10 ms·

The Two Hours That Nearly Destroyed Texas’s Electric Grid

54 points by kjw 6y ago

Havoc 6y ago
This does seem to demonstrate some limits of the market approach to critical infrastructure.
- api 6y ago
  It boils down to the fact that markets don’t plan for things they can’t “see.” Extreme weather like this has not happened in ages in Texas so there was no price signal for it.
  - reportingsjr 6y ago
    They were warned about basically everything that happened this time around in.. 2011. Ten years. There was plenty of time for the market to fix this, and nothing was changed.
  - AnthonyMouse 6y ago
    That isn't a problem unique to markets. Regulators frequently ignore foreseeable events like aquifer depletion and climate change until something sufficiently catastrophic happens to force them to take notice. Democrats in full control of the federal government for a month now, where's my carbon tax? People also like to stomp on what the free market would actually have to do to prevent this. For a rare event, the cost of surviving it (i.e. winterizing everything) would have to be paid from revenues collected entirely during the event in order to give providers the incentive to do it. Otherwise the ones who don't would have an advantage at all other times. In other words, people might have to be paying tens of thousands of dollars this month for electricity to cover the cost. And it's entirely possible that that isn't actually worth the expense. In that case what the market would do is raise the active price to something not that high, but high enough to curtail demand to what the grid could supply. So enough to cause some people to turn off their electric heat and drain their pipes and take a vacation to Cancun because it's cheaper than staying and paying that electric bill. And then you don't get shutdowns, and that may actually be the most efficient solution, but people don't like it and put pressure on regulators to prevent prices from spiking that high. But there goes your price signal telling the market to winterize things.
    - throwaway3699 6y ago
      If the democrats snapped their fingers and implemented a carbon tax, it would just cause violence and people to starve, not push us into green energy. The infrastructure just doesn't exist.
      - AnthonyMouse 6y ago
        The way you implement a carbon tax is by refunding all of the money to the citizens. The average poor person comes out ahead, because they have less living space requiring less heating and drive a smaller (more efficient) car or take public transit, so they already use less carbon than average and the dividend is more than they pay in tax. Also, some of the tax is paid by corporations but all of the dividend goes to individuals. Nobody starves. But it causes electric cars that avoid the carbon tax to have a market advantage over gasoline powered cars, so more people buy those. It causes non-carbon power generation methods to have a market advantage, so more people build those. As the infrastructure gets built to replace carbon, the amount of the dividend declines, but only because people are paying less in carbon tax because everyone is burning less carbon.
        throwaway3699 6y ago
        Agree this is the way forward, but I don't believe for a second the Democrats would implement it this way. It just isn't political leaders' style to help the poor in America.
        jcranmer 6y ago
        As I recall, this refund provision has been a part of every Democratic proposal on the matter put forward so far.
        prewett 6y ago
        California's PG&E is doing this. I got a number of carbon credit refunds this past year.
        6y ago
  - throw0101a 6y ago
    You can't generate revenue if you don't provide a service: > El Paso Electric said they always try to prepare for the future and after a winter storm in 2011, the utility company worked towards replacing and upgrading their equipment. Many generators now have antifreeze protection. * https://kvia.com/news/el-paso/2021/02/15/el-pasos-not-seeing-power-outages-like-the-rest-of-texas-and-heres-why/ https://kvia.com/news/el-paso/2021/02/15/el-pasos-not-seeing... A little forward planning allows your business to keep on chugging in the face of (foreseeable) challenges.
