America’s energy competition laboratory prepares to build.
Hind Farag is Midwest Market Outlook Manager at Global Energy Advisors. Contact her at email@example.com; Gary L. Hunt is president of Global Energy Advisors. Contact him at ghunt@ globalenergy.com.
The Electric Reliability Council of Texas (ERCOT) region remains a living example of how to make a successful transition to restructured wholesale and retail markets for electricity. At the same time, the market continues to witness some significant developments. Despite the historically high levels of generating reserve margins in recent years, the permanence of operating reserve margin sufficiency has come into question by the considerable number of plant mothballs and, more significantly, permanent retirements. Despite that, sights are turning from recovery to the next stage of the power business cycle: The Buildup.
While the market has seen the construction of approximately 24,000 MW since 2000, operators are mothballing and retiring more than 13,000 MW. Recent ERCOT reports have concluded that additional capacity could be required much sooner than previously expected. Global Energy believes, however, that if reserves drop too low, some mothballed plants may be re-commissioned.
Currently, about 1,970 MW (dependable) of capacity is under construction, very much below the more than 23,700 MW since 2000. Between our Fall 2005 and Spring 2006 Market Outlook reports, we identified an additional 529 MW of new renewable generation capacity currently under construction.