{"id":589,"date":"2013-01-31T14:00:40","date_gmt":"2013-01-31T20:00:40","guid":{"rendered":"https:\/\/allenergyconsulting.com\/blog\/?p=589"},"modified":"2013-02-01T03:30:27","modified_gmt":"2013-02-01T09:30:27","slug":"ercot-modeling-issues-scenarios-vs-sensitivities","status":"publish","type":"post","link":"https:\/\/allenergyconsulting.com\/blog\/2013\/01\/31\/ercot-modeling-issues-scenarios-vs-sensitivities\/","title":{"rendered":"ERCOT Modeling Issues – Scenarios vs. Sensitivities"},"content":{"rendered":"

ERCOT released a new <\/span>10 yr system assessment<\/span><\/a>.\u00a0 The big news among the renewable community is a \u201cscenario\u201d labeled BAU All Tech with Updated Wind Shapes<\/em>.\u00a0\u00a0 In this \u201cscenario\u201d, they have updated the wind profile (capacity factors) for the wind technology option.\u00a0\u00a0 The surprise from the output was the large swing from the BAU case to install 17,000 MW of wind, which did not occur in the base.\u00a0\u00a0 In addition, the combined cycle units fell by 10,000 MW.\u00a0 Also solar added 10,000 MW into the system versus the BAU.\u00a0\u00a0 I have nothing against renewable, in fact I am pro renewable in many ways, however I am skeptical on these results.\u00a0 My skepticism is focused on the one<\/strong> supposed change made by the modelers\u00a0 for this “scenario”.\u00a0 By changing just<\/strong> windshapes, they were\u00a0able\u00a0to produce these dramatic swings from the BAU case.<\/span><\/span><\/p>\n

I have been modeling power systems for over 10 years and I cannot rationalize this outcome without more knowledge than what was presented in the paper.\u00a0\u00a0 Let me start out with the basic concerns before moving over into the technical realm.\u00a0\u00a0 The BAU case vs. this new wind case drops gas consumption by around 40%.\u00a0\u00a0 If this wind profile enhancement was driven by turbine technology, then the rest of the country would also add to the lessening of natural gas demand.\u00a0\u00a0 Anything greater than a 10% change in natural gas demand will surely impact the price of natural gas.\u00a0\u00a0 A true scenario would iterate and or rationalized this issue.\u00a0\u00a0 This type of analysis seems to be more of a sensitivity analysis versus a real scenario development.\u00a0\u00a0 Another fundamental concern is the extent of wind development and the on-going production tax credit (PTC).\u00a0 At some point in the wind penetration, the PTC would be removed.\u00a0\u00a0 I am sure the non-wind blessed state would like to stop subsidizing states, particularly whose economy is much better off.<\/span><\/span><\/p>\n

Another fundamental missing piece is any discussion on rates.\u00a0\u00a0 More capital is being spent in the wind shape case than the BAU.\u00a0\u00a0 This is simple math, as the cost of capital of wind and solar for each MW is greater than gas units.\u00a0\u00a0 The balancing act is the long-term fuel cost will balance the additional capital.\u00a0\u00a0 However large capital investments usually require some guarantees.\u00a0\u00a0 This comes in the form of Power Purchase Agreements with the local utility.\u00a0\u00a0 The PPA\u2019s are signed and prices set based on the current markets as that time of the contract.\u00a0\u00a0 Even though wholesale market prices may come down it does not mean rates will change as PPA contracts are typically fixed in order for the investor to know they will recover their capital investment.\u00a0 Over time the PPA deals will begin to look worse and worse as wholesale markets fall.\u00a0 Eventually industrial and commercial customers could become wise and remove themselves from the utilities poor PPA arrangements by creating distributed generation.\u00a0\u00a0 This then lead to higher residential rates in the face of low wholesale power.\u00a0 This then leads to limited PPA deals.\u00a0 With more than half of the wind and solar build after 2020 one would need to seriously doubt the extent of those developments becoming real, assuming PPA is the mechanism for development.<\/span><\/span><\/p>\n

On a technical basis the major issue lies in how the modelers are treating wind generation.\u00a0 As a panel of experts, including me, in a <\/span>report done for the Northwest Power & Conservation Council<\/span><\/a> noted wind generation, when sufficiently large relative to the market,\u00a0should be viewed in a risk\u00a0analysis as much as in the price of natural gas is commonly analyzed.\u00a0 The dependence on wind to the level seen in this new wind shape case will likely caused some dramatic grid events when the weather decides to not co-operate.\u00a0 This event may be 1 in 10 years to 1 in 100 years, but the point is not if, but when.\u00a0 Given the nature of weather and the sub hourly nature of electricity markets, I would suspect the issue will be closer to 1 in 10 years than 1 in 100 years.\u00a0\u00a0 It is certainly possible to expect a weather front changing the landscape of wind generation in particular day, adding on top of that a drought situation limiting nuclear and fossil generation.\u00a0\u00a0 In a stress case, the grid will likely fail in the new wind shape case.\u00a0 The value of the combined cycle will likely be re-gained in risk analysis.\u00a0 This once again will limit the number of wind builds presented by ERCOT in this new wind shape case.<\/span><\/span><\/p>\n

As noted in the NWPCC report, I have had extensive experience in modeling power systems for market forecasting and planning purposes.\u00a0\u00a0 If you are beginning your\u00a0resource plan\u00a0or are looking for another perspective, please do consider reaching out to me for assistance.<\/span><\/span><\/p>\n

Your Energy Consultant,<\/span><\/span><\/p>\n

David K. Bellman<\/span><\/a><\/p>\n

614-356-0484<\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

ERCOT released a new 10 yr system assessment.\u00a0 The big news among the renewable community is a \u201cscenario\u201d labeled BAU All Tech with Updated Wind Shapes.\u00a0\u00a0 In this \u201cscenario\u201d, they have updated the wind profile (capacity factors) for the wind technology option.\u00a0\u00a0 The surprise from the output was the large swing from the BAU case […]<\/p>\n","protected":false},"author":1,"featured_media":34,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,6,17],"tags":[192,145,18,193,164],"class_list":["post-589","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-market-insights","category-power","category-renewables","tag-ercot","tag-resource-planning","tag-solar","tag-wind","tag-wind-generation"],"_links":{"self":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts\/589","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/comments?post=589"}],"version-history":[{"count":5,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts\/589\/revisions"}],"predecessor-version":[{"id":591,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/posts\/589\/revisions\/591"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/media\/34"}],"wp:attachment":[{"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/media?parent=589"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/categories?post=589"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/allenergyconsulting.com\/blog\/wp-json\/wp\/v2\/tags?post=589"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}