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The price dropped because load on the grid dropped after ERCOT ordered blackouts. This was the correct thing to do as despite lower load there was still clearly
by saddlerustle 5y ago
The price dropped because load on the grid dropped after ERCOT ordered blackouts. This was the correct thing to do as despite lower load there was still clearly insufficient supply, and as long as there is insufficient supply you don't want expensive peaker plants to stop getting paid.
- Dylan16807 5y agoThe price to keep all those plants running is a lot less than $9k though.
- jweir 5y agoERCOT does not have a capacity market. So you can’t get paid merely to have a functioning plant that will never run. It is the only market not to have one. So you get to set the price when you do run. The price limit is 9999.99 which is the DB column size for price AFAIK. https://cpowerenergymanagement.com/why-doesnt-texas-have-a-capacity-market/ https://cpowerenergymanagement.com/why-doesnt-texas-have-a-c...
- Dylan16807 5y agoYes, but that's a separate concern from keeping them all on right now. Are you saying with confidence that was the motivation? And that still isn't much of how they make the decision including how long to override it.
- dustintrex 5y agoPerhaps we should be happy they're apparently running COBOL on a mainframe, so the price limit was not INT_MAX.
- Moru 5y agoFrom what I remember of COBOL I would feel much safer with that than to use INT's for money calculations...
- BenjiWiebe 5y agoWhat's wrong with ints for price calculations? Are you thinking floats?
- makomk 5y agoCapacity markets are kind of controversial these days even in countries which do have them, because by design they're subsidies for inefficient fossil fuel power plants that wouldn't be viable if they had to compete to sell power on the open market, and especially for coal power plants which are meant to go away ASAP due to global warming. Texas in particular would have had to subsidize coal power for a capacity market to make a difference in the recent grid failure. The current trend for new fossil fuel plants is natural gas but that wouldn't have done any good since a major cause of the blackouts was that even the existing power generators couldn't get enough natural gas to continue operating. Coal plants don't have this problem because they can store large quanties of fuel on site, but they've been closing down in Texas and throughout the US and the rest of the developed world.
- beerandt 5y agoAs long as renewable energy advocates refuse to subsidize sufficient reliable backup capacity as part of the cost accounting in pricing renewables, events like Texas will become even more common, and in places that can't just blame it on "because Texas".
- mindslight 5y ago> wouldn't be viable if they had to compete to sell power on the open market Capacity markets are "the open market". They're a market for a different product - the option to request power during a later period. And when we're discussing power shortages with catastrophic results, that lack of capacity is a lot more important than specific resulting spot price. Environmentally it's better to keep an extra coal plant operational than to have everyone install their own backup generators (and ad-hoc fuel storage!) to mitigate the problems with "best effort" grid supply.
- coryrc 5y agoAnd even the capacity markets others have (particularly the timespan) over-incentivize natural gas (more CO2) over nuclear (almost carbon-free).
- Mvandenbergh 5y agoIT's the only US market that doesn't have one. No European country has a capacity market except for the UK (and that one was preposterously held up in court for a period of time).
- rtpg 5y agoLet's say there's not enough supply. People are asking for X, and peaker plants can offer it at Y. They would also be willing to offer it at 10% of Y. At 1% of Y! What sort of societal good is being offered by making it so that people are on the hook for a much higher price than what is needed for guaranteeing supply? What sort of value is added? The point of all this stuff is so that people produce electricity, and others can purchase it at a reasonable price. It's not to find some hypothetical equilibrium using a model that assumes atomicity of actors and some sort of instant feedback loop that didn't actually exist during the blackouts.
- panarky 5y agoThe rational profit-maximizing strategy is to minimize spending on routine maintenance and winterization, which predictably results in supply that will occasionally fail catastrophically, and then pocket billions in windfall profits during each catastrophe. If the state's objective is to maximize corporate profits at the expense of ratepayers, they have succeeded. But if the objective is to reduce the frequency of catastrophes, the state might consider reducing the incentive to produce catastrophes.
- weaksauce 5y ago> If the state's objective is to maximize corporate profits at the expense of ratepayers, they have succeeded. welcome to republican lead texas that deregulated the power grid and decided to isolate the grid instead of playing well with others.
- specialist 5y agoaka Disaster Capitalism
- coryrc 5y agoUnless all of your company's generators go down and you have to buy from another company to supply your fixed-rate customers, then you'll lose your shirt. Or if you tried to cheap out and always buy at market rate.
- netizen-936824 5y ago
- dustintrex 5y agoFixing the artifically low price makes sense. Setting the new price at $9000 instead of ~$25 does not.
- beerandt 5y agoA large portion of capacity was prohibited by DOE and EPA rules from coming online unless the floor price was $1500/MWh. There's your absurdity. This isn't a greedy capitalism problem, it's a govt manifested price hike and long term reduction in capacity, as part of the attempt to kill fossil fuels with no mature, viable, reliable, and affordable alternatives. The fact checkers clouded this issue by claiming it "false", not because the $1500 floor price isn't true, but based on a manufactured straw-man argument that Abbot requested the DOE waiver instead of ERCOT. And a few other equally ridiculous (but expected) "fact checks".
- HWR_14 5y agoIgnoring the rest of your argument, 9000 is six tomes 1500 and there are nine million values in between (assuming costs have a resolution of tenths-of-a-cent). There was a bug, and the decision to feed the maximum value into the computer system to keep the lights on makes sense. But to think that should be the real cost doesn't.
- beerandt 5y agoEven that "excess" capacity was capped by what capacity still exists, so economic truths and results where demand exceeds supply still applies. And regulations basically mandate that power distributors/wholesalers must buy it if they need it and are able, no matter the cost. They aren't allowed to make a judgment call that $7k is affordable but $8k is too costly, and just shut off power to their customers. There were still govt effects limiting supply and mandating purchases, even at those prices. And that's not an accident of policy; that's the intent, in artificially manipulating markets in support of agendas they can't outright mandate.
- CraigJPerry 5y ago>> you don't want expensive peaker plants to stop getting paid It never ceases to amaze me just how absurd capitalism can be. It's the best system we know of so far but it falls massively short of good enough in its current form. What you've said follows perfect capitalist logic. And yet, what you've said incentivises those plant operators to ensure there's more outages. Nothing they can do - whether that be to make their operation leaner or make their generation more efficient or whatever else, nothing can compare to a 350x increase in pay per megawatt hour produced for $0 investment.
- dotancohen 5y ago> best system we know of so far Best by what measure? I know many people who disagree that a social system that objectively benefits those with capital (it's even in the name) is best.
- throwaway6734 5y agoEmpirical results? Global poverty has plummeted over the last 80 years and innovation is through the roof
- pessimizer 5y agoNext time leave China out of the calculation.
- kylebyproxy 5y agoThe issue is we don't have anything useful to compare those results against. Any other system in place over the same period in history could have just as easily yielded the same net result.
- philwelch 5y agoCompare the standard of living in East vs West Germany or North vs South Korea.
- sidewndr46 5y agoI don't really understand the point you are making here. Peaker plants do not get paid in the Texas grid for standing by idle. They only get paid for supplying power.