Power and Renewables

Looking Back: ERCOT Summer 2023 Review

byEnverus

By: Rob Allerman and Manas Trivedi

Summer 2023 will long be remembered as not only one of hottest summers on record but for the extended period of heat throughout the summer. This was especially the case in August. In Houston and San Antonio, it was the hottest on record, but it was the second hottest on record for Austin (hottest was 2011) and it was the third hottest on record in Dallas (behind 1980 and 2011). In addition, the unprecedented and relentless load growth continues to put enormous pressure on the grid. In the early summer, wind, solar, and battery storage effectively stabilized the grid. However, by August and September, the availability of wind and solar resources declined, and utility-scale battery storage output proved insufficient in duration to cover extreme events, such as the EEA2 event Sept. 6. Prices were very high this summer especially later this summer. In this blog we’ll explore the high price events and the trends this summer. 

To get the detailed review, download the report here

Unprecedented Load Growth Since COVID-19

ERCOT faced a tremendous surge in load since early 2020. As you can see in the graphs below weather normalized load growth since 2019 levels in 2021 is approximately 13% on-peak and 15% off-peak.

Source: ERCOT Load

Off-peak load growth, likely from data centers, played a pivotal role. Despite a slight slowdown to 3%-4% load growth in 2023, the persistent strain on the power grid highlights the urgent need for strategic planning. 

Temperature/Load Analysis

Record-breaking temperatures in Summer 2023, notably in Houston and San Antonio, set the stage for an extraordinary energy demand scenario.

Source: NOAA Temperature Actuals

Our analysis reveals that peak load on ERCOT Four Coincident Peak days in August reached an unprecedented 85 GW for most of the month, surpassing records. The comparison with 2011 and 2022 underscores the urgency for new resources, including thermal peakers, to manage escalating peak loads.

Source: ERCOT Load

The graph below highlights the relentless heat measured in August as peak load was nearly 85 GW every day for the month of August. Notice how most summer there is a break in the heat highlighted by lower peak load at times, but this was not the case in 2023. 

Source: ERCOT Load

Wholesale Price Analysis 

Here we’re looking at the highest price days of ERCOT’s Summer 2023, finding the causes behind market price spikes. Notably, on June 20, demand responded to rising temperatures, reaching a peak hourly load of 79.2 GW. The price spikes Aug. 17, Aug. 30 and Sept. 6, reaching the $5K cap, were attributed to factors such as high load, underperformance of renewables and unexpected events. Understanding these dynamics is crucial for market participants and policymakers navigating the ERCOT power market and leveraging ERCOT forecasts. 

Source: ERCOT Market Data

Battery Discharge Behavior 

A deep-dive into battery discharge behavior during Summer 2023 revealed that during peak load hours between HE19-HE21, battery discharge spiked when net load was high and renewables were low. The hourly solar production peaked in August, influencing battery discharge. The statistics emphasize the need for longer-duration battery discharge technology, especially during extreme heat events and periods of high volatility in prices. 

Source: ERCOT Market Data

On Sept. 6, Batteries which were positioned to arrest some of the shortfall as renewable generation began to decline was dispatched more heavily earlier in the day. The capacity of the remaining batteries did not have the duration needed to successfully arrest the decline. This can be seen in the below chart between operating reserves vs battery discharge Sept. 6. 

Source: ERCOT Market Data

Conclusion 

Texas endured one of the most brutal summers in 2023 after coming off 2022 another very hot summer. The power grid did not experience any blackouts, but it was very close. Continued unprecedented load growth and the need for longer duration battery discharge technology and thermal peakers will need to be on the forefront of planners as there appears to be no stopping load growth for the as the Texas economy continues to boom. The trends show renewables are plentiful early in the summer but wane later in the summer, particularly solar as the sun sets earlier in the day but load stays strong. 

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