ERCOT System Adequacy Study
LCG, September 20, 2012 - Electric Reliability Council of Texas (ERCOT) has conducted a resource adequacy and investment study to identify factors that impact the capacity addition decision (hereafter referred to as the “ERCOT Study”). Based on the ERCOT Study, the Public Utility Commission of Texas (PUCT) is currently holding a series of public forums to solicit discussion and formulate possible action (Project No. 40000 - Commission Proceeding to Ensure Resource Adequacy in Texas).
The stakeholders have indicated their support in principle for a combination of the policy options proposed in the ERCOT Study. In addition, ERCOT has increased the High System-Wide Offer Cap (HCAP) to $4,500 for Energy and Ancillary Services beginning August 1, 2012, which may improve the generator margins.
LCG Consulting has over 30 years of experience in providing consulting services and developing specialized models for the electricity and gas industries. We feel the potential market design changes will inevitably affect the business strategy of many market participants.
We propose to perform analyses for individual stakeholders to examine the impact of some of the options currently being discussed including various levels of offer cap, a new capacity market or other market changes of their choice. We will evaluate a number of scenarios based on PUCT discussion and the policy options proposed in the ERCOT Study. These scenarios may include but are not limited to the following:
§ Energy-Only Market with various levels of Offer Cap such as $4,500, $9,000 and $11,000
§ Business as Usual Case: Energy-Only Market with required Reserve Margin
§ Make Whole Payment Case: Energy-Only Market with Adders to Support a Target Reserve Margin
§ RMR Unit and Scarcity Price Case: Energy-Only with Backstop Procurement at Minimum Acceptable Reliability
§ Capacity Market Case: Mandatory Resource Adequacy Requirement for LSEs
§ Forward Market for Capacity Case: Impact of Resource Adequacy Requirement with Centralized Forward Capacity Market Auction
In our opinion, this might be an opportune moment to study the impact of various proposals on current market performance as well as future investment of the stakeholders such as generator resources and load serving entities.
Our analysis could cover a combination of the above scenarios for the ERCOT nodal market for any time horizon. The cases will be developed in consultation with individual market participants and could be customized. Standard deliverables of such studies include forecasts of hub and load zone prices, LMPs at the specified buses, congestion, generator performance, and other mutually agreed-upon output.
Please contact Julie Chien to schedule a discussion about such studies. LCG is also interested in hearing from you about your needs for other studies and modeling tools.
About LCG Consulting:
With more than 30 years of experience, LCG Consulting is a pioneer and market leader in modeling the competitive energy market. LCG offers a full range of consulting services and specialized software products for energy producers, suppliers and traders seeking to optimize resources in a cost effective fashion. Its UPLAN suite of models, which offers significant modeling flexibilities and capabilities, has been used extensively to conduct market operation simulations and studies for electrical systems throughout the world.
Contact: Julie Chien
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