Investigations Start. FERC is going to start looking at what happened in Texas. Meanwhile 4 members of the ERCOT board have resigned after last week’s shutoffs. However, most headlines have failed to highlight the role of the railroad commission and their oversight of the gas infrastructure which were some of the biggest cause of problems. The biggest question will come around winterization, what mandate is needed or what market signal has to be created for generators to spend the extra dollars and prepare for edge cases.
Impact To Generators. We learned quite a bit about the stress test that $9,000/MWh will cause to generators, especially with the situation that the fuel source is unavailable or the external weather event renders the generator inoperable. First, I have yet to hear the compelling reason why anyone will hedge the output going forward. Forget the leverage that the hedge opens up because the lender is going to ask about the what if scenario when you fail to deliver electrons and have to settle in the real-time market. Some generators are thinking about the revenue they lost not being able to monetize once in a lifetime energy rates.
To Retail Companies. This is going to get ugly. Most retailers sell energy to consumers with the plan to buy that commodity at a price lower than that. Sometimes they are upside down but it’s all within a risk range. When rates in the realtime market exceed the delivered price by 200x or more for several days, it’s bad news. You’re going to hear about retail companies seeking bailouts or risk going out of business. Free markets, am I right?
To Consumers. We talked about this on Monday but some consumers took the spread risk themselves. I assume that most had no idea what would possibly happen, not that any energy experts thought $9/kWh was possible. I can almost guarantee that these bills will be forgiven in some form, people aren’t going to pay $10,000 for 5 days of electricity, which means survival in some cases.
A Frozen Slinky. I can’t do this but if you want to explain Texas to your kids and live in the cold, put a slinky outside to freeze and then stretch it. Then compare the one from inside and see what happens to the resiliency and flexibility of the material. ERCOT could have avoided all of this with winterization but we’re also recognizing that the grid everywhere is going to need more mitigation capabilities. DERs, storage (on all parts of the infrastructure) and resilient generation are going to play a role to keep the lights on and business running.
- Utility Dive: FERC to examine potential market violations in wake of massive Texas power outages
- Axios: 4 board members of Texas’ power grid operator ERCOT resign
- Renew Economy: Australia’s battery and hydrogen storage pipeline jumped by massive 20GW in 2020
- Gizmodo: Kristal Hansley Wants to Empower Black Baltimore With Solar Energy
- PV-Magazine: BloombergNEF expects up to 209 GW of new solar for this year
- Solar Power World: Experts recommend automatic enrollment in community solar programs for LMI groups
- PV-Tech: Puerto Rico issues RFP for 1.5GW renewables and energy storage
- Greentech Media: Grid Edge M&A Alert – Sentient Acquires Varentec for Dynamic Grid Control
Opinion
Best, Yann