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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

#211

Post by wilde »

denton-scratch wrote: post #208
pfdietz wrote: post #200

One reason the market there isn't providing resilience is that the end customers aren't buying resilience. They largely don't have contracts that explicitly incentivize the suppliers to provide it.

Oh, that's interesting. So in principle, I could have a contract with a supplier that says they have to pay me serious compensation if they cut me off - like, maybe the kind of money I'd have to deploy to quickly deploy and fuel a diesel generator. Under the Texas 2021 conditions, that might mean I've have to get the thing helicoptered in. Presumably such contracts would focus the minds of the risk-takers. Upthread,…

Yeah, that’s why tech datacenters were up while people froze in their homes. Corporations know to negotiate these things. Individuals either don’t have the opportunity or prioritize price.

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

#212

Post by defaultprimate »

lucian1900 wrote: post #202
refurb wrote: post #184

Earlier quoted context omitted.

You completely dodged addressing the main point - capitalist systems have made the most progress in terms of freedom and human rights.

Quoted post unavailable.

It's an objective historical fact.

The overwhelming majority of ethical and moral progression in human history coincided with the extension of private property rights to more and more of the general population, and retracted when those rights were rescinded.

This occurred both because of the recognition of humanity that goes along with granting these rights, and the technological progressions enabled by allowing opportunity and innovation to occur in larger swaths of the population rather than an aristocratic hyperminority.

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

#214

Post by ocschwar »

bryanlarsen wrote: post #167
ocschwar wrote: post #162

Earlier quoted context omitted.

SO here's the thing: " 3 - Market mechanisms are needed to incentivize surplus capacity, or else we wind up with blackouts." Market mechanisms DO incentivize surplus capacity. There are peaker plants stationed all over the US that operate under 24 hours a year. The rest of the time they're either paid to be on standby through a capacity auction, or they're just not paid. SOme of these plants also exist in Texas. And…

That was a one in a century or so storm. It was predictable.

Predictable isn't good enough.

Predictable is a reason for a government regulation.

Without that, you need quantifiable.

What is the probability of a polar vortex this year? (P) How many hours of high prices would that cause? (H) What will the price be during those hours ? (Pr) What is the probability that our grid uplink will go down and cut us off? (Pd)

So, on the profit side: P x H x Pr x (1-Pd)

Liability:

What is the probability that our failure to winterize will cause a blackout? (Pb) How much damage will that cause ? (D) How much of it is our legal responsibility? (L)

Pb x D x L

Now: how much will winterizing cost? C

The big question:

C ?>? Pb x D x L + P x H x Pr x (1-Pd)

Complicating factors: in Texas, L is 0. For everyone. And P,H,Pr, and Pd are all non-zero, non-negligible, but not quantifiable.

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

#215

Post by mannykannot »

"Such 'energy-only' markets rely on investors to anticipate demand for all conditions and build appropriate resiliency into the system. They allow prices to soar during extreme events to incentivize preparedness."

Surely any such incentive is self-limiting? The more preparedness it creates, the less likely it is to pay out. The article talks about the uncertainty of there being a payoff, but not about how the incentive itself affects that uncertainty.

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

#216

Post by acdha »

refurb wrote: post #189
p_l wrote: post #188

Earlier quoted context omitted.

Or maybe some of us are aware of huge amounts of public grants that went into building up the foundations of that industry till it could operate without induced demand. And many of us also are aware of different constraints impacting monopoly creation and how capital intensive areas behave differently.

Sure, the military bootstrapped the semi-conductor industry, but we’re a long fucking way from the 8088 processor - thanks to capitalism. I mean for $1,000 I can have effectively a 1990’s supercomputer in my pocket. The government didn’t do that, greedy capitalists did.

> I mean for $1,000 I can have effectively a 1990’s supercomputer in my pocket. The government didn’t do that, greedy capitalists did.

Heavily reliant on research funded by the government, ambitious funding for things the internet, the financial stability and access to markets supported by the government, etc. Neither side of this is doing it on their own — it’s like trying to decide whether the wheel or chain deserves credit for making your bicycle work.

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

#217

Post by defaultprimate »

refurb wrote: post #184
croon wrote: post #182

Earlier quoted context omitted.

[flagged]

You completely dodged addressing the main point - capitalist systems have made the most progress in terms of freedom and human rights.

Exactly, and I would be remiss to leave out in an absurdly short period of time on the scale of human history. It's so far beyond coincidence it's laughable to contend that it might be.

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

#218

Post by giaour »

RhysU wrote: post #178
Spooky23 wrote: post #137

Earlier quoted context omitted.

Texas is uniquely dominated by energy interests. Most of the quacking about cheapness is just noise. I have a relative who moved from an “expensive” northeast state to South Carolina. His big bitch was about taxes, but he didn’t really do the math. He saved on property taxes, but between more regressive sales tax, HOA, etc it doesn’t really compute. Most significantly, he discovered the tyranny of local government is…

They're the same tyranny, no? Someone else claims an amount of your money that they choose to be spent as they choose and you get an 1/N vote in the matter. You can leave whenever you sell.

> They're the same tyranny, no?

It's much easier to replace local politicians or constrain/require local government action via the courts than it is to do the same to an HOA, isn't it?

In either case, you can vote with your feet, but I prefer being able to vote with a ballot

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

#220

Post by hippich »

It is probably nitpicking on the "market" word, but...

About 1-2 weeks before the storm I ordered 10kW gas generator https://www.amazon.com/dp/B07Q1DLKBG for about $1350 (it is cheaper now because there is no storm coming :))

It uses about 0.9 gal/hour to produce 9.5kW (let's round to 10kW). This is real output as I powered the whole house with it, including 7.5kW electric HVAC heating element that are switched on when temperature falls below heat pumps' ability to pump heat from the outside (we do not have propane/natural gas.)

0.9 gal was probably like $2.5, meaning 1kW cost me just 25c vs regular price of about 11 cents when getting electricity from the grid.

Considering that people were paying $9/kW prices to the Griddy (https://www.vox.com/2021/2/20/22292926/texas-high-electric-b...) and the like, that $1,350 suddenly became a very attractive option. Except yes, you have to overbuild and not put efficiency at the top.

Furthermore, if electricity "market" was indeed a market, I would imagine there would be plenty of people ready to plug their generators to feed the grid. (i know it is not as straightforward of just plugging it into the grid and starting, but between $.25/kW and $9/kW I am sure solution could be found.)

Also, that "market" was forced to cap prices at $9/kW. The real market price was probably much-much higher.

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