![]() ![]() “I don’t know of any market design that exists anywhere that would have anticipated and have been prepared for something of this scope and scale," he said. William Hogan, an energy economist at Harvard University who helped design the Texas market, said this week’s blackouts weren’t indicative of a major design flaw, but rather inevitable imperfections stemming from extraordinary weather challenges. ![]() “That’s why public policy makers and electricity officials need to address some of the shortcomings." Renewable-energy sources cannot be turned on and off like a power plant, making it harder to ensure sufficient supply at any one time. “The premises of that paradigm have changed," said Bernard McNamee, a former Federal Energy Regulatory Commission member who is now a partner at law firm McGuireWoods LLP. The current system has roots in the 1990s and early 2000s, when fossil fuels supplied the majority of the nation’s electricity and extreme weather risks were more predictable. California’s grid operator last summer resorted to rolling blackouts when a severe heat wave swept the West, reducing the state’s ability to import power and pushing demand into the evening hours after solar production declined.Įnergy markets have moved away from the monopoly-style power-delivery systems that once were common. power market failure, others have faced serious challenges in recent years. ![]() While Texas is now the most prominent U.S. Cities including Austin, Houston and San Antonio are under boil-water notices until Monday after a wave of burst water pipes caused shortages. The outages shut down hundreds of stores and businesses, limiting supplies of food and water. The Ercot breakdown affected millions of Texans, many of whom resorted to desperate measures to stay warm. Now, most everyone agrees that major changes-including more regulatory intervention-will be needed to keep it working. Before this week’s meltdown, the Texas market had been widely regarded as one of the best. is becoming more reliant than ever on electricity, but has no perfect model for running a power market in the 21st century. Many climate scientists expect an increase in extreme weather events, which would further test the system’s vulnerabilities. That makes balancing supply and demand more complex. Nationwide, the grid is evolving to support more renewable energy and the emerging demand for power for electric vehicles. It was a policy failure that state and federal officials are already scrutinizing as electricity, a public necessity as critical as water and heat, becomes even more important as more vital functions become electrified. Such mechanical problems might have been avoided if operators had chosen to equip their plants like those that operate in traditional cold-weather states. Another problem emerged: Some power plants lost their pipeline supply of gas and couldn’t generate electricity even if they wanted to capture the high prices. Wind turbines in West Texas froze as well, and a nuclear unit near the Gulf of Mexico went down for more than 48 hours. The system broke down this week when 185 generating units, including gas and coal-fired power plants, tripped offline during the brunt of the storm. His office didn’t respond to requests for comment. “What happened this week to our fellow Texans is absolutely unacceptable and can never be replicated again," he said. The state, he said, should also supply the funding to make it happen. He called upon legislators to mandate that power generators prepare for extreme winter storms. Greg Abbott, facing a political uproar as the state of 29 million people virtually ground to a halt, tacitly acknowledged in a statewide address Thursday that these market incentives weren’t sufficient. “They’ll face financial consequences in the marketplace," he said. Generators that can’t produce power when it is most needed risk missing out on windfalls. The high prices operators can reap from such periods of peak demand were supposed to be incentive enough for them to invest in safeguarding their equipment from severe weather.īill Magness, chief executive of the Electric Reliability Council of Texas, or Ercot, which operates the state’s power grid, explained during a Thursday news conference how the system was supposed to work: High peak prices provide the incentive for producers to keep operating in all weather. Texas officials don’t require plant owners to prepare for the worst by spending extra money to ensure they can continue operating through severe cold or heat. While power providers collectively failed, the companies themselves didn’t break any rules. ![]()
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