The new report found that Texas should enjoy robust summer reserve margins under the traditional methodology, but those margins fall dramatically using a new methodology.


A new ERCOT analysis has raised fresh concerns about the grid’s long-term resource adequacy, with some estimates included in a recent report showing generation resources falling dramatically short by the decade’s end.

However, a more traditional analytical method also employed by ERCOT— and included in that same report — shows the system could enjoy relatively healthy reserves over the same time period.

The parallel analyses appeared in ERCOT’s new Capacity, Demand and Reserves report, which the grid operator released on May 24 and updated on May 31. The estimates included in the annual CDR reports represent ERCOT’s best guess for the system’s “planning reserve margin” across a five-year time horizon.

This year’s report includes data provided by generation owners and developers, but also — for the first time ever — load interconnection data provided by the state’s transmission and distribution utilities. It’s when this second data set is included in the analysis that ERCOT’s adequacy estimates fall dramatically short of what is required for system reliability.

CDR report expresses planning reserve margins as a percentage figure representing the difference between the total generation available in the ERCOT system and its forecasted firm peak demand. The historical planning reserve margin target has been 13.75 percent; i.e., a target of having 13.75 percent more available generation capacity on the ERCOT system than the expected peak amount of electricity usage on the grid by consumers.

The new report found that Texas should enjoy robust summer reserve margins under the traditional methodology, but those margins fall dramatically using the new methodology. In 2029, for instance, the report projects a 60.0 percent margin above summer peak using the traditional methodology, and a 2.3 percent negative margin when the TDU data is included. In the immediate near term — that is, for the summer of 2025 — the report projects healthy reserves under either scenario: 43.4 percent using the traditional methodology, and 31.6 percent with the TDU data incorporated.

The report likewise projects a reserve margin for the 2029/2030 winter season of 33.6 percent above peak using the traditional forecasting methodology, and a 21.7 percent negative margin when the TDU data is incorporated. For the more near term 2025/2026 winter season, the report shows a 43.3 percent margin using the traditional methodology, and a 26.7 margin when incorporating the TDU data.

The good news is that under either methodology, outage risk remains low in the immediate short term. Also, the new estimates do not consider the effects of the state’s rapidly growing battery fleet. This fleet could mitigate future outage risks during certain peak hours.

However, without a doubt the new methodology included in this CDR changes the picture of resource adequacy for Texas. The alternative forecasting shows load growing to more than 140 gigawatts in 2029 and more than 154 GW in 2034. By way of comparison, the all-time peak demand in the summer 2023 was approximately 85.5 GW. Driving much of this dramatic jump in forecasted electricity use is oil, gas and crypto mining operations, artificial intelligence data centers, and hydrogen production.

The new methodology employed by ERCOT in the CDR report is a consequence House Bill 5066 adopted by the Legislature in 2023. That bill requires that ERCOT consider forecasted load in its annual planning processes.

— R.A. Dyer