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The main problem with the Texas grid is really very simple. Their "free market" real time power auction makes no allowances for long term concerns like reliabi

The main problem with the Texas grid is really very simple. Their "free market" real time power auction makes no allowances for long term concerns like reliability. Any provider who spends money to address these sort of issues is immediately priced out of the market. Some things are too important to leave to the "free market".

mothballed 1y ago
In a free market Texas could connect to the interstate grid which would average some of the localized reliability issues.
- MBCook 1y ago
  It’s because they want their “free market” that they don’t connect to the national grid.
  - mothballed 1y ago
    Other states/feds were happy to take the "free market" of Texas during WWII when they direly needed it and other Gulf states begged Texas to connect. It's a holier than thou thing for the other states. "Free market" buying from Texas when they need it, when they don't it's "fuck the free market" and cut texas off via legislation and refuse to provide the same assistance that Texans provided.
  - barbacoa 1y ago
    Texas is connected to the Eastern and Mexican grids and can share power through high voltage DC interconnect stations. They simply don't sync to the phase of other grids.
bryanlarsen 1y ago
This can be a "have your cake and eat it too" situation. California, most of Northern Europe and many other jurisdictions have a power market without this problem. They do this by also establishing a market for capacity and/or reliability.
- zdragnar 1y ago
  > California > without a problem That doesn't really line up.
  - bryanlarsen 1y ago
    California's myriad problems are delivery side, not supply side.
  - mrguyorama 1y ago
    Then try one of the other 48 states. The rest of us have figured this out. People should stop pretending the US is only Texas and California like there aren't plenty of well run states that aren't single-party kleptocracies
- dlcarrier 1y ago
  California has both a free energy market and energy capacity problems, although NIMBYism is the main factor in the lack of stable energy production.
infecto 1y ago
I hear opinions like yours often but I am not sure it’s simple or that the reasons you’re citing are grounded in reality. What is the alternative, have a state imposed monopoly with a single power company like PGE who I would not see as an ideal operator either. Same can be true for a lot of other similar generators across the company. You’ll probably bring up the winter storm outage which is inexcusable but their neighbor to the north SPP had very similar failings in being prepared and only faired better because they have interconnects. Texas has had some of the fastest adoption for wind and solar. It is far from perfect but I also think there is benefit to having multiple generation companies supplying to the grid. You have companies with different expertise and perhaps innovation.
- lokar 1y ago
  PG&E only runs the grid(s), not generation The government can structure a public market in many different ways (they do this in many aspects of the economy). It’s not limited to real time auction vs single provider.
  - infecto 1y ago
    Incorrect. They do have generation but it’s not a majority producer. My point being that PGE still is helping set the rate via the CPUC. They are purchasing power through some of the spot markets. They are unable to even manage their own transmission lines effectively though.
- apendleton 1y ago
  > What is the alternative Other markets in the US are generally energy + capacity markets -- you get paid both for what you actually provide and for your ability to provide a certain level of power, whereas Texas is an energy-only market (EOM). It needn't be the case that that if you don't do an EOM, you have to have a monopoly.
  - infecto 1y ago
    Definitely you could operate on a capacity model instead of generation. There are a lot of levers. My issue is mostly around how much uninformed hate a “free market” energy system gets.
floatrock 1y ago
There's a lot of things to take a critical eye towards on the Texas power market, but > ...no allowances for long term concerns like reliability. Any provider who spends money to address these sort of issues is immediately priced out of the market. ...is a bit of an exaggeration. When Texas has those cold-snap/freeze days a few years ago, wholesale rates went up to $9,000 per megawatt-hour. So $9/kWh. Wholesale. A large amount of energy suppliers went out of business because they didn't properly hedge for such an event. You can bet those who are left have started to react to market price signals like that. Whether it's through financial engineering or boots-and-poles engineering is a fair discussion to have, but to say "no allowances for reliability signals" is a bit disingenuous. When someone says "It's all really very simple...", it's almost certainly not.
robocat 1y ago
> Their "free market" real time power auction makes no allowances for long term concerns like reliability Blaming the "free market" is an ignorant kneejerk reaction. There is a whole discipline revolving around designing the incentives for electricity markets - countries pay for consultants from companies like NERA Economic Consulting to create or improve their electricity markets to achieve the goals needed by that country. https://duckduckgo.com/?q=wholesale+electricity+market+design https://duckduckgo.com/?q=wholesale+electricity+market+desig... The problem is that wholesale electricity markets need to be designed so that the incentives of the market participants are aligned with desired outcomes. Use game theory so that selfish participants are rewarded for good outcomes in the market, and are penalized for bad outcomes in the market. When there is a failure (e.g. Spain) the responsibility lies at the feet of the regulators. Unfortunately after a failure we all want to blame someone, and it is easiest to blame the market participants or the market. Read how Enron manipulated the market to the detriment of California and its residents. The answer isn't to Blame Enron. Blame the people that set up shitty incentives. The big issue is ensuring that large generators/retailers don't twist the market rules to their advantage or obtain regulatory capture. The large players tend to have a knowledge advantage and are very experienced at manipulating their regulatory authorities.

mothballed 1y ago

In a free market Texas could connect to the interstate grid which would average some of the localized reliability issues.

