ERCOT increases electricity supply for next summer

Last summer, the Texas grid saw record highs in electricity demand during the month of August with usage peaking at 74,820 megawatts. This caused the state to experience a historically low reserve margin of 8.6%, prices to skyrocket and ERCOT to request two conservation measures to avoid potential brownouts.

To avoid repeating this year’s tight margins, ERCOT has started to prepare for next summer.

While the peak demand isn’t expected to lower – in fact, they are expecting peak demand to increase to 76,696 megawatts next year – there will be an increase to its supply.

A report released by ERCOT expects the reserve margin to increase from 8.6% to 10.6%. This increase in reserve margin is due to the addition of renewable and flexible gas-fired generators to the grid, which is expected to add 7,633 megawatts of new energy sources. This good news isn’t bound to just next year, though. The report predicts reserve margin will be 18.2 % in 2021 and 17.3% in 2022.

This is good news for the wholesale markets – and Griddy members – as the increase in supply should lead to a decrease in prolonged price spikes next summer. There’s a saying in the trading world which is: “Nothing cures high prices like high prices, nothing cures low prices like low prices.” So after years of little investments in new generation, last summer has urged more generation to be created as quickly as possible. Hopefully, there will be more to come.

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