Energy Mess in Texas | Hacker News Reader

Energy Mess in Texas

wimflyc.blogspot.com

41 pointsundefined114 comments

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.

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-capac...

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.

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

Maybe markets are not the best solution for every situation.

Those are both snapshots. Over the years/decades that energy generation infrastructure operates, there's an average.

The problem is that it isn't good enough if the grid only works "on average". It needs higher uptime than pure market incentives would give.

> Yes, they are CHARGING power plant operators who rushed to bring capacity online.

A negative cost incentivizes the operators to turn it off, no? I imagine those power plant operators can easily turn it off in an hour? 9000/31=290.3, so there is plenty of margin to break even.

I'm a Texas residential customer. I've tried Griddy, the only service that exposes the customer directly to the wholesale electricity rates. Over two days, my electric bill mounted to somewhere around $1600. I'm not complaining, because in ~18 months prior to that, those low (and sometimes negative) $/kWh actually saved me around $2,000.

Not for everyone. But one effect of these real-time communicated rates, is my house skipped running equipment that would have consumed 50kWh+ during those $9.00/kWh periods. Accordingly, by adjusting my demand, in response to limited supplies, I made it possible for other Texans to not get crushed by a rolling blackout.

In addition, if thousands of people adjust their demand in this manner -- it can make it possible to reduce the CO2 emissions associated with the mere construction of a peaker plant, that, itself, might get used only 10-15% of the time.

Markets are great when the rules they are bound to are well defined and protect consumers. None of this would have been a problem if they required producers to winterize their equipment.

The markets in Texas generally work pretty well except for where they don’t. It doesn’t take a rocket scientist to see that basic regulations that power generation needs be winterized (among others thing) may cost slightly more on a day to day basis but costs consumers far less in the long run.

Everything in life is a trade off and unfortunately the voters of Texas have prioritized centralizing regulatory authority (a little counterintuitive but ERCOT runs basically everything and local municipalities are not allowed to much wiggle room), blind faith private entities that are accountable to no one and loose very little when something like this happens (the generation companies aren’t paying for everyone’s burst pipes, the property owners who’s insurance premiums are going through the rough do and the American people in general through Federal aid).

True, but it also seems like a dubious business proposition to build a power plant in the hope that energy prices will spike that high in a timely manner.

>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.

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.

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.

Maybe in the aughts.

But since the 2010s wind has been built solely for the economics.

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