US seasonal outlook webinars: hot topics for ERCOT and MISO in summer 2024

The US Energy Information Administration predicts record highs for US power consumption in 2024 and 2025, as homes and businesses use more electricity for heat and transportation. As demand rises, US Regional Transmission Organizations (RTOs) must also cope with the progression away from fossil fuels to renewable generation. So, how are grid operators coping? 

In our Summer 2024 outlook webinars, Wood Mackenzie’s power and renewables short-term analysts took a close look at how US RTOs have been performing and presented their expectations for the upcoming season.

Fill out the form at the top of the page for complimentary access to the full slide decks and webinar recordings for ERCOT and MISO, and read on for the lowdown on two key issues for these RTOs. 

ERCOT: The impact of data centres 

Why the Jumbo State is a haven for big data 

Data centres have expanded rapidly in the last few years, driven by the rise in cloud computing and the mining of cryptocurrencies – which requires significant quantities of processing power. Texas is a popular location for these facilities due to favourable economics; average retail prices for industrial and commercial electricity in Texas in 2023 were 6.63 and 8.96 cents per kilowatt hour (kWh) – significantly lower than most other US states. What’s more, certain items essential to the operation of qualified data centres are exempt from the 6.25% state sales and use tax, boosting the appeal of Texas for data centre owners.   

More than a third of the 37 qualified data centres listed by the Texas Comptroller’s office are dedicated to crypto mining. For these facilities, location is not a significant constraint. The remainder are focused on cloud computing and storage for occupants including big tech names such as Amazon, Google and Microsoft, as well as Tesla and Wells Fargo.  

Data centres for cloud computing are more dependent on efficient web infrastructure as well as robust generation and transmission networks, so tend to be located in the suburbs around the big cities. Currently San Antonio has the highest concentration of non-crypto data centres, but more than half the facilities under construction are located in the Dallas area, which has a strong tech sector and where over 20 Fortune 500 companies are now headquartered. 

Too much information? 

The rapid growth of data centres in these suburban areas creates specific congestion risks as local electricity networks struggle to cope with increased demand. To take one example, demand in the city of Temple north of Austin is expected to increase considerably as two major data centres come online by January 2025. Rowan Digital Infrastructure’s Moriah facility will have a capacity of 300 megawatts (MW), while Meta are building a huge 900,000 square foot nearby. With the only local thermal plant Panda Temple having a total capacity of 1606 MW, power will inevitably have to be delivered from regions with more robust generation capacity. That raises the risk of overflowing transmission systems, particularly during outages at Panda Temple.  

The impact of increased load from data centres isn’t limited to the big cities, however. Western Texas has the highest installed renewable capacity in the state, but local demand is weak. This cheap renewable output is therefore likely to be directed towards Dallas-Fort Worth to address increased demand there. This makes the WESTEX generic transmission constraint more vulnerable to binding, whereby the power flow hits available limits. Similarly, renewable imbalances between the Coastal and South-Central regions create congestion risks for the flow of power from Corpus Christi or the Valley region to San Antonio. 

MISO: Implications of the Planning Resource Auction for 2024/2025 

Most resource adequacy requirements for MISO should be met 

The Midcontinent Independent System Operator’s (MISO’s) recent 2024/2025 Planning Resource Auction (PRA) was largely successful in ensuring sufficient planning resource for each of its Local Resource Zones (LRZs). Auction Clearing Prices were largely consistent across almost all sub-regions by season, at US$30 for Summer, $15 for Fall, US$0.75 for Winter and US$34.10 for Spring. Surplus over the summer is expected to be around 40% lower than Summer 2023, mainly due to retirements and an increased Planning Reserve Margin Requirement in the North/Central region. 

MISO’s Zone 5 is the exception 

Fall and Spring clearing prices for MISO’s Zone 5 (Missouri) are the exception to the rule in terms of consistent Auction Clearing Prices, with both clearing at the seasonal Cost of New Entry of almost US$720. Both inadequate capacity and higher Local Clearing Requirements will contribute to the shortfall that is at the root of higher prices. 

In terms of capacity, most significant will be the closure in October 2024 of the coal-fired Rush Island power plant. This facility was originally scheduled for retirement in 2039, but is being shut down early in the wake of a court order relating to a Clean Air Act violation. This will remove 1.1 gigawatts (GW) of capacity from the grid. Scheduled maintenance will further reduce capacity, although asset owners can be asked to shift planned outages to free up generation if necessary. 

Adding to the issues, Zone 5’s Zonal Import Ability will drop by 1.5 GW, while at the same time fall demand for the LRZ is expected to ramp up by 370 MW. As a result, as things stand, a deficit of 872 MW can be expected. Zone 5 should return to sufficiency during the winter, thanks to lower demand, a higher import limit and a lower local reliability requirement, bringing a low clearing price aligned with other zones. However, come Spring 2025 the LRZ will once again be running a deficit of around 196 MW. 

Learn more 

Remember to fill in the form at the top of the page for complimentary access to the slide decks and recordings of our ERCOT and MISO webinars. These include reviews of the spring period and outlooks for summer generation, as well as coverage of further key topics affecting these RTOs.