USA Market: Storm Uri impacts continue to bite

The impact of Winter Storm Uri continues to hit the ERCOT market, bringing about sweeping changes for the interconnector’s reliability measures.

During an ERCOT working group on 16 April, it was announced that the Emergency Response Services (ERS) Budget for the remainder of 2021 has been decreased by over $7m. That equates to a ~14% reduction for the Summer months (June through September) and ~45% for the Fall (October & November).

The reason for the drop is that PUCT Substantive Rule 25.507 restricts ERCOT’s ERS expenditures to an annual cost cap of $50mn, to be allocated within its ERS budget year. However, changes in the ERS contract year dates, means that the 2021 year is two months shorter than historically and the budget for the scheme has be adjusted to $41M accordingly.

Given the unexpected spend during the February – May period owing to actions taken during the severe weather, the budget available for the rest of 2021 has been readjusted. But what does this mean for the rest of the year?

Source: ERCOT April DSWG working group

Summer outlook

ERCOT’s preliminary summer assessment expects (under normal conditions) supplies to be maintained through the summer months. But more extreme scenarios that could lead to emergencies and controlled outages.

In the 2021 preliminary assessment ERCOT included three extreme scenarios. Each scenario would leave the grid short, which would trigger outages:

• Scenario 1: a drought combined with low winds, several natural gas plants offline and an increase in economic activity as the pandemic eases, would leave the power grid short 3,6000MW
• Scenario 2: Add low solar power generation to the first projection, and the grid would be short 7,500MW
• Scenario 3: in the most extreme scenario, ERCOT considered, a severe heat wave across the entire state combined with outages for every major power source would leave the grid short 14,000MW

The latest climate outlook from the National Oceanic and Atmospheric Administration, published on April 15, expects Texas to see a hotter and drier summer than normal, which will likely result in one of ERCOT’s more extreme scenarios taking place.

This should be of great concerns for commercial and industrial (C&I) businesses, which rely on a constant energy supply from the grid. Now more than ever, it’s time to review how you manage your energy spend and demand. Actively managing your demand, time of use and exposure to market risk over the upcoming summer period will aid your business in protecting both operations and revenues.

Sweeping legislation

Elsewhere in the market area the Texas Legislature has been advancing sweeping legislation that aims to address some of the issues stemming from February’s winter storm and subsequent power outages.

On March 30, the state House of Representatives passed by wide margins the following house bills (HB):

• HB11: Requires the Public Utility Commission of Texas to require each generator to prepare to provide sufficient power in an extreme weather emergency, hot or cold.
• HB12: Establishes a state-wide disaster alert system for events such as widespread power outage lasting longer than 24 hours.
• HB13: Establishes a Texas Energy Disaster Reliability Council to prevent extended power outages caused by disasters, manage such emergencies, coordinate fuel delivery to electric generators, monitor supply chains for the electric grid, and recommend methods to maintain grid reliability.

In addition, Senate Bill (SB) 3 was unanimously approved March 29 by the Senate, and contains provisions similar to House measures, such as establishing a Texas Energy Reliability Council, requiring generators to prepare to operate during a weather emergency, establishing a state-wide energy to residential customers.

Protect your business

Wayne Muncaster, GridBeyond VP for North America, commented:

To ensure your businesses is prepared for the coming season (and for the future) don’t commit yourself to the ERS. The combination of our ERCOT price forecasting and automated dispatch allows our clients to see the problem hours in advance and/or react in real-time”.

For more information on how GridBeyond’s technology can help your business improve its bottom line through enhanced energy services, contact our friendly team.

Notes

• The Electric Reliability Council of Texas (ERCOT) manages the electricity grid for more than 26mn customers in Texas – around 90% of the state’s load.
• The Emergency Response Services (ERS) programme is designed to boost grid reliability during times of grid emergencies. It is aimed specifically at large consumers that have the ability to temporarily reduce their power consumption in response to grid emergencies.
• The Seasonal Assessments of Resource Adequacy aim to provide an early indicator of the risk that ERCOT may need to call an Energy Emergency Alert due to having insufficient operating reserves during seasonal peak demand periods. The final summer assessment for 2021 will be published May 6.