5 ms·

Energy Mess in Texas

41 points by undefined1 6y ago

pydry 6y ago
>A capacity market in Texas would have made wind significantly more expensive, and was thus politically untenable. A rather surprising claim, given the apparent tenability of wind in the rest of the world.
- throwawayboise 6y ago
  I've heard basically two arguments for wind/solar: it's cheaper, and it's greener. In a place like Texas, you get support on the "it's cheaper" argument. Wind and sunlight are free after all. In many other places, you get support on the "it's greener" argument. Doesn't matter if it's more expensive, less reliable, etc. because it's saving the environment.
  - gumby 6y ago
    That hasn't been widely true in a decade. LCoE of solar and especially wind has been lower in several markets for quite a while. The "green" argument works at the retail end, but at the production side the cost structure (including the need for source diversity) drives it. LCoE calculations are quite situationally specific of course; thus in the US coal-fired electricity production is dying (independent of any government action) while in China and, to a lesser extent India, it's still on the rise.
  - deleted 6y ago
    [deleted]
  - addicted 6y ago
    Maybe in the aughts. But since the 2010s wind has been built solely for the economics.
ipsocannibal 6y ago
Summary: Texas's energy market does not incentivise capacity planning as common in other utility markets instead pricing only energy delivered. When demand increased and capacity dropped the grid failed. The post claims this market structure is designed to make renewable a more attractive investiment which partly dropped capacity due to lack of wind velocity but then sides steps the question of winterization of the non wind generation sources as the primary cause of the drop in capacity. In short, Texas cheaped out on long term grid protection to make short term gains in energy delivery prices. The bet pays off most of the time, but when it doesn't the failures are catastrophic.
- throwawayboise 6y ago
  When I have read about this Texas situation I found that I did not really understand what a "capacity market" for energy was. I assumed it was some sort of futures market, and it sort of is. This maybe clarifies how an energy capacity market works. https://energynews.us/2013/06/17/midwest/explainer-how-capacity-markets-work/ https://energynews.us/2013/06/17/midwest/explainer-how-capac...
- bryanlarsen 6y ago
  To a large degree, simple price signals can incentivize capacity. A plant doesn't have to operate many hours in the year to be profitable at $9000/MWhr.
  - asmithmd1 6y ago
    Sure, sure, $9,000/MWhr is a sweet reward that was being offered way back on Wednesday. Do you know what the clearing price is right now? -$31.65 Yes, they are CHARGING power plant operators who rushed to bring capacity online: http://www.ercot.com/content/cdr/html/20210220_real_time_spp http://www.ercot.com/content/cdr/html/20210220_real_time_spp Maybe markets are not the best solution for every situation.
    - throwawayboise 6y ago
      Those are both snapshots. Over the years/decades that energy generation infrastructure operates, there's an average.
Proven 6y ago
> Summary: Texas's energy market does not incentivise capacity planning Market doesn't need to incentivize anything. Rather than state screwing with fake incentive stuff (which is exactly how they got in this situation) they should cancel all existing subsidies.

41 points by undefined1 6y ago

>A capacity market in Texas would have made wind significantly more expensive, and was thus politically untenable. A rather surprising claim, given the apparent tenability of wind in the rest of the world.

throwawayboise 6y ago
I've heard basically two arguments for wind/solar: it's cheaper, and it's greener. In a place like Texas, you get support on the "it's cheaper" argument. Wind and sunlight are free after all. In many other places, you get support on the "it's greener" argument. Doesn't matter if it's more expensive, less reliable, etc. because it's saving the environment.
- gumby 6y ago
  That hasn't been widely true in a decade. LCoE of solar and especially wind has been lower in several markets for quite a while. The "green" argument works at the retail end, but at the production side the cost structure (including the need for source diversity) drives it. LCoE calculations are quite situationally specific of course; thus in the US coal-fired electricity production is dying (independent of any government action) while in China and, to a lesser extent India, it's still on the rise.
- deleted 6y ago
  [deleted]
- addicted 6y ago
  Maybe in the aughts. But since the 2010s wind has been built solely for the economics.

ipsocannibal 6y ago

Summary: Texas's energy market does not incentivise capacity planning as common in other utility markets instead pricing only energy delivered. When demand increased and capacity dropped the grid failed. The post claims this market structure is designed to make renewable a more attractive investiment which partly dropped capacity due to lack of wind velocity but then sides steps the question of winterization of the non wind generation sources as the primary cause of the drop in capacity. In short, Texas cheaped out on long term grid protection to make short term gains in energy delivery prices. The bet pays off most of the time, but when it doesn't the failures are catastrophic.

throwawayboise 6y ago
When I have read about this Texas situation I found that I did not really understand what a "capacity market" for energy was. I assumed it was some sort of futures market, and it sort of is. This maybe clarifies how an energy capacity market works. https://energynews.us/2013/06/17/midwest/explainer-how-capacity-markets-work/ https://energynews.us/2013/06/17/midwest/explainer-how-capac...
bryanlarsen 6y ago
To a large degree, simple price signals can incentivize capacity. A plant doesn't have to operate many hours in the year to be profitable at $9000/MWhr.
- asmithmd1 6y ago
  Sure, sure, $9,000/MWhr is a sweet reward that was being offered way back on Wednesday. Do you know what the clearing price is right now? -$31.65 Yes, they are CHARGING power plant operators who rushed to bring capacity online: http://www.ercot.com/content/cdr/html/20210220_real_time_spp http://www.ercot.com/content/cdr/html/20210220_real_time_spp Maybe markets are not the best solution for every situation.
  - throwawayboise 6y ago
    Those are both snapshots. Over the years/decades that energy generation infrastructure operates, there's an average.

Proven 6y ago

> Summary: Texas's energy market does not incentivise capacity planning Market doesn't need to incentivize anything. Rather than state screwing with fake incentive stuff (which is exactly how they got in this situation) they should cancel all existing subsidies.