ERCOT - August in Aggregate

The underwhelming prices in ERCOT have been a frequent topic of conversation so far this summer, as even with new records reached in load and net load the day-ahead and real-time settlements have failed to live up to the hype.  We have written about the supply components on the renewable side and how that has played out in price formation in our recent Special Report, “A Different Summer in ERCOT”, while recent market flashes have touched on the recurring underperformance of load relative to day-ahead forecasts this summer.  Our latest Battery Report, “Clouds on the Horizon for ERCOT Batteries?” walks through the battery revenues in ERCOT this summer compared to 2023 and how bullish and optimistic expectations from earlier this year in the spring have come up against a hard reality.  There are some signs for optimism from the current month with strong and unusual wind patterns during August so far working to offset or disguise some of the impact from increased solar capacity, but the overall news is worrying for those cheering for high scarcity pricing within the state.

Figure 1. North Hub Heat Rate by Aggregate Net Load, June-August

From an implied heat rate perspective, prices have fallen this summer compared to the past two years when comparing intervals with similar levels of aggregate net load.  The news overall is bearish which has been reflected in the forward prices.  But there are some indications the August wind profile in ERCOT is disguising the impact of increasing solar capacity in the region and flattening the net load profile through the evening ramp.  This is detailed in the full special report, which is available for purchase via the link below.  It is also available as part of our eCommerce package with a Platinum or Platinum Plus subscription.