Are You Ready For This Summer’s Perfect Texas Storm?

June 14, 2018

In October 1991, Hurricane Grace formed near Bermuda and began moving north. At the same time, a massive low-pressure system moved south from Canada. They converged in the North Atlantic, creating a deadly, cataclysmic weather event that was dubbed “the perfect storm,” later immortalized in the film of that name starring George Clooney.

No such weather event (or related George Clooney appearance) is currently predicted for Texas this summer. However, two significant man-made forces are currently converging in the ERCOT (Electric Reliability Council of Texas) energy market: Reduced supply and projected record peak demand. The resulting “perfect storm, Lone Star-style” of clashing supply and peak demand projections has led ERCOT to ask those involved in demand response (as well as generators and transmission owners) to focus on maximizing performance.

Let’s take a look at these two big factors impacting ERCOT this summer. First, supply. In Texas, the name of the game is reliability. To ensure a reliable grid, ERCOT prefers to maintain a capacity reserve margin target of 13.75% of peak electricity demand. These reserves enable them to serve electricity needs in case of unexpectedly high demand or levels of unanticipated outages from generation plants.

As we noted last November, ERCOT approved the retiring of three coal-fired generation plants, reducing available capacity reserves by about 4,200 MW. In its Final Summer 2018 Seasonal Assessment of Resource Adequacy (SARA), ERCOT projects total summer capacity to be 78,184 MWs, and the Summer 2018 planning reserve capacity to be 5,428 MWs, or roughly 11% reserve margin. That’s well below its capacity reserve margin target of 13.75% for peak electricity demand.

Second, demand. Texas currently boasts the nation’s fastest growing economy. Its growth is driven, as Forbes reported in May, by a resurgence in oil and gas drilling in the panhandle as well as growth in manufacturing that outpaced national growth rates in that sector. ERCOT’s SARA report acknowledges that this growing economy will continue to drive demand for electrical power, going as high as 84,814 MWs by 2023.

In fact, ERCOT predicts “record-breaking peak demand usage” for this summer—72,756 MWs. According to the SARA report, that’s more than 1,600 MWs higher than the all-time peak demand record of 71,110 MW set in August 2016.

So—72,756 MWs of demand. 78,184 MWs of capacity, 5,428 MWs of reserve planning capacity… frankly, that’s cutting it pretty close. Maybe tooclose. In fact, ERCOT thinks these tight reserves could trigger the need to deploy Emergency Response Service (ERS) demand response capacity, “to maintain sufficient operating reserves.”

If this happens, it increases the potentialforreal-time emergency events in order to maintain the grid’s reliability. How does this affect ERS participants?

ERS pays organizations like yours for using less energy when the grid is stressed and electricity prices are high. There are two types of ERS programs: ERS 10 and ERS 30, which pay businesses for being available to curtail their electricity load within 10 and 30 minutes respectively. The request to curtail is a referred to as a “called event”.

In the aftermath of the SARA report’s release, our ERCOT office heard from a number of customers who were concerned about the potential for real-time extended events. They feared disruptions to operations and the potential negative impact these disruptions could have on their customers and their bottom line. But how likely are we to see calls to curtail in ERS?

Looking at historical data, not very likely. Called events in ERS are rare. Between 2008 and 2017, a total of three events have been called. In the last eight years, we have seen no events at all. Over the past ten years, capacity shortage events above and beyond annual tests have averaged 0.3 per year in ERS 10, and 0.2 per year in ERS 30. As far as frequency goes, over the last 10 years the most that the ERS program has seen in one year is… two.

Based on the numbers, then, the odds are good that you won’t have to endure many, if any, curtailment requests. We’re confident that you should still be able to participate as in years past, and continue to earn revenue for your availability.

That said, CPower recommends the following steps to maximize your performance in ERS this summer.

Check your plan. Businesses and organizations change, expand, contract, evolve, and are seldom the same year over year. The curtailment plan you first developed with CPower’s engineers may no longer be the best fit for your current electricity usage and operations. Contact CPower and set up a review of your plan. An up-to-date curtailment plan is the best path to success in demand response. (You may even find some additional kWs to enroll that weren’t there before.)

Automate your DR. Automation is required for ERS 10 participation, but it’s still optional in ERS 30. Having even one or two steps on your curtailment process automated can make the difference between performing and underperforming. Make sure you discuss automation opportunities, including incorporating CPower’s Link API, when you review your curtailment plan.

Test your generators—at full load. If you’re counting on your back-up generators to provide you with needed energy during your curtailment events, make sure they can handle the load. Too many generators undergo their monthly and weekly test running off load, for fear of wearing their generators out. The problem is, generators are designed to run at their stated rating, every time. In fact, testing at less than full load can ruin an engine in as little as 50 hours of accumulated running time. Ask CPower’s engineers to review your current onsite generation process as part of your curtailment plan review.

While you’re at it, set up some time to assess your generators for enrollment in demand response. Properly permitted, onsite generation is source of additional revenue. Talk with CPower about your options.

CPower is here to help you through what could be a long, hot summer in the Lone Star State. ERCOT expects everyone, including demand response participants, to give the grid maximized performance for the benefit of all. CPower is here to help you do just that.

Join CPower on Tuesday, June 26, for the third in our ERCOT Webinar Series, “The Perfect Texas Storm: Low Reserves, High Prices, and Record Peak Demand for Summer 2018.” Join CPower’s Texas experts Mike Hourihan and Joe Hayden as they tackle the topics that will impact demand response customers this summer.

The webinar is free and now open for registration.

“The Perfect Texas Storm: Low Reserves, High Prices, and Record Peak Demand for Summer 2018”

Date: June 26, 2018

Time: 10:00-11:00 a.m. Central Time

REGISTER NOW

Published by

Mike Hourihan

Mike Hourihan is market development manager and analyst for the ERCOT market. He is a long-time advocate for demand-side resources participation as a reliable low-cost alternative to traditional generation assets. He has extensive experience in analyzing and developing market rules in multiple energy markets across North America.

Mike Hourihan

Mike Hourihan is market development manager and analyst for the ERCOT market. He is a long-time advocate for demand-side resources participation as a reliable low-cost alternative to traditional generation assets. He has extensive experience in analyzing and developing market rules in multiple energy markets across North America.