Scenarios of Resource Adequacy in ERCOT: Mandated Reserve Margin, Impact of Environmental Regulations and Integration of Renewables

Among four different scenarios that were evaluated relative to a reference case using an economic dispatch model, the one mandating a 13.75 percent reserve margin leads to the lowest average wholesale price of electricity, even with the estimated cost of capacity payments added. However, design details of a capacity market can certainly lead to higher prices and inadequate capacity at times. The environmental regulations cause significant retirements and uncertainty in the market, resulting in low reserve margins and high prices. If all built, planned renewables capacity will help resource adequacy, especially if peak contribution improves.