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.
PSI webinar: How do recent changes at ERCOT affect you?
1. 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.
4. 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
5. 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
6. 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
7. 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
8. 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
10. 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
11. 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?
12. 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
13. 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
14. 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
15. 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?
16. 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
17. 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
18. 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
–
19. 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?
20. 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
21. 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
22. 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
24. 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
25. 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
26. 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
27. 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
29. 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.
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]
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