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Texas power crisis revealed flaw in market’s design

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Re: Texas power crisis revealed flaw in market’s design

#121

Earlier quoted context omitted.

Mine is 100% renewable and I haven't lost power at my location in years. What rate do you pay including delivery? My rate indoors delivery charges, sometimes people see those as two separate things.

7 cents for delivery, zero to five cents for power. 2.3 cents/kwh as of a few minutes ago. I'm just surprised because maintaining a grid in an extremely dense urban area that hasn't gotten above freezing in several weeks and getting nuclear power which is very expensive should be a good deal more expensive than the wild west that is Texas energy markets and it doesn't seem to be.

9.3c/kWh is greater than my 8.8c/kWh. Your rates swing from a bit cheaper to mine to a bit pricer than mine, while mine is always the same. You would have to share your actual effective monthly cost for us to know if you truly paid less on average, as if it stays on the higher end you're paying a lot more but if it's only on the lower end then you're a good bit cheaper.

Maintaining the grid in a dense urban area is actually usually cheaper than less dense areas. More customers per mile of cable to offset the costs. Customers in urban areas usually don't impart as much load. There's more utility owned property per customer in a suburb than in a city by a good bit.

Note that it was massively unusually cold, not that it was just cold. A large part of the grid failure wasn't electrical equipment failing, it was really more of a lack of natural gas supply. There's no real long term storage for natural gas, so when you start using more than what suppliers are making you get shortfalls. Residential customers take priority, so gas companies couldn't get more gas. Gas generators were the primary expected generation capacity, but they couldn't get enough gas. Electric demand kept increasing but capacity started falling. Rolling blackouts were attempted. Sites critical to gas generation and supply were not listed as critical industrial customers so their circuits were higher priority to shed load (non-critical industrial and commercial first) leading to further gas shortages which led to further plant shutdowns which led to more circuits being shed. Those gas lines have a good bit of moisture in them. When the gas is flowing, it's not really a problem. When the producers stop because of power issues, lines freeze. Lines were unable to be unfrozen, so gas capacity really couldn't be increased to theoretical capacity even when the producers got power back on. So we had a number of plants which should have been able to operate but there literally wasn't any gas left to burn.

There were some other failures. A nuclear plant had a cooling system pipe exposed which froze. Coal plants had open piles of coal freeze solid without equipment to break up the pile and move the coal. Some wind turbines we're offlined as they were worried about icing as they don't normally need de-icing. The skies were really cloudy so solar didn't have as much output. But the vast majority of power failures were failures in natural gas supply.

Re: Texas power crisis revealed flaw in market’s design

#122

Earlier quoted context omitted.

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 use…

Capacity payments ARE a market mechanism. It's like paying the ambulance squad for answering your call when you need medical help, and paying the ambulance squad to exist in the first place regardless of whether you call. Both services are valuable. And both of them can be paid for in a market mechanism.

>Capacity payments ARE a market mechanism.

Yes, I think maybe my post wasn't clear enough.

The usual justification for deregulation as in Texas, California, and other states is the supposed improved efficiency of generation assets as a result of these market mechanisms. I claim, to be fair without evidence, that the way these "efficiencies" are realized is to cut down on surplus capacity. As such, the existence of capacity fees and/or capacity markets, as they provide incentive to build surplus capacity, seem to me to be an argument against the existence of the market mechanisms at all. Simply:

1 - We need to deregulate because it will make generation more efficient. 2 - The only real way to make generation more efficient is not to have surplus capacity (this is my own claim). 3 - Market mechanisms are needed to incentivize surplus capacity, or else we wind up with blackouts.

I think that the fact that point 3 seems to follow is in fact a clear argument against point 1. Why deregulate if not for the supposed efficiencies in generation? If they're eaten up as soon as we have a separate market mechanism to incentivize surplus capacity, then the two markets don't do anything but justify one another. Just go back to vertical integration and be done with it.

Re: Texas power crisis revealed flaw in market’s design

#123

Earlier quoted context omitted.

Depends. Some industrial customers like datacenters have strict availability agreements with customers and won't be able to accept prolonged cutoffs. Forcing non residential customers like these to curtail their use would likely end up driving the industry (and corresponding tax revenue) elsewhere. But what you're talking about does already exist, and it's called demand response, https://www.energy.gov/oe/activities/…

If people are freezing in their homes, then damn any availability agreement a datacenter has.

If you shut down the datacenter, then all of the folks that rely on IoT-controlled furnaces will freeze in _their_ homes!

Re: Texas power crisis revealed flaw in market’s design

#124

Earlier quoted context omitted.

