Fayette Power Project 1124

The Fayette Power Project, a coal-fired power plant near La Grange, Texas, in winter 2019. Austin Energy on Nov. 1 said it would not retire its 570-MW share in Fayette by the end of 2022 as previously planned. The plant partially failed during the cold-weather event in February.

The Texas grid operator in a new assessment says it has made significant improvements since the February storm that plunged millions of state residents into darkness and left many without heat and water for days during freezing weather.

But critics fear the Electric Reliability Corporation of Texas has not done enough to stave off another disaster should cold weather return to the Lone Star State this winter.

"Assuming that the ERCOT Region experiences typical winter grid conditions, ERCOT anticipates that there will be sufficient installed generating capacity available to serve the system-wide forecasted peak demand for the upcoming winter season," the grid operator said in its Nov. 19 Seasonal Assessment of Resource Adequacy for winter 2021-2022.

The assessment is based on normalized assumptions that exclude the unplanned outages that occurred during the February cold-weather event "due to the exceptional impact of Winter Storm Uri," as the event is known. Specific information "such as a system-wide heat wave" can be used to consider the range of resource adequacy for seasonal assessments that look ahead less than a year "to consider the range of resource adequacy outcomes in a more deterministic manner," the report says. However, the outlier figures from February 2021 are excluded from the base analysis.

A recent report from the Federal Energy Regulatory Commission and the North American Electric Reliability Corporation on the February cold-weather event, which affected other areas of the Midwest and south-central U.S. as well as Texas, pointed out that the region has experienced unusually cold weather in four of the past 10 years and that ERCOT has repeatedly failed to require mitigation measures from its participants as recommended by FERC in the aftermath of previous events (see CEM No. 1668).

ERCOT's new assessment anticipates a peak demand of 62,001 MW for the coming winter season, which runs from December through February, based on average weather conditions at the time of winter peak demand from 2005 to 2019. The grid operator says 84,861 MW of operational capacity will be available for the season. Based on those assumptions, ERCOT anticipates 22,860 MW of reserve capacity, representing a 43.3-percent reserve margin.

Over two days during the February storm, ERCOT averaged 34,000 MW of planned and unplanned generation outages, according to the FERC and NERC report. Firm load shed lasted almost three consecutive days during the event and peaked at 20,000 MW.

Two thermal generation resources, one coal-fired and one natural gas-fired, will be out of service for the 2021-2022 winter season, ERCOT's seasonal assessment says. Three units, two gas-fired and one biomass-fired, that previously operated only during the summer season are now slated for year-round operation, adding an additional 223 MW. However, one of these, a 61-MW gas unit, is currently experiencing an extended outage.

The assessment includes a total of nine scenarios, running from "base" and "moderate" to "extreme" reserve-capacity risk outlooks. The five extreme-risk scenarios, which ERCOT characterizes as "low-probability, high-impact scenarios," consider varying levels of generation outage and renewable resource output, with a high winter peak load of 72,772 MW. Under such circumstances ERCOT predicts a reserve margin of 10,771 MW. The extreme load estimate is based on 2011 weather conditions—the coldest in recent history, prior to 2021—and an August 2020 economic forecast. It falls thousands of megawatts short of the estimated demand during the 2021 winter peak, which is impossible to calculate due to load shed and other unplanned outages.

ERCOT's winter scenarios for the upcoming season include a new "extreme low" renewables-output assumption and incorporate estimates of thermal and renewable energy improvements stemming from the Texas Public Utility Commission's October Electric Weatherization Standard. They also take into account voluntary weatherization activities performed by natural gas suppliers and pipeline operators, the grid operator says (see CEM No. 1665).

A white paper on ERCOT market-design reform, released in September by Energy and Environmental Economics in cooperation with former ERCOT Independent Market Monitor Beth Garza, proposes a "reliability obligation" for ERCOT load-serving entities. The proposal reflects provisions put forward in Texas' SB 3, passed after the February event, to ensure reliability. The research was funded by NRG and Exelon. Garza is now a senior fellow with the R Street Institute's Energy and Environmental Policy team, which "seeks to advance a cleaner environment and a thriving economy through principles of market competition, limited government and well-founded science," according to the institute's website.

FERC in its annual enforcement report, released Nov. 18, said it has been conducting a comprehensive review of wholesale natural gas and electricity market activity during the February cold-weather event to determine whether any wholesale market participants engaged in market manipulation or other violations. Investigators have evaluated six tips received through FERC's enforcement hotline regarding potentially improper market-participant behavior during the cold snap. They have also met with industry participants and public interest groups to discuss their concerns.

FERC officials have coordinated with the attorneys general of Colorado, Kansas, Missouri and Texas regarding potential market manipulation in the Southwest Power Pool and Midcontinent Independent System Operator during the February freeze, the report said (see related story).

The ERCOT market, located entirely within the state of Texas, is outside of FERC's jurisdiction, but the ERCOT Independent Market Monitor in March recommended downward adjustments of the record-high wholesale prices of $9,000 per MWh that endured for 32 hours during the cold snap (see CEM No. 1633). The extended high pricing led to multiple bankruptcies among ERCOT LSEs, while some generation providers made extraordinary profits.

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Associate Editor - California Energy Markets

Abigail Sawyer grew up in northwestern New Mexico near two massive coal-fired power plants. She spent many hours gazing out the car window at transmission lines on family road trips across the Southwest and now reports on the region from San Francisco.