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ERCOT Plant Outages: Who Went Offline

The dust is still settling over ERCOT’s massive outages last month. Investigations are ongoing, bills are outstanding, damage to balance sheets are being calculated, and litigation is pending. While there are still plenty of unknowns, the Texas Public Utility Commission (PUC) gave the market some earlier-than-expected insight into what happened in February. This past Friday, the Texas PUC waived the 60-day waiting period for generator outage data and unmasked additional plant data from an earlier voluntary ERCOT disclosure. Today’s Energy Market Insight will delve into this release of data and look at the plant failures that nearly led to the collapse of the Texas power grid.

The graphic below shows the capacity lost due to outages and derates by fuel type. In the early days of the storm, fingers were pointed at freezing wind turbines and the growing reliance of ERCOT on wind generation as the culprit. Up until February 15, these accusations would have seemed to hold some water. Wind capacity fell out of the stack the fastest as shown below through February 14th.

Freezing temperatures across Texas on Valentine’s day resulted in rapidly escalating thermal outages. Then in the early morning hours of February 15, natural gas-fired capacity outages spiked to above total wind capacity outages. The exact reasons for this rapid spike in derates will no doubt be scrutinized for years to come. However, evidence so far points to infrastructure freezing as well as mistaken power cuts at critical energy infrastructure sites such as processing plants and pipeline compressor stations. During these early morning hours, natural gas plants across ERCOT fell out of the stack. Exelon’s Colorado Bend Energy Center II and Wolf Hollow II plant lost nearly 2.5 GW of capacity in a matter of hours. The Bastrop Energy Center’s 550 MWs went offline. Talen’s Barney Davis plant lost 650 MW at the same time. The list goes on.

The situation continued to deteriorate until the next morning when outages hit their peak. The following map shows outages at their peak around 8 AM on February 16. As can be seen on the map, wind capacity in the West and Lower Rio Grande Valley were heavily impacted.

Meanwhile, thermal generation, mainly focused in ERCOT’s North and Houston areas, continued to fail. The graphic below shows that at the peak of the outages, natural gas derates accounted for 19 GW of lost capacity, with coal accounting for 5.1 GW, and the outage at South Texas Project’s Unit 1 nuclear reactor accounting for another 1.4 GW.

The market has yet to figure out all the repercussions from the February 2021 outages, but one thing for sure is that they will be felt for some time. Beyond potential changes to ERCOT’s market structure, damage to balance sheets will be determined and disclosed over the next quarter. Operators with certain power purchase agreements (PPAs) or firm hedges were obligated to buy electrons on the open market at real-time prices at $9,000/MW. For plants like Vistra’s Oak Grove that last year produced in excess of 40,000 MWh per day, those bills (depending on the terms of the PPA in place) could be staggering. Thermal operators will not be alone however, as renewable operators will face similar exposure. PPAs are the backbone of getting a project financed and put into service, so operators whose turbines froze could also be exposed supply obligations. RWE quickly put out a press release highlighting their exposure.

As ramifications continue to unfold, check back with BTU Analytics. If you have questions about power markets or would like to see additional plant-level data and insights (including the outage data discussed above) email info@btuanalytics.com.

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Matthew Hoza is a Manager of Energy Analysis for BTU Analytics. Currently he is leading the power team in the development of BTU Analytics’ Power View platform, which provides capacity, generation, and power price outlooks for ISOs and utility areas across the US. Previously, Matthew led the natural gas team that develops and maintains outlooks for natural gas production, demand, pricing, and infrastructure, as well as provided bespoke natural gas market analysis. He holds a M.S. in Finance from the Simon Graduate School of Business at the University of Rochester and B.S. in Physics from Florida State University.

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