Ercot uses a free market system to manage power supply on the Texas grid. Every 15 minutes they publish a bid for electricity generation. If any power provider accepts the bid, ALL power providers are paid the same for the power they generate during the bid period. During forecast shortages, raising the bid has the effect of motivating generation plants that are sitting idle for any reason, to come online with power as quickly as possible, including further draining already critically low reservoirs to generate hydroelectric power as we saw some years ago during a several years long drought.
Texas power plants are not profitable until demand soars to near capacity, as it often does in summer, and bids raise in response to demand. Like Black Friday is the day brick and mortar businesses turn profitable, August is the month power providers look forward to to break even or even make a profit. That is why they shut down in winter for cleaning and repairs in preparation for summer demand, which makes for a perfect storm of power shortages when severe weather arrives.
This system was set up in the early 20th century specifically to supply power to big business at the lowest possible cost, and it is why no winter hardening has take place even after many like events over the years. There is no built in system to promote investment in hardening the supply like there is in other markets across the nation. That will likely change in the coming months once the Congress decides who'll pay for the upgrades. Residential consumers will likely be asked to cover some of the cost.
For a more indepth look into the catastrophe and the moment the stuff hit the fan at ERCOT.
www.yahoo.com
I see they've edited this article to remove the screen shot of the energy board at ERCOT. I'll post it below as soon as I can get the technology to work.
Texas power plants are not profitable until demand soars to near capacity, as it often does in summer, and bids raise in response to demand. Like Black Friday is the day brick and mortar businesses turn profitable, August is the month power providers look forward to to break even or even make a profit. That is why they shut down in winter for cleaning and repairs in preparation for summer demand, which makes for a perfect storm of power shortages when severe weather arrives.
This system was set up in the early 20th century specifically to supply power to big business at the lowest possible cost, and it is why no winter hardening has take place even after many like events over the years. There is no built in system to promote investment in hardening the supply like there is in other markets across the nation. That will likely change in the coming months once the Congress decides who'll pay for the upgrades. Residential consumers will likely be asked to cover some of the cost.
For a more indepth look into the catastrophe and the moment the stuff hit the fan at ERCOT.
The Two Hours That Nearly Destroyed Texas’s Electric Grid
(Bloomberg) -- The control room of the Texas electric grid is dominated by a Cineplex-sized screen along one wall. As outdoor temperatures plunged to arctic levels around the low-slung building 30 miles from Austin last Sunday night, all eyes were on it. The news wasn’t good.Electric demand for...
I see they've edited this article to remove the screen shot of the energy board at ERCOT. I'll post it below as soon as I can get the technology to work.
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