@b_vermill

Power Markets at Modo Energy

 Brooklyn, NY
Joined May 2024
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55Media
ERCOT's firming requirements take effect from 2028 for new generators with IAs signed from 2027. Initial cost should be small with few resources obligated, but it will become a structural cost for new generation if low reserve margins return and the obligated pool grows
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1/ Some volatility returned to ERCOT's Real-Time Market this week. Settlement prices peaked at $561/MWh on August 23 and $781/MWh on August 26, were in the mid-triple digit range for multiple hours each day, and settled above day-ahead in nearly every interval.
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4/ What was specific to the 23rd was thermal outages. Dispatchable capacity on outage for that evening rose 3 GW after the day-ahead market closed, from 8 to 11 GW. ERCOT's 90th percentile expectation for August is just 8.5 GW, and their modeled maximum is 11.7 GW.
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5/ Congestion was worse in RT than DA on both days. 12 constraints reached four-figure shadow prices on the 23rd and 20 on the 26th, and on the 26th, the Pawnee to Calaveras 345 kV constraint required GWs of re-dispatch, separating West from Houston by $200/MWh.
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4/ What was specific to the 23rd was thermal outages. Dispatchable capacity on outage for that evening rose 3 GW after the day-ahead market closed, from 8 to 11 GW. ERCOT's 90th percentile expectation for August is just 8.5 GW, and their modeled maximum is 11.7 GW.
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5/ Congestion was worse in real time than day-ahead had signalled on both days. 12 constraints reached four-figure shadow prices on the 23rd and 20 on the 26th, and the Pawnee to Calaveras 345 kV constraint required GWs of re-dispatch, separating West from Houston by $200/MWh.
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It's a highly uncertain time in US power markets, and policy noise has made FTM grid-scale BESS harder and pricier to develop lately. But the long-run signal is intact: Li-ion pack prices have fallen from $1,200/kWh in 2010 to about $108 today. 🧵
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But BESS development isn't the only variable in flux in power markets. Demand is moving too, even though headline load forecasts look inflated (as supported by Gov. Abbott's letter to the PUCT and ERCOT this week, New York's data center moratorium and PJM market design uncertainty). Despite headwinds for load growth, our ERCOT projection still indicates ~25% growth in observed peak demand by 2030, which is staggering for a grid operator.
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To zoom back out, infra investments play out over 15-plus years, and volatile markets like ERCOT run in cycles. A pullback in BESS development met by serious load growth is the recipe for volatility, and the revenue that comes with it, returning toward the turn of the decade.
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The biggest talking point out of ERCOT this week is load, which set a new all-time peak yesterday above 91 GW. More impressive is that it peaked on a day with relatively low wind generation, and operationally, it was essentially a non-event. A couple of years ago, a day like this would have been a four-figure price day. The difference is batteries.
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