What I don’t understand about the Texas electricity market is that, despite how “free” it is, price per kwh isn’t terribly competitive compared to more tightly regulated states - having the highest average residential rates in the West South Central region: https://www.eia.gov/electricity/monthly/epm_table_grapher.ph...

Deregulation isn't about improving consumer outcomes, it's about improving profits. Expecting it to result in lower cost per kWh is a losing game.

If you read all the books covering the history of the deregulation of the regulated electric industry in the US, their reasoning was clear. Many years ago, under regulation (and still for those areas of the US that aren't in a market), it was the job of planners to determine the load growth and to build enough supply to meet demand and get a steady ROR. We did really bad at this in (I think it was the 80s), so there was a lot of pushback in making customers pay for generation they didn't need. At the same time, combined cycle plants made it possible to finally de-monopolize the generation side of things. The theory was the free market would be more innovative than the regulated utilities and less wasteful.

Re: Texas power crisis revealed flaw in market’s design

#125

This 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…

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Re: Texas power crisis revealed flaw in market’s design

#126
post #37

Earlier quoted context omitted.

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.

Depends. Some industrial customers like datacenters have strict availability agreements with customers and won't be able to accept prolonged cutoffs. Forcing non residential customers like these to curtail their use would likely end up driving the industry (and corresponding tax revenue) elsewhere. But what you're talking about does already exist, and it's called demand response, https://www.energy.gov/oe/activities/…

I'm sorry, but that's on the datacenter provider to put their operations in such a free-market state. The fact that we would suggest that datacenters be allowed to run freely, and then tell residents that they need to stock up on batteries as opposed to mandating a winterized network is kind of appalling.

Re: Texas power crisis revealed flaw in market’s design

#127
post #64

Earlier quoted context omitted.

You suggest that these problems would be faced everywhere. So why is Texas the only one experiencing them?

It’s not? We’ve had rolling black outs in the Bay Area few the past few years - not to mentioned a few massive fires started by crappy infrastructure.

Those are interesting mental gymnastics you just did.

Rolling “black outs” in California in recent years were due to two reasons. When we approached maximum capacity, the California ISO requested large electrical users voluntarily reduce usage. In times and places where that wasn’t enough, some areas saw black outs. This is because demand on the hottest parts of the hottest days of the year breached supply/capacity by the western electrical grid.

Further, PG&E (one energy provider in. Ali for us) did create blackouts during weather that was most likely to cause fires with their equipment. These had nothing to do with electrical load/capacity, but with environmental factors.

PG&E has struggled to prune foliage from their equipment, which is one of the causes of recent fires. They claim environmental regulations are onerous, but this is the same company that went into bankruptcy after poisoning multiple towns (causing cancer cluster) and allowing a neighborhood in San Bruno to explode due to lack of proper maintenance on their natural gas lines. They were also found guilty of deaths (murder?) in some more recent fires.

Re: Texas power crisis revealed flaw in market’s design

#128

Earlier quoted context omitted.

Mine is 100% renewable and I haven't lost power at my location in years. What rate do you pay including delivery? My rate indoors delivery charges, sometimes people see those as two separate things.

7 cents for delivery, zero to five cents for power. 2.3 cents/kwh as of a few minutes ago. I'm just surprised because maintaining a grid in an extremely dense urban area that hasn't gotten above freezing in several weeks and getting nuclear power which is very expensive should be a good deal more expensive than the wild west that is Texas energy markets and it doesn't seem to be.

If you are where I think you are (where I am), this is also after all of the bribery scandals...

Re: Texas power crisis revealed flaw in market’s design

#129

Earlier quoted context omitted.

This average price is a bit complicated to look at, and requires even more understanding of the Texas market. There are essentially two types of electric customers in ERCOT areas in Texas: those in co-ops and those in open markets where you can choose your Retail Electric Provider and plan. Your physical location determines which kind of market you fall into. In a co-op, those residents do not get to choose their pow…

My wife got a contract with our provider, we pay normal prices during the day but get 100% free power from 8 PM to I think 5 or 6 AM. Can't really complain.

shit I would invest in a power wall and time shift my power usage to the night.

Re: Texas power crisis revealed flaw in market’s design

#130
post #64

Earlier quoted context omitted.

It’s not? We’ve had rolling black outs in the Bay Area few the past few years - not to mentioned a few massive fires started by crappy infrastructure.

Those are interesting mental gymnastics you just did. Rolling “black outs” in California in recent years were due to two reasons. When we approached maximum capacity, the California ISO requested large electrical users voluntarily reduce usage. In times and places where that wasn’t enough, some areas saw black outs. This is because demand on the hottest parts of the hottest days of the year breached supply/capacity b…

Precisely. Not sure people who live in glass houses should be throwing stones.
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