[flagged]
Texas power crisis revealed flaw in market’s design
31–40 of 296 posts
Re: Texas power crisis revealed flaw in market’s design
#32A flaw in the market design, or intentional design that favored power producers at the expense of consumers in extreme weather?
Very explicitly the latter, but predicated on the assumption that energy production is infinitely elastic — as long as you priced power high enough, someone will eventually generate it for you. In this case, however, you could run the spot price up as high as you wanted (and the PUC did!), but producers couldn’t bring additional capacity online, and consumers couldn’t moderate their demand (since they were constantly freezing, then thawing as soon as they got power back), so the market catastrophically failed with inelastic demand and production.
I was in power markets when Texas dereg happened, and our economist termed it a “priced to fail” market design. Wasn’t wrong!
Re: Texas power crisis revealed flaw in market’s design
#33This is classic “efficiency” vs “antifragility.” There are some things that are okay to ocassionally fail, and for those it’s often good to pursue efficiency. But for something critical like electricity, the market all decided - with good financial justification - that it would be more profitable to just let the system fail occasionally than to be hardened against long-tail events. In systems engineering if we want t…
As I understand it, (ie, poorly), California pays for both power and capacity. Capacity payments are paid whether the plant is used or not, and capacity has fairly strict uptime requirements or it doesn't pay for that capacity.
Correct. Most grids work this way. ERCOT does not.
https://www.sciencedirect.com/topics/engineering/capacity-pa...
https://www.reuters.com/article/us-usa-weather-power-prices-...
Re: Texas power crisis revealed flaw in market’s design
#34Earlier quoted context omitted.
Or just be transparent about that trade-off. It's a fair one to make. Putting batteries at mission-critical sites may be the better play than winterizing the entire grid, from hospitals to merry-go-rounds.
Every home that uses electricity for heat is a mission-critical site when it's 0 degrees F outside. Kids froze to death in their own beds.
Source?
Re: Texas power crisis revealed flaw in market’s design
#35Earlier quoted context omitted.
Or just be transparent about that trade-off. It's a fair one to make. Putting batteries at mission-critical sites may be the better play than winterizing the entire grid, from hospitals to merry-go-rounds.
But this leaves for potentially unethical situations like vulnerable populations who cannot afford batteries or winterized electricity. Im thinking someone disabled living on disability probably can’t afford premium electricity bills even if they need to maintain their lifesaving and expensive equipment yknow?
There's still a dark balancing act going on.
We don't have the collective power to save everyone, and if we overextend ourselves trying to do that, then there is a risk that the whole system collapses for everyone, or partially collapses and causes more pain than might have happened without spreading ourselves too thin.
We obviously need to struggle to make a good world for everyone, but nature is fucking brutal and it doesn't care about our sense of ethics.
Re: Texas power crisis revealed flaw in market’s design
#36Energy in Texas, like everywhere else in the US, is heavily regulated. They can't just raise rates or borrow money whenever they want. These decisions are regulated and political. So there is a set amount of income coming in to improve things and repair things and to pay off debt. They were required to build out wind power. Probably a good thing in the big scheme of things, but that takes money away from other priori…
You suggest that these problems would be faced everywhere. So why is Texas the only one experiencing them?
Re: Texas power crisis revealed flaw in market’s design
#37Earlier quoted context omitted.
Or just be transparent about that trade-off. It's a fair one to make. Putting batteries at mission-critical sites may be the better play than winterizing the entire grid, from hospitals to merry-go-rounds.
But this leaves for potentially unethical situations like vulnerable populations who cannot afford batteries or winterized electricity. Im thinking someone disabled living on disability probably can’t afford premium electricity bills even if they need to maintain their lifesaving and expensive equipment yknow?
The solution is to cut off industrial and commercial sites first, which draw the most power anyways, and keep residential zoning online as much as possible. The economy can take a break for one day.
Re: Texas power crisis revealed flaw in market’s design
#38I suppose we've come full circle and stopped trusting in free markets to fully solve all problems. Does anyone know of hybrid central planning / market approaches? Maybe a central planner with a market trying to predict whether the planner is making good decisions?
Is your first paragraph about Texas specifically or something? Utilities in most places are pretty heavily regulated. In like that last 20 years we have had ~0 gas outages and probably less than 10 days of power outages here. The weather event in Texas had the problem of being rather extreme, but it sure wasn't unimaginable or anything like that.
10 days worth of power outages in 20 years is not something to brag about. I lived in Toronto where we had maybe 1 hour of power outages in 5 years (my Linux box had >485 days of uptime on wall power with no UPS until I had to move). Well, that was until the 2003 blackout hit and took out power for 24+ hours.
Re: Texas power crisis revealed flaw in market’s design
#39This is classic “efficiency” vs “antifragility.” There are some things that are okay to ocassionally fail, and for those it’s often good to pursue efficiency. But for something critical like electricity, the market all decided - with good financial justification - that it would be more profitable to just let the system fail occasionally than to be hardened against long-tail events. In systems engineering if we want t…
As I understand it, (ie, poorly), California pays for both power and capacity. Capacity payments are paid whether the plant is used or not, and capacity has fairly strict uptime requirements or it doesn't pay for that capacity.
I havent studied this in depth, but my intuition tells me that having capacity payments such that the grid as a whole has sufficient overhead for extreme events nullifies any "efficiency" arguments for having these market mechanisms in the first place.
Call me crazy, I think that Texas is doing exactly what it set out to do with deregulation. Run the grid more efficiently via market mechanisms. The method that is used to make the grid more efficient is simply to shave off the traditional 20% capacity overhead meant to cover these sorts of situations. There you go, slightly cheaper electricity 99% of the time.
Re: Texas power crisis revealed flaw in market’s design
#40Earlier quoted context omitted.
Or just be transparent about that trade-off. It's a fair one to make. Putting batteries at mission-critical sites may be the better play than winterizing the entire grid, from hospitals to merry-go-rounds.
But this leaves for potentially unethical situations like vulnerable populations who cannot afford batteries or winterized electricity. Im thinking someone disabled living on disability probably can’t afford premium electricity bills even if they need to maintain their lifesaving and expensive equipment yknow?
In Texas when you are filling information to your RETAIL provider, you can notify them that you have health equipment that relies on electricity. I do not exactly know what kind of actions they take -- when you provide that info but I am assuming they are legally required to make certain accommodations.