‘So far, so good’ for Texas grid operator as records fall

Source: Edward Klump, E&E News reporter • Posted: Thursday, August 9, 2018

Summer is far from over in Texas, but the CEO of the state’s main power grid operator is pleased with how the system handled record peak demand last month.

The Electric Reliability Council of Texas (ERCOT), which had to cope with triple-digit temperatures in cities such as Dallas and Austin, reported several all-time demand peaks in July.

People in the market were aware of what needed to be done and the generation outage rate was extremely low, Bill Magness, ERCOT’s chief executive, told the council’s board of directors yesterday.

“I think this is a good testament to how the participants in this market can perform and work in a stressed situation,” Magness said.

The comments from the CEO are notable because ERCOT and market observers had cautioned that this could be a tight summer (Energywire, May 2). That’s in part because Vistra Energy Corp.’s Luminant business took a number of coal-fired generating units off the grid this year. While some retail electric providers asked customers to conserve power in July, ERCOT did not reach for that lever during the hot streak.

The current record peak demand of 73,259 megawatts came in the 4-5 p.m. period of July 19. Record weekend peak demand of 71,444 MW followed on July 22 between 5 and 6 p.m. The figures are based on preliminary operating data. Before this summer, the all-time peak was 71,110 MW from August 2016.

Dan Woodfin, senior director of system operations at ERCOT, said yesterday that the region saw contributions during the July hot stretch from renewables and private use network capacity as well as power brought in from elsewhere. But he said the key story involved generation unit availability.

Hopefully, cooler weather more recently has given units a chance to regroup and fix some things, Woodfin told ERCOT’s board, in case hotter weather or tighter conditions emerge again this summer. The ERCOT region features a mix of generation resources, including facilities that rely on natural gas, coal, wind and nuclear.

DeAnn Walker, chairwoman of the Public Utility Commission of Texas, said she expects continued reliability in the ERCOT region after record load in July.

“The ERCOT grid remained reliable due in part to low generator outages and customer demand response,” Walker said in a statement. “ERCOT’s reliability this summer reflects the value of preparation and ongoing collaboration between market participants and ERCOT.”

Walker said the commission has opened a project to consider potential changes to the ERCOT market and operations, with a review slated to occur this fall.

Vistra and NRG

The ERCOT region has seen some elevated prices this summer, including a real-time average hub price that topped $2,100 per megawatt-hour during one notable July interval. But it hasn’t experienced the sort of huge, sustained price spikes that some experts thought were possible. That has been disappointing to some observers, who also have been tracking forward prices that look into the future.

NRG Energy Inc. and Vistra, which boast retail and generation operations in Texas, continued to praise their integrated setups recently as they addressed ERCOT’s summer.

During a Monday earnings webcast, Vistra CEO Curt Morgan noted recent ERCOT peak demand records and discussed what’s known as the day-ahead market.

“Given these high temperatures, day-ahead hourly prices were regularly higher than $1,000 per megawatt-hour,” he said. “Vistra was able to capture some of this favorability.”

Morgan said July real-time prices settled largely consistent with the company’s expectations when factoring in normal actual wind and strong ERCOT-wide plant performance.

“It appears the hype was overdone coming into the summer just like the response recently on August 2018 forwards and 2019 and 2020 forwards to the downside,” he said, outlining the potential for “increasingly tight market conditions” in 2019 and 2020.

NRG CEO Mauricio Gutierrez said on his company’s earnings webcast last week that record load in July was met with “equally impressive reliability across the grid” that tempered real-time pricing.

“In other words, it took nearly perfect systemwide reliability to meet” the summer peak demand, Gutierrez said. He added that “the longer-term outlook for ERCOT fundamentals” remains very strong.

ERCOT likely will have more detail on the summer performance in October. It also may provide more information in the future on wind performance.

Some examination suggests that a good scenario for high wind generation includes high temperatures in West Texas, and even more so if it’s really hot there and much less hot in the rest of the state, according to Chris Coleman, senior meteorologist at ERCOT. He told ERCOT’s board such conditions can be seen, for example, in June and somewhat in July.

Something to watch during any further hot stretches this summer is the possibility of noteworthy drops in wind energy output at important times. Beth Garza, director of the independent market monitor for the ERCOT region, described the potential for less wind in August. Garza told ERCOT’s board she wouldn’t declare summer over yet.

ERCOT’s Magness noted yesterday that plenty of days remain in August and September. So some hot tests could still await ERCOT and generators in the region.

“We gotta keep more wood in this room,” Magness quipped. “So far, so good on the summer.”