Clearing price for supplying power to Texas grid

Re: Clearing price for supplying power to Texas grid –$31.65

#41

Post by asmithmd1 » Sat, Feb 20, 2021, 10:28 PM UTC

godmode2019 wrote: post #33

mrDmrTmrJ wrote: post #30

Earlier quoted context omitted.

Honestly, I reach a very different conclusion. Comparing ERCOT to other grids (PJM or CALISO), ERCOT system has delivered very low prices and very high levels of renewable penetrations. PJM wastes billions of dollars a year in capacity payments to coal plants for no reason. What you write, "The market in power should only exist to optimise" well, that is exactly what ERCOT does. As for the disaster last week, that wa…

I'm sorry but how does a trace element affect the polar vortex/ jetstream bending. It doesn't. Its not a good argument if all weather situations can be explained by "climate change". It's too hot - climate change It's too cold - climate change What you are describing is called weather.

Also, when an obvious market failure kills dozens of people, “free markets fix everything” is not correct.

Re: Clearing price for supplying power to Texas grid –$31.65

#42

Post by Sparkle-san » Sat, Feb 20, 2021, 10:28 PM UTC

godmode2019 wrote: post #33

mrDmrTmrJ wrote: post #30

Earlier quoted context omitted.

Honestly, I reach a very different conclusion. Comparing ERCOT to other grids (PJM or CALISO), ERCOT system has delivered very low prices and very high levels of renewable penetrations. PJM wastes billions of dollars a year in capacity payments to coal plants for no reason. What you write, "The market in power should only exist to optimise" well, that is exactly what ERCOT does. As for the disaster last week, that wa…

I'm sorry but how does a trace element affect the polar vortex/ jetstream bending. It doesn't. Its not a good argument if all weather situations can be explained by "climate change". It's too hot - climate change It's too cold - climate change What you are describing is called weather.

Climate change leading to temperature extremes in both directions is an open question within climate science. There are some theories suggesting this is the case and there are skeptics of that theory, but if you've proven otherwise then you should probably submit your research to them.

Re: Clearing price for supplying power to Texas grid –$31.65

#43

Post by mrDmrTmrJ » Sat, Feb 20, 2021, 10:30 PM UTC

godmode2019 wrote: post #33

mrDmrTmrJ wrote: post #30

Earlier quoted context omitted.

Honestly, I reach a very different conclusion. Comparing ERCOT to other grids (PJM or CALISO), ERCOT system has delivered very low prices and very high levels of renewable penetrations. PJM wastes billions of dollars a year in capacity payments to coal plants for no reason. What you write, "The market in power should only exist to optimise" well, that is exactly what ERCOT does. As for the disaster last week, that wa…

I'm sorry but how does a trace element affect the polar vortex/ jetstream bending. It doesn't. Its not a good argument if all weather situations can be explained by "climate change". It's too hot - climate change It's too cold - climate change What you are describing is called weather.

Godmode2019,

I suspect we're strongly agreeing. My point is that Texas didn't assume the 'weather' would ever be bad. So when it got cold they ran out of natural gas to run their electricity system.

The reason I bring up methane is that's the raw fuel they need to power their generators. And my proposed solution is to require the energy infrastructure (here the natural gas infrastructure, which is required to power the electricity infrastructure) to be designed to handle bad weather. As you said 'weather' means in gets both hot and cold.

Re: Clearing price for supplying power to Texas grid –$31.65

#44

Post by JumpCrisscross » Sat, Feb 20, 2021, 10:30 PM UTC

Osiris wrote: post #35

mrDmrTmrJ wrote: post #30

Earlier quoted context omitted.

Honestly, I reach a very different conclusion. Comparing ERCOT to other grids (PJM or CALISO), ERCOT system has delivered very low prices and very high levels of renewable penetrations. PJM wastes billions of dollars a year in capacity payments to coal plants for no reason. What you write, "The market in power should only exist to optimise" well, that is exactly what ERCOT does. As for the disaster last week, that wa…

If the market solves all problems why would the government even need to mandate winterization? Wouldn't smart businesses have done the risk analysis and done the work? Maybe the problem here is that loss of electrical power has a significant external cost that isn't absorbed by the utilities. In other words, the cost of winterization was more than the cost to fix the damage to their equipment but doesn't take into ac…

> If the market solves all problems

Straw man.

Re: Clearing price for supplying power to Texas grid –$31.65

#45

Post by WalterBright » Sat, Feb 20, 2021, 10:30 PM UTC

asmithmd1 wrote: post #29

mrDmrTmrJ wrote: post #18

Earlier quoted context omitted.

Why do you hate ERCOT? I ask because I broadly understand ERCOT to have delivered the lowest prices and the highest reliability over the last decade. A far better outcome than PJM or CALISO. Last weeks failure was because the natural gas pipeline infrastructure isn't winterized - a separate issue from the structure of the electricity market. What leads you to a different opinion?

They may have delivered low prices, but it was at the cost of ignoring handling “black swan” events. As the ERCOT CEO said, If they had not blacked out millions of customers, grid and consumer equipment would have been destroyed - wiping out all the accumulated cost savings. ERCOT does not pay producers for standby capacity. Just this week the New England grid completed its annual auction for capacity to be available…

If the consumer retail electricity rate was allowed to float minute by minute, there'd be no need for "peaker" plants.

