ERCOT Says New Gas Plants Will Ease Reserve Margin Concerns

In its preliminary Seasonal Assessment of Resource Adequacy (SARA) for the summer of 2014, the Electricity Reliability Council of Texas (ERCOT) said that more than 2 GW of new combined cycle plants coming online this summer will “significantly reduce the likelihood of scarcity conditions.”

The region has struggled with its reserve margins for years, and ERCOT has issued predictions that it was facing potential negative reserve conditions unless the situation was addressed. Though discussions on whether to add a capacity market to its current energy-only auctions continues, several developers have moved to build new gas-fired plants despite the challenging financial environment. Those efforts appear to be finally bearing fruit.

In the preliminary SARA for Summer 2014, released Mar. 5, ERCOT said that the 2,112 MW of peak summer capacity added by four new plants—Ferguson, Panda Sherman, Panda Temple 1, and Deer Park Energy Center—will ease reserve margin challenges this year.

The Deer Park project is a 260-MW expansion of Calpine’s existing four-unit plant east of Houston. The new fifth turbine should commence operations by July 1. The other three projects, all new or replacement plants, are expected to begin operations by Aug. 1.

The two Panda plants are largely identical 758-MW fast-start Siemens Flex-Plants being built by Panda Power Funds. A second plant at the Temple site is expected to come online in 2015. The 540-MW Ferguson plant is being built by the Lower Colorado River Authority northwest of Austin to replace a 420-MW thermal plant on the same site that was retired in 2013.

The new plants are unlikely to quell debate on a possible ERCOT capacity market. The Panda plants were financed by an unusual—and expensive—method known as a revenue put, under which Panda Power Funds guaranteed the plants’ future income for investors. Panda has gone on record supporting a capacity market.

—Thomas W. Overton is a POWER associate editor (@thomas_overton, @POWERmagazine)

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