725
16
Market Efficiency is a Hallmark of the Competitive Wholesale Market
When elec...
How To Reach Us
www.aect.net (512) 474-6725
17
For background on electric
markets, environmental data and
Electricity 101
...
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The Wholesale Electric Market in ERCOT - 2017

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Latest data and information on the performance of electric generation in the competitive ERCOT wholesale market.

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The Wholesale Electric Market in ERCOT - 2017

  1. 1. Legislative Advertising Paid For by: JuliaRathgeber, Association ofElectric Companies ofTexas 1005Congress, Suite 600,Austin,TX 78701 • 512-474-6725• www.aect.net 2017 The WholesaleElectric Market in ERCOT
  2. 2. Generation Companies AECT Companieswithinthe ERCOT competitivemarket www.aect.net (512) 474-6725 2 Retail Electric Providers Total ERCOT Capacity: >77,000 MW
  3. 3. Steps to Competition: WholesaleMarket www.aect.net (512) 474-6725 3 Senate Bill No. 373 enacted in May 1995 – Required utilities to provide non-discriminatory open access transmission to support wholesale competition in ERCOT. – Recognized new, unregulated participants in ERCOT wholesale market.  Exempt wholesale generators  Power marketers – Allowed non-utility wholesale market participants to offer market-based prices in ERCOT. – Deregulated electric cooperative distribution rates. Note: Non-ERCOT areas are subject to FERC jurisdiction for wholesale services, including transmission services.
  4. 4. Overview of ERCOT www.aect.net (512) 474-6725 4 ERCOT: By the Numbers • 90% of the electric load in Texas is in ERCOT • 75% of ERCOT’s load is in the competitive market, including 24 million customers • Over 550 generating units, providing 77,000 MW of generating capacity during peak demand • 46,500 miles of high-voltage transmission ERCOT Responsibilities • System reliability – planning and operations • Wholesale market settlement for electricity production and delivery • Retail switching process for customer choice • Open access to transmission ERCOT region
  5. 5. ERCOT: Separate Companies ProvideRetail, Transmission & Distributionand Generation Services www.aect.net (512) 474-6725 5 • In competitive markets, consumers have multiple retail electric providers (REPs) and service plans to choose from. • Wholesale and retail prices are set by competitive market forces, while the PUC sets transmission and distribution rates. Power Flow Financial Flow Regulated
  6. 6. The CompetitiveWholesaleMarket in ERCOT www.aect.net (512) 474-6725 6 Competition Has Brought Greater Efficiency to the Wholesale Market – Generators shoulder the risk of building new power plants, bringing efficient, cost-effective generation to consumers. – New power plants produce more electricity per unit of fuel. – Operational efficiency of a competitive market helps push wholesale prices downward. – The competitive market will continue to bring forward the right mix of technology and fuel type based on environmental choices by policymakers.
  7. 7. Increased Population DrivesFuture ElectricConsumption www.aect.net (512) 474-6725 7 1980 1990 2000 2010 2020 2030 2040 Sources: U.S. Census, Texas State Data Center 0.5 scenario Texas’ Projected Population Growth (millions) 1980-2040 28.9 million 25.1 million 37.0 million 32.9 million 20.9 million 17.0 million 14.2 million To meet increases in electric load created by Texas’ rapid population and economic growth, Texas will require additional power, transmission and distribution, customer demand response and energy efficiency.
  8. 8. ERCOT Generation Mix: more natural Gas thanU.S. Average www.aect.net (512) 474-6725 8 Note: Oil-fired generation is negligible in ERCOT, accounting for less than 0.1% of ERCOT capacity and load; numbers may not add up to 100% due to rounding. Sources: ERCOT (2015 data); EIA (2015 data) Capacity(MW)Energy(MWh) ERCOT U.S. Average Nuclear Natural Gas Coal Non-Hydro Renewables (Mostly Wind) Hydro 33% 33% 20% 6% 1% Coal Nuclear Natural Gas Other 48% 28% 11% 1% Coal Natural Gas Nuclear Wind 53% 22% 6% 18% 1% Other Wind 12% Other (Mostly Petroleum) 7% Nuclear Natural Gas Coal Non-Hydro Renewables (Mostly Wind) 43% 26% 9% 7% 6% Other (Mostly Petroleum) 9% Hydro
  9. 9. Gas on the Margin in ERCOT Nearly Year-Round www.aect.net (512) 474-6725 9 • Nuclear and coal-fired power plants in ERCOT operate approximately 90 percent of the time • Some natural gas-fired generation operates at nearly all times to meet demand • Peaking natural gas-fired power plants are ramped on and off, depending upon demand • Wind-generated electricity is only intermittently available, depending on wind conditions Typical August Generation Output in ERCOT Source: ERCOT