- cratermoon 6y ago
  It demonstrates irrational faith in the Free Market Fairy: https://bitworking.org/news/2008/01/the-free-market-fairy/ https://bitworking.org/news/2008/01/the-free-market-fairy/
  - MR4D 6y ago
    Hmmmm...this doesn’t seem correct... “ there never would have been a space program to hand over unless the government had done the initial leg work” Except that the government intervened into an already free market. You see, the government has little interest in rocketry [0]. At least not until it affected war and ballistic nuclear missiles. So this article is distorting something to serve its own purposes. I would suggest that what we all want is as much freedom to do what we what while having as low harm to others as society will accept before the trade offs go in the other direction. [0] - https://www.nasa.gov/missions/research/f_goddard.html https://www.nasa.gov/missions/research/f_goddard.html
  - everybodyknows 6y ago
    This starts off as a bit of a rant, but skipping ahead to “Stop the Magic”, the author lays out the concept of market externalities, and government’s necessary duty to manage them, rather well.
- baybal2 6y ago
  Is US, and Texas in particular a free market? I was always saying that US is an extensively regulated, yet chaotic market. There is no free capitalism in America. US financial regulations are by far most Byzantine in the word, precluding the whole notion of US as a nation of free capitalism. US construction industry is a caricature of regulatory capture. For example, even door knobs are legally regulated by some states with zero rationality given. US laws governing infrastructure, and things like utility companies, and procurement of infrastructure engineering services are also very exemplary of regulatory capture becoming bordering on absurdity.
  - cratermoon 6y ago
    The electric grid in Texas is not meaningfully connected to the rest of the US to avoid federal regulation. The state has almost completely deregulated power generation in Texas. It's about as close to the mythical Free Market as can be imagined. Everything is driven by market forces, and the utilities responded by cutting costs.
    - jgnnfuncs 6y ago
      According to a post here on HN a couple of days ago, ERCOT has more stringent regulations on winterization than the Federal regulatory body requires, so basically everything you just said is bullshit ERCOT is a government regulated group, answerable to the Legislature. It's not meaningfully different from the rest of the country. People just assume Texas is a completely unregulated market because of the reputation given to us by Hollywood. Unsurprisingly, media created in a region that disdains us does not represent us truthfully or fairly. I grew up in Appalachia so I'm used to this treatment by the media and by people I interact with as a professional software engineer, including on this board, about where I came from and where I chose to make my home. We know you hate us. It's the main message we receive every time we turn on the TV or any mainstream silicon valley website, including this one, again. That's why I post with a throwaway name. I don't expect people who hate us to represent us fairly.
      - krapp 6y ago
morsch 6y ago
Below 59 and the state’s electrical system would face cascading blackouts that would take weeks or months to restore. Is the tolerance really this small? Afaict, in Germany this point is only reached at a -2.5 Hz deviation from the regular 50 Hz. At the -1 Hz point noted in the article, we start dropping large commercial loads from the grid. IANAEE.
ipsocannibal 6y ago
Related article with a good discussion on capacity versus delivery pricing in the Texas energy market. https://news.ycombinator.com/item?id=26207591 https://news.ycombinator.com/item?id=26207591
neonate 6y ago
https://archive.is/fSOMH https://archive.is/fSOMH

