Demand growth, led by a boom in oil production, means that reserve margins in the Electric Reliability Council of Texas (ERCOT) will likely fall below 10% for the summer of 2019.

The planning reserve margin for summer 2019 is forecast to be 8.1%. That is lower than what was reported last spring. Electric generating reserves are expected to rise to 10.7% in 2020 and 12.2% in 2021.

ERCOT is an independent system operator that manages the flow of electric power to about 90% of the state’s electric load. ERCOT schedules power on an electric grid that connects more than 46,500 miles of transmission lines and more than 600 generating units.

The expected fall in ERCOT power reserves for summer 2019 is primarily driven by a higher summer peak-load forecast and delays and cancellations of planned generation projects.

The Energy Department says that reserve margin is equal to capacity minus demand divided by demand, where capacity is the expected maximum available supply of generating resources and demand is the expected peak demand. A reserve margin of 15% means that an electric system has excess capacity in the amount of 15% of expected peak demand.

Expected reserve margins in ERCOT through 2023. Credit: ERCOTRegulatory bodies usually require power producers to maintain a reserve margin of anywhere from 10-20% of normal capacity as insurance against breakdowns in part of the system or sudden increases in energy demand.

Oil Boom

ERCOT said in a report that oil and gas development in far west Texas continues to drive increasing electricity demand. The annual growth rate in peak demand in that part of the state is forecast to be around 8% through 2023. ERCOT’s annual system-wide load growth rate is expected to be 2% during the same time.

The peak load forecast for summer 2019 is expected to be 74,853 MW, which is 651 MW higher than what was reported last spring. ERCOT’s current system-wide peak demand record is 73,473 MW, set on July 19 between 4 p.m. and 5 p.m.

Since last spring, three planned gas-fired projects totaling 1,763 MW and five wind projects totaling 1,069 MW have been canceled. Another 2,485 MW of gas, wind and solar projects have been delayed.

Resources totaling 1,714 MW have been approved by ERCOT for commercial operations, and another 7,463 MW of installed capacity became eligible for inclusion in the resource forecast.

The report includes a look forward at all currently operational and planned resource capacity as reported to ERCOT by resource developers and owners. It provides annual projections of ERCOT’s planning reserve margins for the summer and winter seasons.