  10. 10. ERCOT WholesaleMarket Management www.aect.net (512) 474-6725 10 System Reliability ERCOT oversees system reliability. ERCOT is part of national reliability council. ERCOT protocols, approved by PUC, mandate system reliability standards that all market participants must follow. Statute and Rules Address “Market Power” and Generation Merger Issues Independent Market Monitor oversees wholesale market operations. Generating capacity owned and controlled by a Power Generation Company limited to 20% of installed generating capacity capable of delivering power to a power region. Administrative penalties for market power abuse were reviewed and updated during the 79th Regular Session. Mergers of Power Generation Companies subject to PUC review. Market Design ERCOT transitioned to a Nodal Market in 2009 as a result of PUC rulemaking. The change is expected to bring cost-savings and additional efficiency to the market by enhancing market transparency and allocating costs more accurately to market participants.
  11. 11. Key Stats in the Competitive Wholesale Market 11
  12. 12. Long-Term Outlook for ERCOT Generation Resources www.aect.net (512) 474-6725 12 Source: ERCOT, Report on the Capacity, Demand and Reserves in the ERCOT Region, December 2016 60000 65000 70000 75000 80000 85000 90000 2017 2018 2019 2020 2021 ERCOT Summer Resources and Firm Load Forecast: 2017-2021 Total Resources Peak Load Forecast Reserve Margin 16.9% 20.2% 19.6% 19.5% 19.0% This report does not include retirements of any coal-fired generation in its calculation of reserve margin
  13. 13. DecliningPower Prices Over Time www.aect.net (512) 474-6725 13 Source: ERCOT real time settlement data, north zone, 2008-2016 63 30 36 42 25 30 37 26 24 28 18 17 0 20 40 60 80 2008 2009 2010 2011 2012 2013 2014 Q1 Q2 Q3 Q4 Q1 Average of real time power prices in ERCOT north zone, $/MWh 2015 2016 Since Q1 2015, average power prices have dropped from $26 to $17/MWh; trailing 12-month price averages $22 / MWh
  14. 14. VariableCosts Drive Market Pricing in ERCOT www.aect.net (512) 474-6725 14 Fuel Type Approx. Range for “Short-run” Variable Costs ($/MWh) Wind/Solar Nuclear Coal Gas ‘CCGT’ Gas Steam Gas Turbine (‘CT’) TypicalDispatchOrder 0 10 20 30 40 50 (2.3) 1 0 8 12 15 13 23 40+? 37 31 1 Effective negative cost reflects federal Production Tax Credit (PTC) 2 ERCOT 15-minute settlement data, north zone ($/MWh); “last 12 mo.” is through Q1 2016; Q1 2016 “5 x 16” (6am -10pm for 5 weekdays) = $20/MWh Source: Estimates based on typical range of plant fuel costs (gas starting at $1.75/mmbtu), heatrates, & variable O&M costs; CTs exclude startup costs • At low natural gas prices (~$2 / mmbtu) many CCGTs can operate cheaper than much of the ‘baseload’ coal fleet • ~19 GW of renewables will bid zero or negative if needed to capture the PTC, displacing other generators. This can cause negative pricing. At various gas prices ($/mmbtu) $2+ $3+ $4 Recent 7x24 power prices2: $17 Q1 ‘16 $22 Last 12 mo. 53
  15. 15. EPA RegulationsImpactingFossil Fuel Generation www.aect.net (512) 474-6725 15
  16. 16. Key Takeaways www.aect.net (512) 474-6725 16 Market Efficiency is a Hallmark of the Competitive Wholesale Market When electricity is priced by the market, cost-effective generation thrives Power plants in Texas are relatively new, producing more electricity per unit of fuel More Power is Needed to Serve the Growing State of Texas Demand for electricity continues to rise along with population and economic development The ERCOT market has strong fuel diversity, with greater use of natural gas than the national average Market Design Must Reflect Market Prices Wholesale power prices are declining, due to a mixture of low fuel costs (especially natural gas), market forces and regulatory decisions All of these factors will impact what fuels are used for power At the same time, we must be aware of the state’s need for new generation, as well as generation to replace older or uneconomic power plants
  17. 17. How To Reach Us www.aect.net (512) 474-6725 17 For background on electric markets, environmental data and Electricity 101 Regular updates from AECT and its member companies Keep up with pictures and links to latest documents released by AECT AECT.net @aectnet AECT Advocacy on Facebook

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