54 points by kjw 6y ago

Havoc 6y ago

This does seem to demonstrate some limits of the market approach to critical infrastructure.

api 6y ago
It boils down to the fact that markets don’t plan for things they can’t “see.” Extreme weather like this has not happened in ages in Texas so there was no price signal for it.
- reportingsjr 6y ago
  They were warned about basically everything that happened this time around in.. 2011. Ten years. There was plenty of time for the market to fix this, and nothing was changed.
- AnthonyMouse 6y ago
  That isn't a problem unique to markets. Regulators frequently ignore foreseeable events like aquifer depletion and climate change until something sufficiently catastrophic happens to force them to take notice. Democrats in full control of the federal government for a month now, where's my carbon tax? People also like to stomp on what the free market would actually have to do to prevent this. For a rare event, the cost of surviving it (i.e. winterizing everything) would have to be paid from revenues collected entirely during the event in order to give providers the incentive to do it. Otherwise the ones who don't would have an advantage at all other times. In other words, people might have to be paying tens of thousands of dollars this month for electricity to cover the cost. And it's entirely possible that that isn't actually worth the expense. In that case what the market would do is raise the active price to something not that high, but high enough to curtail demand to what the grid could supply. So enough to cause some people to turn off their electric heat and drain their pipes and take a vacation to Cancun because it's cheaper than staying and paying that electric bill. And then you don't get shutdowns, and that may actually be the most efficient solution, but people don't like it and put pressure on regulators to prevent prices from spiking that high. But there goes your price signal telling the market to winterize things.
  - throwaway3699 6y ago
    If the democrats snapped their fingers and implemented a carbon tax, it would just cause violence and people to starve, not push us into green energy. The infrastructure just doesn't exist.
    - AnthonyMouse 6y ago
      The way you implement a carbon tax is by refunding all of the money to the citizens. The average poor person comes out ahead, because they have less living space requiring less heating and drive a smaller (more efficient) car or take public transit, so they already use less carbon than average and the dividend is more than they pay in tax. Also, some of the tax is paid by corporations but all of the dividend goes to individuals. Nobody starves. But it causes electric cars that avoid the carbon tax to have a market advantage over gasoline powered cars, so more people buy those. It causes non-carbon power generation methods to have a market advantage, so more people build those. As the infrastructure gets built to replace carbon, the amount of the dividend declines, but only because people are paying less in carbon tax because everyone is burning less carbon.
      - throwaway3699 6y ago
        Agree this is the way forward, but I don't believe for a second the Democrats would implement it this way. It just isn't political leaders' style to help the poor in America.
        jcranmer 6y ago
        As I recall, this refund provision has been a part of every Democratic proposal on the matter put forward so far.
        prewett 6y ago
        California's PG&E is doing this. I got a number of carbon credit refunds this past year.
      - 6y ago
- throw0101a 6y ago
  You can't generate revenue if you don't provide a service: > El Paso Electric said they always try to prepare for the future and after a winter storm in 2011, the utility company worked towards replacing and upgrading their equipment. Many generators now have antifreeze protection. * https://kvia.com/news/el-paso/2021/02/15/el-pasos-not-seeing-power-outages-like-the-rest-of-texas-and-heres-why/ https://kvia.com/news/el-paso/2021/02/15/el-pasos-not-seeing... A little forward planning allows your business to keep on chugging in the face of (foreseeable) challenges.
cratermoon 6y ago
It demonstrates irrational faith in the Free Market Fairy: https://bitworking.org/news/2008/01/the-free-market-fairy/ https://bitworking.org/news/2008/01/the-free-market-fairy/
- MR4D 6y ago
  Hmmmm...this doesn’t seem correct... “ there never would have been a space program to hand over unless the government had done the initial leg work” Except that the government intervened into an already free market. You see, the government has little interest in rocketry [0]. At least not until it affected war and ballistic nuclear missiles. So this article is distorting something to serve its own purposes. I would suggest that what we all want is as much freedom to do what we what while having as low harm to others as society will accept before the trade offs go in the other direction. [0] - https://www.nasa.gov/missions/research/f_goddard.html https://www.nasa.gov/missions/research/f_goddard.html
- everybodyknows 6y ago
  This starts off as a bit of a rant, but skipping ahead to “Stop the Magic”, the author lays out the concept of market externalities, and government’s necessary duty to manage them, rather well.
baybal2 6y ago
Is US, and Texas in particular a free market? I was always saying that US is an extensively regulated, yet chaotic market. There is no free capitalism in America. US financial regulations are by far most Byzantine in the word, precluding the whole notion of US as a nation of free capitalism. US construction industry is a caricature of regulatory capture. For example, even door knobs are legally regulated by some states with zero rationality given. US laws governing infrastructure, and things like utility companies, and procurement of infrastructure engineering services are also very exemplary of regulatory capture becoming bordering on absurdity.
- cratermoon 6y ago
  The electric grid in Texas is not meaningfully connected to the rest of the US to avoid federal regulation. The state has almost completely deregulated power generation in Texas. It's about as close to the mythical Free Market as can be imagined. Everything is driven by market forces, and the utilities responded by cutting costs.
  - jgnnfuncs 6y ago
    According to a post here on HN a couple of days ago, ERCOT has more stringent regulations on winterization than the Federal regulatory body requires, so basically everything you just said is bullshit ERCOT is a government regulated group, answerable to the Legislature. It's not meaningfully different from the rest of the country. People just assume Texas is a completely unregulated market because of the reputation given to us by Hollywood. Unsurprisingly, media created in a region that disdains us does not represent us truthfully or fairly. I grew up in Appalachia so I'm used to this treatment by the media and by people I interact with as a professional software engineer, including on this board, about where I came from and where I chose to make my home. We know you hate us. It's the main message we receive every time we turn on the TV or any mainstream silicon valley website, including this one, again. That's why I post with a throwaway name. I don't expect people who hate us to represent us fairly.
    - krapp 6y ago

morsch 6y ago

Below 59 and the state’s electrical system would face cascading blackouts that would take weeks or months to restore. Is the tolerance really this small? Afaict, in Germany this point is only reached at a -2.5 Hz deviation from the regular 50 Hz. At the -1 Hz point noted in the article, we start dropping large commercial loads from the grid. IANAEE.

ipsocannibal 6y ago

Related article with a good discussion on capacity versus delivery pricing in the Texas energy market. https://news.ycombinator.com/item?id=26207591 https://news.ycombinator.com/item?id=26207591

neonate 6y ago

https://archive.is/fSOMH https://archive.is/fSOMH