ERCOT Cancels Procurement for Additional Capacity, Provides Update on Winter Preparedness and Grid Improvements
(Austin, TX) – ERCOT has canceled the procurement from the Request for Proposal (RFP) seeking additional capacity due to the limited response from the market, which included only a small 11.1 MW of potentially eligible capacity.
“The request for additional capacity was an extra layer of precaution to mitigate higher risk during extreme weather this winter,” said ERCOT President and CEO Pablo Vegas. “ERCOT is not projecting emergency conditions this winter and expects to have adequate resources to meet demand.”
ERCOT has implemented many reforms and grid improvements since 2021, including weatherization inspections of electric generation units and transmission facilities, additional ancillary services, and firm fuel supply service.
Additionally, regardless of the market response today, ERCOT firmly believes that there remains tremendous potential in expanding demand response capabilities throughout the industrial, commercial, and residential customer classes, and looks forward to working with the Public Utility Commission of Texas (PUCT) and stakeholders to explore what incentives and product designs may work better in the future. Reducing peak demand at critical times can be an effective tool in an overall portfolio of reliability solutions.
Additional Information on the RFP
The RFP was based on probabilistic analysis indicating that if the ERCOT Region experienced a storm during the 2023-2024 winter Peak Load Season comparable to last year’s Winter Storm Elliott, there would be a 20% risk of ERCOT entering Energy Emergency Alert (EEA) conditions. To reduce this elevated risk, ERCOT sought to procure up to 3,000 MW of additional capacity that could be called upon if needed as an added layer of protection during peak times.
In declining to proceed with the RFP, ERCOT weighed factors such as the costs of the program, including costs of administration, and the incremental additional complexity for the Control Room operators against the very small amount of capacity that could be provided and the associated minimal reliability benefits.
“One of the important outcomes of this RFP process was learning what the market response would be to this type of capacity request,” said Vegas. “We’ll take these lessons and continue to work with the PUCT and the market to evaluate other types of demand response products that could contribute meaningfully to electric reliability in the future. In the interim, ERCOT will continue to advance its winter preparedness through the many reliability programs and tools we have available.”
Winter Preparedness and Grid Improvements Since 2021
- Weatherization and Inspections. ERCOT is entering the third season of winter weatherization inspections with enhanced requirements for generation and transmission facilities, compared to last winter season.
- Firm Fuel Supply Service (FFSS) Phase 2. An additional source of onsite fuel for generators benefits the grid by providing a redundant, or additional, fuel source should there be a natural gas scarcity. FFSS Phase 1 created the FFSS service (deployed for the first time during Winter Storm Elliott and then again for Winter Storm Mara). Phase 2 expanded Resources that can qualify. If a Resource’s fuel service is firm and isn’t under a lower curtailment priority if there’s a curtailment event, they can now qualify.
- Scheduled Maintenance Period. ERCOT has worked with generators and transmission operators to schedule their maintenance to prepare their equipment for winter after running hard this past summer.
- Forecasting Improvements. ERCOT has been working on reducing weather forecast error by procuring additional weather forecasts and developing load forecast models that are tuned for extreme cold weather. ERCOT has also improved the forecasting software testing process related to holidays and other outlier scenarios.
- ERCOT Contingency Reserve Service (ECRS). Added in June 2023, ECRS takes advantage of Resources that can start within 10 minutes to address unexpected or rapid changes in supply or demand.
- Fast Frequency Response Service. Added in 2022, this addition to our Ancillary Services takes advantage of the capability of faster-responding Resources to respond to events.
- Improved, Transparent Communications. The Texas Advisory and Notification System (TXANS) was launched May 2023. TXANS is a communications tool to keep Texans updated on grid conditions.
- Critical Supply Chain and Critical Infrastructure Map. This map was created in 2022 to share the locations and connectivity of all the critical parts of the Texas power infrastructure.
- Improved Inter-Agency Communications. Agencies are seeing improved, ongoing communications through both the Texas Department of Emergency Management and Texas Energy Reliability Council.