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Electric Reliability Council of Texas Inc., the Lone Star State's primary wholesale grid operator, is expected to see another record-breaking year in 2022 with planned capacity additions of 27,242 MW and zero scheduled retirements, according to an analysis of S&P Global Market Intelligence data.
A year after the deadly February 2021 Arctic blast that paralyzed the state's electric grid and triggered rolling blackouts, Texas has taken steps to improve grid reliability.
All but three of 324 power facilities fully passed ERCOT's winter weatherization inspections in January, and the grid operator was able to withstand a cold front that moved into the state in February 2022. However, some industry experts question whether the system is ready to handle another storm as intense as in February 2021.
Despite recent winter issues, the Texas grid remains a summer-peaking grid, with most demand coming during the hot summer months, according to ERCOT's latest Capacity, Demand and Reserves, or CDR, report. The December 2021 report forecast peak demand for summer 2022 of 78,084 MW, while the firm peak demand is 74,977 MW. The winter 2022-2023 peak demand forecast is 64,961 MW, and the firm peak demand forecast is 62,119 MW.
Planning reserve margin for the incoming summer is estimated at 23.9%, which is about 5% lower than the margin predicted in the May 2021 CDR report. ERCOT attributes the year-over-year drop due to delayed projects that were expected to be added to the grid by July 1.
The bulk of ERCOT's planned additions is solar, at 12,785 MW of capacity, more than twice the 6,241 MW of planned wind capacity, and nearly triple the 4,595 MW of planned storage capacity.
For the first time, planned storage has exceeded proposed gas generation in Texas. These will all be added to the grid operator's 126,422 MW total existing capacity in 2021.
ERCOT started the year with just 889 MW of storage, but by the end of 2022 that total could grow to almost 5.5 GW if all planned projects come online.
Several projects are expected to be completed in time to meet peak summer demand in 2022, including the 1,150-MW first phase of FGE Power's FGE Eagle Pines combined-cycle plant in Cherokee County, as well as Vistra Corp.'s 854-MW Eagle Mountain gas plant in Tarrant County, both scheduled to begin operating in June.
The largest solar plants expected to come into service are due later in the year. Tokyo Gas America Ltd.'s 500-MW Aktina Solar Project in Wharton County is slated to reach operations in September, and Enel Green Power North America Inc.'s 500-MW Roseland Solar Project in Falls County is expected to come online in the fourth quarter.
National Grid PLC's 279-MW Noble Solar Plus Battery Project in Denton County is expected to be completed in May. Among wind resources, Enel's 487-MW Azure Sky Wind Project with battery storage is also scheduled to go online in May.
In 2021, ERCOT added a total of 9,472 MW of new generation capacity, led by solar and wind generation.
It was a record high for the state, although it was a mere 45% of the 19,928 MW planned total capacity additions during that year, as several of the projects were delayed by supply chain constraints.
Wholesale power prices in ERCOT's North Zone are expected to hover roughly between $38/MWh to $42/MWh for much of the year, but rising to $52.03/MWh in July and $69.76/MWh in August and declining to around $36/MWh in the last two months of the year. Forward power prices in ERCOT's South Zone are forecast to follow a similar but lower trend, rising to $49.11/MWh in July and $66.82/MWh in August.
Wholesale natural gas prices at the NGPL TexOk and NGPL South Texas hubs are forecast to hover at nearly $4/MMBtu for most of the year, with expected increases in the last two months of 2022.
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