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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

#81

Post by mrDmrTmrJ »

godmode2019 wrote: post #73
mrDmrTmrJ wrote: post #43

Earlier quoted context omitted.

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 t…

I didn't mean to be negative. I just get bothered when see co2 makes things cold, its almost absurdist joke ie the one thing to nullify a hypothesis is now incorporated into the hypothesis to strength the argument. I don't know anything about Texans, I don't even live in America but American politics trickle down

If you're question is 'why can increased CO2 lead to colder weather in Texas?'

There's a huge difference between describing average temperatures (what people describe as 'global warming') and describing the temperatures on any specific day.

Previously, a strong jet stream air current trapped cold polar air far north of Texas (which is say 30' North latitude). As the pole's warm, the jet has become pone to weakening allowing cold polar air to move very far south e.g. 90'N to 30'N in Texas, which sits east of the rocky mountains in the US.

Effects like this are why a lot of people are using the term 'climate change' more frequently. Because an increase in CO2 means more than just an average higher surface temperature. Weather changes and instabilities will grow more common, with a bias to warmer events over all.

Think of it as the 'variance in the weather' is growing along side the mean weather (temperature) is going up.

Yes, as an American I'll agree our politics has plenty of instabilities as well.

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

#83

Post by steve76 »

mrDmrTmrJ wrote: post #54
Osiris wrote: post #35

Earlier quoted context omitted.

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…

Strongly agree. Free markets often fail to adopt low cost protections to tail events. E.g. the free market didn't get us 100% of new cars having seatbelts and airbags, government requirements did. And those standards were fought by the car manufacturers. My point is we need regulations to mandate our energy system to be resilient to outlier events (heat/cold/flooding/high wind etc.) and that's a government function s…

[flagged]

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

#84

Post by seventytwo »

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…

Socialize the costs, privatize the profits! The capitalist mantra!

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

#85

Post by floatingatoll »

WalterBright wrote: post #45
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…

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…

In general, individual consumers expect sellers to increase the price above the cost of goods in exchange for decreasing the exposure of the consumer to volatility. A case could be made that gas prices violate this expectation, by transmitting sharp price shocks to consumers in violation of the unspoken agreement.

I remember something about how gas prices quite reliably go up rapidly and go down very slowly, which doesn't at all reflect a market that's allowed to 'float'. It seems as though gas prices are building in their own 'fixed' problem: shock-tremor resilience into a very low rate of decline in prices, paired with a very high rate of incline in prices, in order to buffer against market shocks in a way that "boils the frog" so that consumers don't realize it.

Are there any examples of an industry that transmits price shocks directly to customers, with equal responsiveness in both directions, regardless of the opportunity to sellers exploited by gas prices today?

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

#86

Post by kortilla »

josephg wrote: post #49
Osiris wrote: post #35

Earlier quoted context omitted.

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.

Free markets do account for huge shortages, but we’ve eliminated the motivation for actors to do something about it with anti price-gouging regulations.

There would be tons of stockpiles if businesses could appropriately upcharge when there was mass panic buying. Instead we stupidly lock prices, which wipes out most of the point of paying extra storage costs compared to a just in time competitor.

The problem is we’ve as a society don’t like when prices go up with demand so we’ve crippled markets in their ability to deal with these types of events.

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

#87

Post by hedora »

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.

Rising CO2 puts more energy into the atmosphere. That means more extreme weather. This has been understood since at least 1980.

Here’s a report from the American Petroleum Institute from 1980 that correctly projected the economic impact and timing of current extreme weather events.

https://mk0insideclimats3pe4.kinstacdn.com/wp-content/upload...

In some other comments you say the science is still an open question.

The projections in this report have been refined and confirmed repeatedly by dozens (if not hundreds) of independent research groups for the last 40 years.

At this point, I cannot imagine more definitive evidence that the science is settled.

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

#88

Post by TwoBit »

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…

My personal definition of a libertarian has been: someone who read a capitalism economics textbook but skipped the chapter on externalities.

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

#89

Post by hn_throwaway_99 »

godmode2019 wrote: post #73
mrDmrTmrJ wrote: post #43

Earlier quoted context omitted.

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 t…

I didn't mean to be negative. I just get bothered when see co2 makes things cold, its almost absurdist joke ie the one thing to nullify a hypothesis is now incorporated into the hypothesis to strength the argument. I don't know anything about Texans, I don't even live in America but American politics trickle down

It's not "co2 makes thinks cold", but there is a real possibility your previous statement that a "trace element" can't affect the jet stream is certainly up for debate.

A large factor in the strength of the jet stream is the temperature differential between polar regions and lower latitudes. It's well known at this point that polar regions are warming the fastest, so there is a smaller differential, and the hypothesis goes that this can weaken the jet stream, leading to more events where the polar vortex dips down much further than normal.

This is a great article explaining that hypothesis: https://www.washingtonpost.com/opinions/2021/02/18/texas-pow... . Note the author of the article actually thinks the evidence for that hypothesis isn't very strong, but believes it's certainly possible and that its proponents are arguing in good faith.

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

#90

Post by hn_throwaway_99 »

godmode2019 wrote: post #74
Sparkle-san wrote: post #42

Earlier quoted context omitted.

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.

I agree, I feel the burden of proof is in the new theory, rather than - here is a hypothesis, prove its wrong. It's pretty clear in the small scale studies co2 concentration affects temperature in the direction or warming in the long term and the short term affect of cooling because less energy makes it to the surface. (Similar to clouds or smog/ smoke blocking light) But a causing extreme cold weather events..

> the short term affect of cooling because less energy makes it to the surface

That's absolutely not true, and I've never even heard climate change skeptics argue that.

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