by Kelso King, Grid Monitor
The ERCOT Board of Directors’ October 2019 meeting looks to be particularly interesting, with ERCOT staff and the ERCOT Independent Market Monitor looking back on ERCOT market activities during summer 2019, a time of extremely tight reserves, including expectations of rotating outages.
Source: Potomac Economics
Summer 2019 Operational and Market Review
During summer 2019 there were many days with tight conditions and Energy Emergency Alerts (EEA1) were declared twice, however, the deployment of Emergency Response Service prevented the need for an EEA2.
The peak demand day saw higher than normal production from intermittent renewable resources and, as a result, the peak day was not one of the highest-priced days. Interestingly, the tightest system conditions often occurred earlier than the peak demand, Resource performance continued to outpace historical patterns.
Overall, market outcomes supported ERCOT’s reliability needs.
ERCOT Independent Market Monitor Report
High expectations for scarcity conditions during summer 2018 went largely unfulfilled and ERCOT market watchers wondered whether similar expectations for summer 2019 would come to fruition and whether generation availability in 2019 would be at the high levels experienced in 2018.
Questions to be answered after reviewing summer 2019 activity include:
• Were pricing outcomes reflective of system conditions?
• Did the Operating Reserve Demand Curve and Reliability Deployment Price (RDP) adders contributed appropriately to real-time prices?
• Did the various mechanisms ERCOT used to ensure demand/supply balance work as intended?
• Did market participants effectively manage their price exposure?
During summer 2019, ERCOT’s highest prices were no longer associated with its highest loads. Instead, Net Load (Load – Wind) was a better predictor of high prices. Larger adders, including the RDP, contributed to higher 2019 prices. The ORDC adder also became a more frequent contributor to price.
At approximately $130,000, the 2019 Peaker Net Margin is the highest ever.
Stay tuned for more details and answers to these important questions when Grid Monitor publishes its full report on the meeting.