August 30, 2019

ERCOT CEO: EEAs caused by high demand, forced outages, low wind

by Kelso King, Grid Monitor
Posted 08/30/2019

At its Open Meeting on August 29, the Texas PUC heard a presentation from ERCOT CEO, Bill Magness, concerning grid operations during the week of August 12, a week that included new demand records and significant price spikes. The CEO’s slide deck is available here. Detailed reports on the Energy Emergency Alert (EEA) days have been filed in PUCT Project No. 27706.

Mr. Magness discussed high demand periods that occurred during the week of August 12, 2019. Two Energy Emergency Alerts (EEAs) were issued during the week and ERCOT is compiling a more comprehensive report on summer 2019, including settlements, distributed energy resources and demand response, that will be filed with the ERCOT Board of Directors for its September meeting.

The chart below shows daily peak hour demands for summer 2019. June and July were not terribly hot by Texas standards and 2019 was the coolest June since 2007. Temperatures were moderate in July but, after a mild and wet spring, a drying pattern began, resulting in hotter weather and higher demands in August, including demands consistently of over 70,000 MW during the week of August 12.

Source: ERCOT

Peak demands in August 2019 show load increasing beginning on August 5. Although load did not exceed 70,000 MW on that day, some scarcity pricing occurred, with prices exceeding $2,500. On August 6, demand exceeded 71,000 MW. The peak demand record set in 2016 was 71,110 MW. Mr. Magness noted that going over 70,000 MW had been “a pretty big deal” at that time.

Source: ERCOT

Demands of over 70,000 MW occurred every day beginning on June 6, including a new weekend peak of 71,864 MW and a new all-time peak of 74,531 MW on August 12, 1,058 MW higher than the previous all-time peak set in July 2018, “a pretty significant jump.” The two EEAs occurred on Tuesday, August 13 and Thursday, August 15. The CEO noted that there have now been three days over 74,000 MW.

ERCOT’s most recent Seasonal Assessment of Resource Adequacy (SARA) predicted a 2019 summer peak of 74,853 MW, 0.43% higher than actual. The CEO added that, without load mitigation on those days, they might have exceeded the forecast.

Mr. Magness discussed Load vs. Net Load (load less wind output), explaining that, with increasing amounts of intermittent resources on the ERCOT system, there is a divergence between the peak load period and the period of the day with the most stress on the system, i.e., the lowest reserves.

Source: ERCOT

The new all-time demand record occurred on Monday, August 12. Peak demand occurred at 4:40 p.m. but the lowest reserves occurring at 2:50 p.m.

Mr. Magness noted that this divergence has now become “a feature of the system,” a consistent summer pattern where, due to coastal and non-coastal wind supporting the system at different times of day, a trough occurs between the two. Mr. Magness noted that the peak typically occurs during the hour ending 5:00 PM but the higher load is tending to not decline as quickly as usual.

Mr. Magness noted that the three main variables in ERCOT’s supply/demand balance are load, wind generation and forced outage rate for thermal units. On the day of the all-time peak, August 12, the lowest “net load” occurred at 2:51 PM. Although total load was lower on August 13, when the EEA was issued, net load was lower, despite there being 525 MW less forced outage, largely due to over 1,400 MW less wind output.

Source: ERCOT

Mr. Magness noted that the situation on August 15, was “even more dramatic,” with significantly lower load, just over 70,000 MW, but only 2,000 MW of wind generation and an additional 1,000 MW of forced outages.

Source: ERCOT

The critical issue on August 15 was having significantly less wind, around 2,000 MW, compared to the 6,000 MW that had been available on the peak demand day, combined with an increase in forced outages.

ERCOT’s CEO noted that the “extreme forced outage rate” scenario included in the spring SARA report was 6,891 MW. The actual level of forced outages at this time was “not extreme” but was coupled with low wind output.

Mr. Magness explained that when generating units are running hard for an extended period they can become “limping units,” ultimately becoming “stopping units” unless they can be taken out of service for maintenance. Although the forced outage rate was not extraordinary, when combined with a loss of wind generation and continued high load, it led to ERCOT issuing an EEA when reserves dropped below 2,300 MW.

The CEO noted that the load on Monday, August 26 was 74,558 MW, the second highest peak load ever experienced, but impacted the system differently because of the higher wind output (9,374 MW) and lower forced outages (4,403 MW).

Source: ERCOT

Mr. Magness noted that significant load response occurred on the EEA days, indicating that the systems worked, including the scarcity pricing mechanisms that are in place and the changes made by the PUCT earlier in the year.

Source: ERCOT

Mr. Magness noted there have been no credit defaults as a result of these events, unlike issues that were seen last summer. The CEO suggested that changes that were made in the collateral and credit market are now “baked in” and parties are better prepared.

Chairman Walker congratulated ERCOT and especially its operators. She requested additional information on demand response in ERCOT’s final report, particularly 4CP, adding that on Tuesday and Thursday she saw some things that were “very interesting.”

Commissioner D’Andrea agreed with the Chairman and congratulated ERCOT for its performance with the system’s very tight reserve margins. He suggested that having “the most efficient grid in the world saves Texans a lot of money.”

Chairman Walker noted that Staff had opened a project (P-49852) to do a “look back” on summer 2019 ERCOT market performance. The Chairman suggested that, unlike 2018, the PUCT not ask specific questions but instead hold a workshop after its October 11 Open Meeting, to allow parties including ERCOT, the ERCOT Independent Market Monitor (IMM) and others, to make presentations.

Commissioner D’Andrea agreed that demand response had been impressive and asked for more data on that.

Chairman Walker added that demand response was impressive on Tuesday but not Thursday.

Commissioner Botkin expressed interest in seeing “unusual observations” rather than a discussion of normal operations.

Chairman Walker concluded the discussion by noting that she and ERCOT’s CEO would be meeting with the North American Electric Reliability Corporation (NERC) in November because NERC is concerned about the reliability of the ERCOT grid. The Chairman noted that they will be telling NERC that “we’ve got it.”

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