Why It Matters: ERCOT is the leading market for the buildout of renewable resources
- While wind is a fantastic source of renewable energy, it is inherently unpredictable, which is leaving ERCOT ill-prepared to ramp up and down gas generation. In the non-summer months, wind resource is exceptional with Texas getting a record shattering 40% of their electricity from wind in March. However, wind speeds slowed sharply this week (see our Windometer data), which resulted in a big call on gas generation. This nearly resulted in another ERCOT electricity outage in a month that is historically very benign.
- In the graph below, we looked at the daily ERCOT generation from gas and wind. As shown, there is now a tight inverse relationship between wind resource and gas generation, with gas making up the demand shortfall that is not covered by wind and solar. On April 13th, wind speeds slowed considerably at the same time that Texas temperatures were coming in hotter than expected. This would require gas generation to provide peak generation of almost 30GW on that day, significantly above any day we’ve seen since the winter storm in February.
- Bottom Line: 1) ERCOT / Texas needs to adapt to the new reality that renewables will have a very large seat at the generation table 2) there is a critical need for large scale storage and 3) participants need to overhaul messaging to emphasize natural gas during the energy transition