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Clearing price for supplying power to Texas grid –$31.65

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

#61

Post by WalterBright »

Dylan16807 wrote: post #57
WalterBright wrote: post #51

Earlier quoted context omitted.

Gasoline pump prices always retails for the spot price, and no shortages have occurred since 1980 when Reagan repealed all oil & gas price/allocation controls. This is despite plenty of oil shocks, wars, refinery explosions, the current freeze preventing gas transport, etc. Nobody has reported gasoline shortages in Texas.

It's really easy to store gasoline. This makes the spot prices far more stable, and in case of shortage you don't instantly cripple households. And households that run out can easily get an alternative. It's a completely different product, so the ideal market is different.

In the 1970s, the feds decided they could set prices and allocate gas far more efficiently than the market. The result was many years of gas shortages and long lines.

Reagan's first act in 1980 was an Executive Order to repeal all of that. The gas lines disappeared literally overnight, and have not returned in 40 years.

I don't buy that anything is fundamentally different about electricity.

> case of shortage you don't instantly cripple households

The point of market pricing is you don't have shortages. The price rises until demand drops to match the supply. Rolling blackouts and peaker plants would be unnecessary with market pricing.

Demand for electricity is very elastic. I'd change my behavior if rates doubled. Wouldn't you, too? I bet you could easily cut your consumption by 50% without any particular hardship. Put on a sweater, read a book instead of watch TV, lights on only when you need them, turn off exterior lights, shorten the time your computer goes into power saving mode, etc.

A lot better than rolling blackouts.

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

#62

Post by mrDmrTmrJ »

raisedbyninjas wrote: post #53
mrDmrTmrJ wrote: post #34

Earlier quoted context omitted.

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…

Is 26GW the actual surplus capacity? My understanding is the number of homes without power that were not part of intentional blackouts would have surpassed grid capacity. This aligns with heating taking more power than summer cooling. It's normal for Texas to have a few blackouts per summer season due to demand.

26GW is the thermal capacity that the market would like have had, IF there had been sufficient natural gas. [1]

And that ERCOT's extreme plan (worst case scenario) had only anticipating loosing [2] 14GW of 'thermal' (i.e. mostly natural-gas) capacity. So 'lost capacity' was 2x the worst case anticipated.

Estimates are that supply was about 20GW below peek demand.[3]

Sources: MIT trained Princeton Professor who was tweeting real time data from ERCOT and is one of the nations leading researchers on energy systems, grids, and reliability.

I highly recommend all of these threads:

[1] https://twitter.com/jessejenkins/status/1361348544154664961 [2] https://twitter.com/JesseJenkins/status/1362062037275279363 [3] https://twitter.com/JesseJenkins/status/1362063819858714633

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

#63

Post by taeric »

WalterBright wrote: post #59
taeric wrote: post #58

Earlier quoted context omitted.

Aren't there strong controls on how much gas can fluctuate?

No.

Huh? I know the few times that gas has had a run on it in my lifetime, people immediately bring up gouging laws.

Quickly reading, sounds like this is only a few states and depends on a few other factors?

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

#64

Post by bretpiatt »

lostlogin wrote: post #31
bretpiatt wrote: post #20

Here's raw table data to look at 15 min spot price per mWh http://www.ercot.com/content/cdr/html/20210220_real_time_spp Here's overall grid conditions in real-time http://www.ercot.com/content/cdr/html/real_time_system_condi... You can see the massive excess capacity which is why pricing has gone negative now, total opposite of earlier in the week, grid may fail now from overload instead of brown out.

Any indication of what those links showed? I get ‘Access denied’.

Here's screenshot of 15 min spot price page https://ibb.co/YTzsqdj

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

#65

Post by taeric »

david-gpu wrote: post #13
asmithmd1 wrote: post #12

Earlier quoted context omitted.

If your job is to establish a stable market between producers and consumers, and the market price you set swings positive and negative, through 6 orders of magnitude in just 72 hour...you are not doing a good job.

...or, hear me out, this system is far more complex than an armchair specialist from HN can understand from reading a couple of headlines, and the actual experts in this subject matter are doing everything in their power to make the system work as best as they can, balancing a zillion opposing forces.

When the solution leads to deaths... It is fairly easy to side on the "it was done wrong" side.

Is it complicated? Of course. But evidence is pretty damning in this event.

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

#66

Post by WalterBright »

taeric wrote: post #63
WalterBright wrote: post #59

Earlier quoted context omitted.

No.

Huh? I know the few times that gas has had a run on it in my lifetime, people immediately bring up gouging laws. Quickly reading, sounds like this is only a few states and depends on a few other factors?

I thought the gouging laws only applied when disasters are declared.

The gouging laws are stupid, anyway, as they simply ensure there's no gas to buy. Everybody is worse off.

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

#67

Post by taeric »

WalterBright wrote: post #66
taeric wrote: post #63

Earlier quoted context omitted.

Huh? I know the few times that gas has had a run on it in my lifetime, people immediately bring up gouging laws. Quickly reading, sounds like this is only a few states and depends on a few other factors?

I thought the gouging laws only applied when disasters are declared. The gouging laws are stupid, anyway, as they simply ensure there's no gas to buy. Everybody is worse off.

That is inline with what I was reading. I'm assuming the outage last week was an emergency, so assumed something like this would apply, but I see no evidence that is the case.

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

#68

Post by ggm »

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…

Externalities are, in my opinion, one of the primary reasons for market failure.

This. Amongst other reasons (market distortions, gaming, profit incentives which misalign to the actual role of the markets target service)

The demand pricing thing, is entirely sensible inside the construct of market for energy. But, the system itself demands both load shedding and load returning and has transmission system dependencies. Price driven load shedding can (if understand it correctly) drive more things off-line when you need to keep the, online.

It's cascading failure stuff. But, not everyone's bidding model is tuned to optimise the overall goal of delivering power.

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

#69

Post by Dylan16807 »

WalterBright wrote: post #61
Dylan16807 wrote: post #57

Earlier quoted context omitted.

It's really easy to store gasoline. This makes the spot prices far more stable, and in case of shortage you don't instantly cripple households. And households that run out can easily get an alternative. It's a completely different product, so the ideal market is different.

In the 1970s, the feds decided they could set prices and allocate gas far more efficiently than the market. The result was many years of gas shortages and long lines. Reagan's first act in 1980 was an Executive Order to repeal all of that. The gas lines disappeared literally overnight, and have not returned in 40 years. I don't buy that anything is fundamentally different about electricity. > case of shortage you don…

> I'd change my behavior if rates doubled. Wouldn't you, too?

But most customers want fixed-rate electricity. So in a free market, that's what they buy. The spot market largely only exists for suppliers, and if you run out of suppliers the problems with electricity are vastly harsher than you could ever get with gas.

The combination of market + contracts + consumer preference ends up causing shortages.

I'm not suggesting setting prices or trying to allocate supply. Still have the spot market. But I think it would help if there was also some money that went toward keeping a percentage of extra capacity around even if it's going completely unused and would never make a profit from the spot market alone.

-

Alternatively you could use regulation to force variable pricing onto consumers. That would probably work too.

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