3 ms·
> What would installation have cost? What would maintenance have cost? More or less than a year's worth of profits? Power that's selling right now for $25/MWh
by mschaef 6y ago
> What would installation have cost? What would maintenance have cost? More or less than a year's worth of profits?
Power that's selling right now for $25/MWh was selling at the $9,000/MWh cap. A 36,000% increase in price can surely pay for enough to, say, keep your pressure sensing equipment from freezing over. (Which is why the 1,280MW STNP Unit 1 went offline at a $11.5MM/hour+expenses cost.)
Not to mention the lives and property damage that might have been spared.
> When would this foresighted person have made their preparations?
As far as _when_, maybe after the 2011 TX cold snap that took generation offline for similar reasons. Or the one in 1989.
- rcxdude 6y agoThis kind of analysis assumes the price would go that high if people had winterized their equipment. The price only went that high because the grid had basically already failed. It's extremely unlikely it would go that high if the grid was functioning. So the incentive to get that payout only exists if the grid falls over anyway. Basically this either allows smaller actors (who can't prevent the crises) to take a bet with long odds and a large payout (already not a winner as far as infrastructure investments go), or it basically removes its own incentive if enough of the larger actors take steps to avoid it. Basically I think this idea of ultra-high pricing during a crisis providing an incentive to prepare for one (as opposed to paying for the capacity to that the crisis doesn't occur in the first place), is not necessarily well-formed: it's feels like it's assuming the market remains efficient in one half while it also requires that the market has effectively failed due to the crisis we're trying to structure the market to prevent.