The notion of fixed electricity rates is the source of most of the problems.

After all, there are regular events where oil refineries go off like, burn down, blow up, etc., and yet I'm still able to buy gas because the pump prices go up, reducing demand to match the supply.

Note that this big freeze also impacted gas deliveries, and gas prices went up, and no shortages. A fixed pump price would have produced shortages and lines.

Whenever there are shortages, there's almost always a fixed price in there causing the problem.

Re: Clearing price for supplying power to Texas grid –$31.65

#46

Post by JumpCrisscross » Sat, Feb 20, 2021, 10:32 PM UTC

This is the market screaming for energy storage.

If large negative-price swings, on account of higher power variability, become commonplace it could very elegantly pay for storage. It would also let storage be compared, apples to apples, dollar to dollar, with base load power supplies.

Re: Clearing price for supplying power to Texas grid –$31.65

#47

Post by PragmaticPulp » Sat, Feb 20, 2021, 10:32 PM UTC

Osiris wrote: post #35

mrDmrTmrJ wrote: post #30

Earlier quoted context omitted.

Honestly, I reach a very different conclusion. Comparing ERCOT to other grids (PJM or CALISO), ERCOT system has delivered very low prices and very high levels of renewable penetrations. PJM wastes billions of dollars a year in capacity payments to coal plants for no reason. What you write, "The market in power should only exist to optimise" well, that is exactly what ERCOT does. As for the disaster last week, that wa…

If the market solves all problems why would the government even need to mandate winterization? Wouldn't smart businesses have done the risk analysis and done the work? Maybe the problem here is that loss of electrical power has a significant external cost that isn't absorbed by the utilities. In other words, the cost of winterization was more than the cost to fix the damage to their equipment but doesn't take into ac…

In a truly free market, Texas would have simply received power production from nearby states that were connected into their grid.

This isn't a free-market situation because the state has gone to great lengths to keep this power system isolated.

Re: Clearing price for supplying power to Texas grid –$31.65

#48

Post by WalterBright » Sat, Feb 20, 2021, 10:32 PM UTC

mrDmrTmrJ wrote: post #34

asmithmd1 wrote: post #29

Earlier quoted context omitted.

They may have delivered low prices, but it was at the cost of ignoring handling “black swan” events. As the ERCOT CEO said, If they had not blacked out millions of customers, grid and consumer equipment would have been destroyed - wiping out all the accumulated cost savings. ERCOT does not pay producers for standby capacity. Just this week the New England grid completed its annual auction for capacity to be available…

Respectfully, I don't see the issue as one of choosing to have a capacity market. There was ample excess capacity (at least 26GWs!), just no natural gas to run it as the natural gas infrastructure was frozen. So what was the nature of the failure? Well, there was not resiliency standard that required the natural gas infrastructure to be winterized. Because this infrastructure froze, the state ran out of methane ('nat…

> Do you see it differently?

Yes. If minute-by-minute retail electricity pricing was there, then there'd be a large incentive to winterize the fuel supply, because the ones who didn't would lose out on the profits from higher electric rates from the ones who did.

Re: Clearing price for supplying power to Texas grid –$31.65

#49

Post by josephg » Sat, Feb 20, 2021, 10:33 PM UTC

Osiris wrote: post #35

mrDmrTmrJ wrote: post #30

Earlier quoted context omitted.

Honestly, I reach a very different conclusion. Comparing ERCOT to other grids (PJM or CALISO), ERCOT system has delivered very low prices and very high levels of renewable penetrations. PJM wastes billions of dollars a year in capacity payments to coal plants for no reason. What you write, "The market in power should only exist to optimise" well, that is exactly what ERCOT does. As for the disaster last week, that wa…

If the market solves all problems why would the government even need to mandate winterization? Wouldn't smart businesses have done the risk analysis and done the work? Maybe the problem here is that loss of electrical power has a significant external cost that isn't absorbed by the utilities. In other words, the cost of winterization was more than the cost to fix the damage to their equipment but doesn't take into ac…

Free markets seem to do a bad job with resiliency. Redundancies, winterisation, warehousing N95 masks just in case, etc is treated as inefficiency by a free market and eliminated.

These aren’t externalities - is there an economics name for this? I’m sure it’s been noticed before.

Re: Clearing price for supplying power to Texas grid –$31.65

#50

Post by WalterBright » Sat, Feb 20, 2021, 10:33 PM UTC

bdonlan wrote: post #19

spacemanmatt wrote: post #8

Earlier quoted context omitted.

I believe that is an accurate description of disincentivizing oversupply. I hate ERCOT.

Unfortunately, storage of electricity is quite difficult; supply and demand therefore need to be balanced at all times. An oversupply (ie, overvoltage or excessive frequency) will damage equipment, so prices go negative to encourage those plants which can go offline quickly to do so; generation stations which take longer to shut down or start up, on the other hand, tend to stay running.

With fixed electric rates, balancing supply and demand is always placed on the supply. With variable rates, demand can adjust as well.