2019 ERCOT Electricity Market Outlook

Written By: Jen Neville
January 15, 2019


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ERCOTERCOT Market Summit 2019 will examine new market rules and economic drivers, while bringing policy-makers together with utility, solar, wind, IPP and other executives to explore opportunities. They will examine the impacts of an anticipated upsurge in solar capacity not only on power prices but also resource adequacy, and how the changing generation mix will drive opportunities for storage, DR and aggregated DERs.

ERCOT has long enjoyed the reputation of being an extremely liquid market, but the long-term view needed to strategically shape portfolios and profit there has become decidedly cloudy. The closure of coal plants suggests resource adequacy issues will emerge, but power pricing from the summer of 2018 did not reach levels to trigger new builds of conventional generation. At the same time, an enormous wave of solar is on the horizon. The growing movement to co-locate storage with wind and solar PV is changing perceptions of what is necessary to assure reliability. Add in the impacts of growing transmission constraints and a burgeoning credit crisis in the retail market, the one clear thing is that companies must explore how these fundamental changes will drive development and risk mitigation strategies to ensure profitability. Learn more.

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Texas continues to see growth in renewable energy resources. In 2018, ERCOT endorsed major transmission projects to serve load growth while relieving congestion in the Far West region. New import and export capabilities are also on the horizon, such as through the integration of Lubbock Power & Light and the possible Southern Cross transmission project.

LCG Consulting recently completed a comprehensive hourly simulation of the ERCOT market for 2019 to help stakeholders tackle uncertainties in future ERCOT operations. The Outlook Report outlines the future operation of the ERCOT nodal market, including Locational Marginal Prices, load zone prices, hub prices and expected congestion.

LCG performed the simulations using the sophisticated and long-standing electricity model, the UPLAN Network Power Model. LCG has been modeling energy systems for more than 30 years and continuously sustains the most up-to-date information on every detail of the Texas grid including minor and major transmission upgrades as well as generation additions and retirement.

Some key findings from the ERCOT 2019 simulation include:

– The lowest prices are expected in the West zone, a result consistent with recent trends.

– Congestion on the Panhandle interface is expected to be a significant factor in the ERCOT market in 2019.

– ERCOT-wide wind curtailment is expected to remain low in 2019, maintaining average monthly curtailment of 1.84% for all months through November. However, a significant uptick in curtailment is expected in November and December as a large amount of capacity is scheduled to come online during that month.

– Wind growth is expected to continue to increase its share of overall generation reaching 21.5% in 2019.

– Electricity generation in ERCOT is expected to continue to be supplied primarily from fossil fuels in 2019

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