ERCOT 5.1b Forecast Preview: I Can't Believe It's Not a Capacity Market

ERCOT 5.1b Forecast Preview: I Can't Believe It's Not a Capacity Market

Persistent load growth and extreme weather risks continue to exacerbate the balance between supply and demand in ERCOT. Though nominally an energy-only market, in practice ERCOT continues to implement numerous mechanisms to provide capacity revenues to dispatchable generating resources as the supply and demand balance tightens.

In a recent webinarpreviewing the Ascend ERCOT 5.1b Market Report,Dr. Gary Dorris, CEO at Ascend Analytics, joined Dr. Brent Nelson, Managing Director of Markets and Strategy, to discuss ERCOT market dynamics, renewable-driven volatility, and new ERCOT incentives to create the driving force to pull in new capacity.

Key Takeaways 

  • ERCOT saw significant increases in both winter and summer peak demand in 2022 and 2023, and projects massive future increases: Ascend load growth forecasts directionally agree with ERCOT’s assessments but disagree as to the feasible magnitude for demand growth.  New load will only come online insofar as new generation can maintain system reliability, and new capacity needs to be flexible to complement renewable supply.
  • Scarcity increasingly occurs around sunset, with the highest combination of renewable generation and scarcity adders occurring late afternoon through just after sunset. Storage opportunity cost bidding has extended the value for solar generation.
  • The sheer amount of solar and wind in ERCOT means that renewable output determines whether high peak loads will result in scarcity conditions. Gross demand peaks and scarcity pricing can be decoupled by renewable generation, and most of the year will consist of low prices during most hours as renewable buildout continues.
  • The scale of the need for flexible capacity in ERCOT is large relative to the expected pace of near-term capacity buildout. Renewables and short-duration storage will capture diminishing quantities of scarcity, driving a growing need for increasing storage durations and flexible thermal capacity.
  • Leveraging analysis from Ascend Market Intelligence™, the webinar offers guidance for where, what, and when to add new capacity resources in ERCOT. 

Access the full webinar now.

Interested in Learning More?  

AscendMI™ (Ascend Market Intelligence) delivers proprietary power market forecasts that have been trusted in hundreds of projects and resource planning activities, supporting over $25 billion in project financing assessments. Contact us to learn more. 

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ERCOT 5.1b Forecast Preview: I Can't Believe It's Not a Capacity Market

July 19, 2024

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Persistent load growth and extreme weather risks continue to exacerbate the balance between supply and demand in ERCOT. Though nominally an energy-only market, in practice ERCOT continues to implement numerous mechanisms to provide capacity revenues to dispatchable generating resources as the supply and demand balance tightens.

In a recent webinarpreviewing the Ascend ERCOT 5.1b Market Report,Dr. Gary Dorris, CEO at Ascend Analytics, joined Dr. Brent Nelson, Managing Director of Markets and Strategy, to discuss ERCOT market dynamics, renewable-driven volatility, and new ERCOT incentives to create the driving force to pull in new capacity.

Key Takeaways 

  • ERCOT saw significant increases in both winter and summer peak demand in 2022 and 2023, and projects massive future increases: Ascend load growth forecasts directionally agree with ERCOT’s assessments but disagree as to the feasible magnitude for demand growth.  New load will only come online insofar as new generation can maintain system reliability, and new capacity needs to be flexible to complement renewable supply.
  • Scarcity increasingly occurs around sunset, with the highest combination of renewable generation and scarcity adders occurring late afternoon through just after sunset. Storage opportunity cost bidding has extended the value for solar generation.
  • The sheer amount of solar and wind in ERCOT means that renewable output determines whether high peak loads will result in scarcity conditions. Gross demand peaks and scarcity pricing can be decoupled by renewable generation, and most of the year will consist of low prices during most hours as renewable buildout continues.
  • The scale of the need for flexible capacity in ERCOT is large relative to the expected pace of near-term capacity buildout. Renewables and short-duration storage will capture diminishing quantities of scarcity, driving a growing need for increasing storage durations and flexible thermal capacity.
  • Leveraging analysis from Ascend Market Intelligence™, the webinar offers guidance for where, what, and when to add new capacity resources in ERCOT. 

Access the full webinar now.

Interested in Learning More?  

AscendMI™ (Ascend Market Intelligence) delivers proprietary power market forecasts that have been trusted in hundreds of projects and resource planning activities, supporting over $25 billion in project financing assessments. Contact us to learn more. 

About Ascend Analytics

Ascend Analytics is the leading provider of market intelligence and analytics solutions for the energy transition. The company’s offerings enable decision makers in power development and supply procurement to maximize the value of planning, operating, and managing risk for renewable, storage, and other assets. From real-time to 30-year horizons, their forecasts and insights are at the foundation of over $50 billion in project financing assessments. Ascend provides energy market stakeholders with the clarity and confidence to successfully navigate the rapidly shifting energy landscape.

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