Return to Blog

ERCOT reserve margins likely to dip below target: IMM

Several coal- and natural gas-fired power plants are shutting down in Texas within the next year. This is expected to drop ERCOT’s reserve margin below their target threshold, which board members are expecting will strengthen power prices in the coming years.

Recently announced planned retirements of 4,500 MW of generation capacity in the Electric Reliability Council of Texas, plus the indefinite shutdown of another 118 MW, would likely push reserve margins below ERCOT’s target of 13.75%, ERCOT stakeholders learned Tuesday.

During the ERCOT Board of Directors meeting Tuesday, Bill Magness, ERCOT president and CEO, said his staff was working to determine whether any of the resources announced for retirement are needed to maintain system reliability, which may prompt the grid operator to negotiate reliability-must-run contracts. Magness said these analyses should be completed by the board’s December 12 meeting.

On Friday, Vistra Energy announced plans to close two coal-fired power plants, Big Brown southeast of Dallas and Sandow northeast of Austin, totaling about 2,400 MW of nameplate capacity in early 2018, after announcing on October 6 the planned retirement of its 1,800-MW Monticello coal plant in northeastern Texas in January.

Talen Energy informed ERCOT on September 27 that it intended to retire the 300-MW Unit 1 of its Barney Davis gas-fired power plant on the Texas Gulf Coast.

And on October 5, ERCOT issued notice that the city of Garland, Texas, planned to indefinitely shot two gas-fired units at its Spencer plant outside Dallas, with a combined capacity of 118 MW.

Beth Garza, who heads Potomac Economics’ independent market monitor unit for ERCOT, said that if none of these units are needed for reliability, “we’re looking at a much different situation going into the summer of 2018 than we had in what I call the ‘fat and happy’ times we’ve seen over the past few years.”

Read the rest at Platts.com

Disclaimer: Although the information contained herein is from sources believed to be reliable, TFS Energy Solutions, LLC and/or any of its members, affiliates, and subsidiaries (collectively “TFS”) makes no warranty or representation that such information is correct and is not responsible for errors, omissions or misstatements of any kind. All information is provided “AS IS” and on an “AS AVAILABLE” basis and TFS disclaims all express and implied warranties related to such information and does not guarantee the accuracy, timeliness, completeness, performance or fitness for a particular purpose of any of the information. The information contained herein, including any pricing, is for informational purposes only, can be changed at any time, should be independently evaluated, and is not a binding offer to provide electricity, natural gas and related services. The parties agree that TFS’s sole function with respect to any transaction is the introduction of the parties and that each party is responsible for evaluating the merits of the transaction and credit worthiness of the other. TFS assumes no responsibility for the performance of any transaction or the financial condition of any party. TFS accepts no liability for any direct, indirect or other consequential loss arising out of any use of the information contained herein or any inaccuracy, error or omission in any of its content. This document is the property of, and is proprietary to, TFS Energy Solutions, LLC and/or any of its members, affiliates, and subsidiaries (collectively “TFS”) and is identified as “Confidential.” Those parties to whom it is distributed shall exercise the same degree of custody and care afforded their own such information. TFS makes no claims concerning the validity of the information provided herein and will not be held liable for any use of this information. The information provided herein may be displayed and printed for your internal use only and may not reproduced, retransmitted, distributed, disseminated, sold, published, broadcast or circulated to anyone without the express written consent of TFS.