One of the ironies of the Texas electricity grid - ERCOT - is how it accidentally created huge incentives for new solar and wind energy by trying to prop up the natural gas markets.
ERCOT operates via an auction system, wherein the electricity carriers put in bids for GWhs and producers meet those bids. When demand is low, electricity is very cheap - $10-25 MWh. But it rise rapidly during a heat wave, peaking at $3000 MWh in some instances. Gas plants don’t have any incentive to sell onto the grid at this point, so they turn themselves off until the price rises. But when a bunch of gas plants operate as a cartel, they can coordinate when they release electricity and drive up the price.
The problem is that the auction price is set on the last GWh sold but it applies to the entire sale of energy for the auction cycle. So if you’re selling continuously across the day, you can accidentally trip into a ahem windfall when gas producers surge the price.
Because green producers can’t really control how much they put out onto the grid, they’re at the mercy of the market. But if they know, in advance, that the gas companies are going to fuck with things, they can anticipate enormous profits during these strategic moments. And because wind/solar don’t need a supply chain like gas does, you can just keep building and building and building wherever you find opportune spots for harvesting (which Texas has in spades).
So the gas companies inadvertently kicked off a green energy boom by their periodic price spike scheme.
Renewable energy development being rapidly accelerated by gas companies price gouging with artificial scarcity… thereby causing Texas to move toward a post-scarcity energy economy… magnificent. What a strange world.
One of the ironies of the Texas electricity grid - ERCOT - is how it accidentally created huge incentives for new solar and wind energy by trying to prop up the natural gas markets.
ERCOT operates via an auction system, wherein the electricity carriers put in bids for GWhs and producers meet those bids. When demand is low, electricity is very cheap - $10-25 MWh. But it rise rapidly during a heat wave, peaking at $3000 MWh in some instances. Gas plants don’t have any incentive to sell onto the grid at this point, so they turn themselves off until the price rises. But when a bunch of gas plants operate as a cartel, they can coordinate when they release electricity and drive up the price.
The problem is that the auction price is set on the last GWh sold but it applies to the entire sale of energy for the auction cycle. So if you’re selling continuously across the day, you can accidentally trip into a ahem windfall when gas producers surge the price.
Because green producers can’t really control how much they put out onto the grid, they’re at the mercy of the market. But if they know, in advance, that the gas companies are going to fuck with things, they can anticipate enormous profits during these strategic moments. And because wind/solar don’t need a supply chain like gas does, you can just keep building and building and building wherever you find opportune spots for harvesting (which Texas has in spades).
So the gas companies inadvertently kicked off a green energy boom by their periodic price spike scheme.
Renewable energy development being rapidly accelerated by gas companies price gouging with artificial scarcity… thereby causing Texas to move toward a post-scarcity energy economy… magnificent. What a strange world.