Turns out Texas' approach of having no capacity market and letting the energy market spike to fund sufficient capacity means generators may decide not to take that risk. This might be Enron 2.0 except there's nobody to blame, or rather no company because the blame rests with the state government. People like to blame ERCOT, but they're just working with the tools they're given.
The guy I know who has worked in the Texas energy sector most of his life built a new house a few years ago. He made sure to design and build his own power generation system, so that should tell you pretty much all you need to know about his faith in the Texas energy grid. He probably already got his money's worth during the winter storm, in the form of preventing property damage. He told me yesterday that during widespread heatwaves, like recently, there's no pressure differential out in west Texas driving the wind and windmills, and one of the major natural gas generating plants has been down for maintenance and repairs. Since large-scale, long term weather trends are usually easily predictable about a week in advance, it seems like someone has dropped the ball repeatedly this year on coordinating when major fossil fuel burners should be allowed to drop offline. In fact, I wouldn't be surprised if Texas has explicitly regulated against the state being able to tell energy companies when they can and can't produce. Meanwhile: This week, not only does the city throttle our Nest thermostat every afternoon (we can more than afford to curb our usage for the greater good, no biggie), but Greg Fuckwit is allocating as much money as possible to build a wall. I guess it'll be built alongside Trump's totally complete, beautiful wall? My A/C went out for a couple days in mid-July last summer. If we have rolling or total blackouts, for sure, expect a repeat of this.
I'm not familiar with the details of how ERCOT manages available generation, but in MISO they cannot deny generation outages. I'd be surprised if ERCOT has more power. But, most generators do want to be on in times like this because they make a lot of money. I wouldn't be surprised if they had planned their outage months or even a year or two in advance and had specialized outside contractors lined up. It might have been a question of making a million dollars last week versus paying out $500,000 in contract commitments and run the risk of having a failure without this maintenance and missing out on millions of revenue.
Now I'm curious and since you know this stuff I'll ask: An economist would say "spiking prices means incentive to bring more power online because the value of power increments increases." It sounds like you're saying "spiking prices do not counter the peril of participating in a volatile grid." Do I have the gist of it? Could you elaborate either way?
That's exactly it. Everywhere else they pay for enough capacity. It's basically break-even costs and only enough generation up to the expected demand (plus a margin). The peril of not having frequent enough or high enough real time prices discourages long term generation investments. And if you want to assume they're being shitty about it, not having enough generation means more frequent high prices for all of your other generation. Enron got in trouble for withholding generation, but what if you simply don't build enough generation? Same thing but you can't get in trouble.
Yeah Ferrari famously limited their output back in the late '90s when Enzo died so they could scalp more per car. You could bid your way to the front of the line, etc. Scarcity is definitely a business model. Lookin' at you, Pappy Van Winkle, you overrated Tennessee-tastin' asshole. Every time Republicans decide to profit off something on Maszlow's Heirarchy it ends badly. It might not crash immediately, but the crash is profound. I guess it makes a select few steenking rich until the cards blow over so it was all worth it in the end.