Wind power's summer weak-spot is a nail-biter for Texas

Texas wind blows mostly hard, but generally not when the power is needed most – during sizzling hot afternoons in June through September, when electric use soars.

That weak performance presents a challenge for ERCOT, the main Texas grid operator, which expects record 74,853MW peak load this summer and a historically low 7.4% planning reserve margin versus 11% a year ago and the state’s 13.75% target.

Wind availability and strength can be difficult to precisely forecast in ERCOT’s extensive territory, which covers most of the nation’s second largest state.

Even though ERCOT is the hemisphere’s biggest wind market with 22,000MW capacity due in operation by mid-year, wind’s summer performance during the crucial noon to dusk high power demand window has been spotty this decade.

For now, ERCOT anticipates non-coastal wind will provide 2,882MW of expected summer peak demand – an anemic 15% of roughly 19,200MW in total non-coastal capacity, mainly in West Texas where wind tends to gust most at night and in the early morning.

In contrast, it expects 1,636MW of coastal wind capacity will be available, or 58% of about 2,850MW installed along the Gulf of Mexico south and southwest from Corpus Christi. A further 153MW will likely also become available if, as expected, a new wind farm comes online by June.

Several hundred participants in the competitive bulk power market, where ERCOT performs financial settlement, remain wary of what to expect from wind as hot months approach.

“Last summer, the wind certainly showed up. That was by far the biggest wild card and will continue to be the big wild card. I don’t think we know enough yet how reliable that is,” Katie Coleman, a partner at Thompson & Knight law firm, told a recent Infocast ERCOT conference here.

“I think we could have seen lot higher prices if the wind didn’t perform the way it did,” said Coleman, whose practice includes energy markets and regulatory law.

On 19 July, last summer’s peak, wind supplied 4,229MW of 73,308MW demand, at least 1,000MW more than anticipated by power marketeers. This limited increases in spot market scarcity pricing which occur each summer as power demand skyrockets.

Thermal generators count on seasonal price spikes to boost revenue and achieve or improve profitability of plants including those on standby. ERCOT is an energy-only market where generators are only paid for the electric power they sell and generally not for standby capacity.

ERCOT has low power prices – 8.24 cents/kWh average (retail) for all sectors last December, according to the Department of Energy’s latest data.

With no fuel cost, wind plant operators can bid power at zero and negative prices and still make money because of the federal production tax credit. The PTC expires this year although eligible facilities will continue to benefit for a decade after they begin operation.

Low price competition from wind is one reason cited by coal and gas investors for not wanting to build as much new generation capacity as ERCOT needs to increase its operating reserves.

Despite the unexpectedly good July performance wind still contributed only 10.83% of power supply, less than half the 22.41% monthly average in January through June.

Unlike elsewhere in the country, electricity demand has steadily risen this decade in ERCOT’s service territory because of robust economic and population growth, and expansion of energy-intensive export industries such as oil and gas and petrochemicals.

ERCOT’s preliminary Seasonal Assessment of Resource Adequacy (SARA) does not show the need this summer for rotating outages, the most extreme measure it could employ under an energy emergency alert programme.

Still, with a low reserve level, the operator recognises it does increase the likelihood they could be needed under extreme conditions including weather, above-normal outages of generators, record high power demand on any given day or very low wind output.

Before such a move, ERCOT would call so-called energy alerts to maintain operating reserves at a level to support grid reliability such as full utilisation of available generation capacity and deployment of contracted emergency resources along with demand response programmes.

Analysts expect wind to gradually become a more reliable presence in summer as additional capacity comes online in south Texas where sea breezes better track the power demand curve in major metropolitan areas such as Houston.

Still, most new capacity is planned in West Texas where land is cheaper, construction is faster and daytime wind more reliable in spring, fall and winter.