Potential record demand to test Texas electricity grid this summer

By: Bob Sechler |

The main electricity grid in Texas is facing a big test this summer, with little room for error if an unanticipated heat wave exacerbates what’s already expected to be record demand for power.

A narrow margin between estimated peak summer electricity usage and maximum generation capacity has prompted the state grid’s operator to warn that so-called “load control measures” — which include everything from rolling blackouts to voluntary outages for some large commercial customers — could be needed.

“In certain scenarios (such as unusually high temperatures and low wind speeds), we could have rotating outages,” said Pete Warnken, manager of resource adequacy for the Electric Reliability Council of Texas, which oversees the state’s electricity grid and is commonly known as ERCOT.

But if conditions are typical for a Texas summer, Warnken said he’s confident electricity generation will be sufficient to meet demand. About 90 percent of electricity flow in Texas is managed by ERCOT.

Austin Energy operates its own power plants in addition to buying and selling electricity on the ERCOT wholesale market, and officials with the city-owned utility said they aren’t anticipating problems for their customers this summer — aside from routine increases in monthly bills that accompany heavy air-conditioner use. They said Austin residents can mitigate those high summer bills by finding ways to conserve.

“We have quite a bit of power supply lined up and available for the summer,” said Pat Sweeney, an Austin Energy vice president. “Because of that, we are not foreseeing any particular increase in our costs over the summer” or on electricity rates paid by customers.

Still, some industry experts are bracing for possible issues around the state.

The state’s electricity consumption has been rising along with population growth, but this will be the first summer to feel the impact of Vistra Energy’s decision last year to close three coal-fired generation plants deemed uneconomical. Those three plants together accounted for more than 5 percent of ERCOT generation capacity. Newer and cleaner wind and gas-fired generators eventually are expected to make up for the lost capacity, but not in time for this year’s peak summer demand.

“There’s reason to believe there could be some carnage this summer,” said Michael Sullivan, chief executive of Houston-based retail electricity provider Champion Energy Services.

Sullivan, who made the comment in Austin this week while speaking at an ERCOT-related conference, said afterward that he bases the view solely on recent increases in wholesale energy prices on the ERCOT market.

“The market is worried about it,” he said. “The market is telling us that we are going to experience (peak demand) near or at generation capacity.”

Randa Stephenson, a senior vice president at the Lower Colorado River Authority, made similar comments during the conference, saying “the market is definitely anticipating a very crazy ride this summer.”

ERCOT on Thursday released its latest preliminary assessment for the summer, pegging peak electricity demand at a record 72,974 megawatts and total generation capacity at 77,658 megawatts. The anticipated peak demand would exceed previous record usage of 71,110 megawatts set in August 2016.

The forecasts for this summer work out to an ERCOT reserve margin of about 6 percent, although the grid operator said it can squeeze out an additional 2,300 megawatts, or about an extra 3 percent, through various emergency measures designed “for addressing reserve deficiency situations.”

Such measures include asking power providers to implement clauses in some contracts with large customers that allow for temporary outages during certain periods. Large customers can agree in advance to such clauses in exchange for financial incentives.

Tony Bennett, chief executive of the Texas Association of Manufacturers, said the large energy users that belong to his organization are confident ERCOT will be able to maintain the reliability of the grid this summer.

“This is a normal cycle in a competitive energy market,” Bennett said, adding that high wholesale prices “will encourage new generation development in the coming years.”

Rob Threlkeld, a General Motors manager, said the automaker — which has an assembly plant in Arlington — has hedged some of its Texas electricity costs through long-term contracts, and he also said the company has the ability to temporarily halt non-critical operations if required. Threlkeld, based in Detroit, was in Austin this week for the ERCOT conference.

“We can manage currently where we think things are” on the ERCOT grid, he said.

Potential record demand to test Texas electricity grid this summer