ERCOT, the operators of the Texas electricity grid are cautious but optimistic that there will be enough power to get Texans through another long hot summer this year. There are some “ifs” involved, however.
- If this summer isn’t as hot as last summer. This summer is forecasted to be hotter than normal but a repeat of last year’s record temperatures is not expected. Last years peak demand was for just over 68,000 megawatts. Capacity this year is expected to come in around 74,000 megawatts. Technically that’s enough but it’s a little too close for the comfort of grid operators.
- If Texans heed requests for conservation during peak demand times. Texans proved last year they are willing to curtail peak time electricity usage in an emergency. Rolling blackouts were avoided last summer as people cutback on electricity intensive activities during peak hours.
- If there are no major supply disruptions. The spread between demand and supply of electricity in the grid is likely to go below the target reserve margin ERCOT likes to keep in place to protect against unexpected outages. This means that a relatively small loss in supply could result in greater calls for conservation or even rolling blackouts in the worst case.
The longer term outlook will be much more challenging. Texas is currently look for way’s to incentivize private capital to invest more in building out new capacity for meet future need. This includes plan to raise the wholesale rate cap from $3,000 per megawatt hour to $9,000 per megawatt hour beginning with an incremental bump to $4,500 this summer.