Barring an unexpected heatwave or a sudden loss of generation, the remainder of the ERCOT market’s summer “looks to be a disappointment” for those hoping for high power prices, according to investment research firm Morningstar.
“We saw some short-lived excitement in July with new demand records set, but lower temperatures look to be sticking around for the rest of August,” the Chicago-based firm said in its Aug. 15 report, “ERCOT and the End of Summer.”
Lower temperatures have replaced the extreme highs of July, when a dome of high pressure settled over Texas and sent temperatures to nearly 110 degrees Fahrenheit. ERCOT broke its system demand record 14 times during July 18-23, with the new mark of 73.3 GW on July 19 smashing the 71.1 GW set in 2016. (See Plentiful Generation Helps ERCOT Meet Extreme Demand.)
“The cooler outlook should keep August prices in the same range as June,” Morningstar said, pointing to a North Hub settlement of $36.99/MWh on the Intercontinental Exchange trading platform. July’s peak settlement was $112.15/MWh, but August’s prices fell to below $45/MWh on Aug. 10.
“Unless a major heatwave hits or a drop-off in wind generation occurs during the last week of August, we will probably see prices settle around [the] $40/MWh range,” the report said.
ERCOT load exceeded 70 GW for 11 straight days in July, a string that was broken on July 27. Load hasn’t broken 70 GW since, peaking at 69.8 GW on Aug. 23.
Morningstar said an increase in wind energy since July has helped depress prices. ERCOT said wind generation has accounted for 4-7 GW of energy during the summer, in line with its expectations. Wind averaged an above-average daily output of 6.1 GW in August. Without the low wind during high temperatures, generators’ hopes for high prices failed to materialize.
“If August wind generation continues at this level, it may buck the trend of being the lowest generation month and keep prices somewhat subdued,” the firm said.
“The market performed as it was designed to perform,” said Public Utility Commission Chair DeAnn Walker in a statement to RTO Insider. “Whether or not the parameters of the market design need to be adjusted will be something the commission and the market discuss this fall” as it reviews ERCOT’s summer performance (Project 48551.)
ERCOT’s Independent Market Monitor declined to comment, saying it is in the midst of analyzing summer outcomes.
August TAC Meeting Canceled
The Technical Advisory Committee’s leadership has canceled its Aug. 30 meeting, citing a “limited number of items to be considered” this month. It is the third TAC meeting to be canceled this year, and the second in three months.
The TAC meets again Sept. 27 before the next Board of Directors meeting on Oct. 9.
The annual TAC/TAC Subcommittee structural and procedure review will be held Sept. 13.
— Tom Kleckner