MBCook 1y ago
It’s because they want their “free market” that they don’t connect to the national grid.
- mothballed 1y ago
  Other states/feds were happy to take the "free market" of Texas during WWII when they direly needed it and other Gulf states begged Texas to connect. It's a holier than thou thing for the other states. "Free market" buying from Texas when they need it, when they don't it's "fuck the free market" and cut texas off via legislation and refuse to provide the same assistance that Texans provided.
- barbacoa 1y ago
  Texas is connected to the Eastern and Mexican grids and can share power through high voltage DC interconnect stations. They simply don't sync to the phase of other grids.

bryanlarsen 1y ago

This can be a "have your cake and eat it too" situation. California, most of Northern Europe and many other jurisdictions have a power market without this problem. They do this by also establishing a market for capacity and/or reliability.

zdragnar 1y ago
> California > without a problem That doesn't really line up.
- bryanlarsen 1y ago
  California's myriad problems are delivery side, not supply side.
- mrguyorama 1y ago
  Then try one of the other 48 states. The rest of us have figured this out. People should stop pretending the US is only Texas and California like there aren't plenty of well run states that aren't single-party kleptocracies
dlcarrier 1y ago
California has both a free energy market and energy capacity problems, although NIMBYism is the main factor in the lack of stable energy production.

infecto 1y ago

I hear opinions like yours often but I am not sure it’s simple or that the reasons you’re citing are grounded in reality. What is the alternative, have a state imposed monopoly with a single power company like PGE who I would not see as an ideal operator either. Same can be true for a lot of other similar generators across the company. You’ll probably bring up the winter storm outage which is inexcusable but their neighbor to the north SPP had very similar failings in being prepared and only faired better because they have interconnects. Texas has had some of the fastest adoption for wind and solar. It is far from perfect but I also think there is benefit to having multiple generation companies supplying to the grid. You have companies with different expertise and perhaps innovation.

lokar 1y ago
PG&E only runs the grid(s), not generation The government can structure a public market in many different ways (they do this in many aspects of the economy). It’s not limited to real time auction vs single provider.
- infecto 1y ago
  Incorrect. They do have generation but it’s not a majority producer. My point being that PGE still is helping set the rate via the CPUC. They are purchasing power through some of the spot markets. They are unable to even manage their own transmission lines effectively though.
apendleton 1y ago
> What is the alternative Other markets in the US are generally energy + capacity markets -- you get paid both for what you actually provide and for your ability to provide a certain level of power, whereas Texas is an energy-only market (EOM). It needn't be the case that that if you don't do an EOM, you have to have a monopoly.
- infecto 1y ago
  Definitely you could operate on a capacity model instead of generation. There are a lot of levers. My issue is mostly around how much uninformed hate a “free market” energy system gets.

floatrock 1y ago

There's a lot of things to take a critical eye towards on the Texas power market, but > ...no allowances for long term concerns like reliability. Any provider who spends money to address these sort of issues is immediately priced out of the market. ...is a bit of an exaggeration. When Texas has those cold-snap/freeze days a few years ago, wholesale rates went up to $9,000 per megawatt-hour. So $9/kWh. Wholesale. A large amount of energy suppliers went out of business because they didn't properly hedge for such an event. You can bet those who are left have started to react to market price signals like that. Whether it's through financial engineering or boots-and-poles engineering is a fair discussion to have, but to say "no allowances for reliability signals" is a bit disingenuous. When someone says "It's all really very simple...", it's almost certainly not.

robocat 1y ago

> Their "free market" real time power auction makes no allowances for long term concerns like reliability Blaming the "free market" is an ignorant kneejerk reaction. There is a whole discipline revolving around designing the incentives for electricity markets - countries pay for consultants from companies like NERA Economic Consulting to create or improve their electricity markets to achieve the goals needed by that country. https://duckduckgo.com/?q=wholesale+electricity+market+design https://duckduckgo.com/?q=wholesale+electricity+market+desig... The problem is that wholesale electricity markets need to be designed so that the incentives of the market participants are aligned with desired outcomes. Use game theory so that selfish participants are rewarded for good outcomes in the market, and are penalized for bad outcomes in the market. When there is a failure (e.g. Spain) the responsibility lies at the feet of the regulators. Unfortunately after a failure we all want to blame someone, and it is easiest to blame the market participants or the market. Read how Enron manipulated the market to the detriment of California and its residents. The answer isn't to Blame Enron. Blame the people that set up shitty incentives. The big issue is ensuring that large generators/retailers don't twist the market rules to their advantage or obtain regulatory capture. The large players tend to have a knowledge advantage and are very experienced at manipulating their regulatory authorities.