ERCOT Reports Show Solar Growth, But Transmission Concerns Persist

In late December, Texas’s transmission grid operator, Electric Reliability Council of Texas (ERCOT),  released three important reports that deal with generation, transmission and adequacy of our electric grid. As a reminder ERCOT  covers about 80% of Texas’ land mass and about 90% of our demand for electricity. 

The first report, released in mid-December, is the biannual Capacity, Demand and Reserves (CDR) which lets the public know how much power will be available in the future, specifically during the summer peak electricity demand. There is generally good news in the report: a significant amount of utility-scale solar is being added to the ERCOT region at a rapid pace, resulting in higher planning reserve margins. 

The planning reserve margin for summer 2021 is forecasted to be 15.5 percent. In other words, when electricity demand is the greatest there is expected to be 15.5% more generation than is needed. As more solar, wind and storage is built between 2022 and 2025, according to ERCOT, the planning reserve margin could reach 25-27.

Overall growth in demand is expected to reach a total of 77,244 MWs in 2021, up from the current system-wide peak demand record of 74,820 MW, set on Aug. 12, 2019. Part of the expansion is due to the incorporation of customers from Lubbock Power and Light beginning in June 2021, as the City of Lubbock left the Southwestern Power Pool to join ERCOT.  

In addition to utility-scale solar, ERCOT indicates continued and accelerated growth in rooftop solar projects. Based on data from generation owners, planned new resources expected to be available by summer 2021 have a summer-rated capacity of 5,620 MW. This includes 816 MW of gas-fired resources, 1,765 MW of wind resources and 3,039 MW of utility-scale solar resources. An additional 9,273 MW of summer-rated solar capacity is expected to be added by June 2022. Finally, the CDR shows some 70 MWs of battery storage will be added by next summer and up to another 1,100 MWs of storage being added between 2021 and 2023. The next CDR report will be released in May 2021.

A second report - the Long Term System Assessment -- was released in the final days of 2020. While the full report can be found here,  ERCOT also recently released a presentation highlighting the major findings. The LTSA is a look forward at potential system needs through 2035. ERCOT announced that the 2035 look produced some key findings, including:

1. Significant growth in solar and wind resources is expected across all five scenarios, including Current Trends, High Battery Integration, Renewable Mandate, High Industrial Growth and Existing Transmission Constraints; 

2. Growth in renewable resources and electric vehicle adoption leads to a shift in scarcity hours to later in the day in both summer and winter months;

3. The scale and location of wind and solar generation additions are dependent upon sufficient transmission capacity between resource-rich regions and demand centers;

4. Holistic solutions addressing both regional transfer limits and local constraints closer to urban demand centers are required to accommodate large-scale renewable generation transfers.

5. In all cases, ERCOT is projecting to see upwards of 20,000 MWs of older thermal resources -- coal and gas - retire over the next 15 years. This includes both operators that have announced retirement, like Vistra Energy’s Coleto Creek coal plant and others that have yet to announce plans to retire. 

The final point might be the most important: current and future transmission constraints are impacting the growth of renewable energy. In fact, ERCOT showed that if they can not resolve the current “Generation Transmission Constraints” that limit the output of solar and wind facilities, they would expect to see about 7,000 MWs less of solar and wind generation as developers choose not to invest in Texas. Instead, more gas would likely be built closer to loads to make up for the loss in generation due to less investments and transmission constraints. The scenario shows that ERCOT and potentially the legislature need to address transmission constraints if the promise of renewable energy is to be fully realized in Texas. 

Finally, ERCOT also released a version of their Regional Transmission Plan (RTP). The RTP highlights the need for additional transmission to be built in the coming years, including in the Valley, Dallas-Fort Worth and West Texas. Upcoming projects identified for inclusion include:

• Dallas-Fort Worth import project in Wise and Tarrant Counties

• Midland area transmission improvement in Midland County

• Nacogdoches Southeast to Hertz North Switchto Lufkin Switch 345-kV loop in Angelina and Nacogdoches Counties

• Venus Switch to Navarro 345-kV line upgrade in Ellis and Navarro Counties

• Venus Switch 345/138-kV transformer addition in Ellis County West Denton 345/138-kV transformer addition in Denton County

• Eagle Mountain 345/138-kV transformer upgrades in Tarrant County 

• Liggett to Hackberry 138-kV to 345-kV line conversion in Dallas County

However, it’s important to note that the RTP released by ERCOT does not contain any “economic” projects to deal with the congestion issues in West or South Texas in 2021, meaning there are no current plans to deal with constraints mentioned in the Long-Term System Assessment. 

The report does suggest that economic projects might be needed in the near future, but for now there does not appear to be any solutions to the generation constraints that are limiting renewable energy onto the grid. The report identifies three potential upcoming projects, which are all tentative. The report states:

Noteworthy results from 2020 RTP economic analysis include:

•  Accelerating the in-service date for the RPG-approved Pelican to Whitepoint 138-kV line upgrade to 2022 met the economic planning criteria.

•  A placeholder economic project to resolve congestion in the Bearkat area is included in the final 2025 economic case. This placeholder project is related to the Midland Area Transmission Improvement Project identified in the 2020 RTP reliability analysis. ERCOT and the affected TPs are continuing to evaluate options that address both the economic and reliability needs identified in the 2020 RTP analysis. 

•  Analysis of several study areas did not result in projects that met the economic planning criteria for 2022, but had more production cost savings in 2025. While ERCOT is not making any project recommendations for those areas as part of the 2020 RTP, specific project options have been identified for reevaluation in future economic planning studies, including the 2021 RTP.

With ERCOT and the Public Utility Commission of Texas slow or unable to resolve these congestion issues in a timely manner, it is expected that the legislature may take up transmission planning during the 2021 legislative session. Sierra Club will be generally supportive of initiatives to increase the use of both “non-wires alternatives” (like storage for local transmission efforts) as well as larger transmission projects needed to resolve constraints.