why is Texas power often failing or skyrocketing in price?
In: Engineering
It’s an intentional market design choice.
One difficult thing about electricity is that you need some power plants just to run during periods of unusually high demand. Since they might only run some tens of hours each year, paying for them it’s hard.
People have come up with three general ideas for how to deal with this:
* The traditional approach, where utilities convince regulations plants are needed, and then the costs are baked into people’s bills.
* “Capacity markets,” where the grid operator gets enough plants under contract to meet expected needs with some extra
* Texas style, where prices are allowed to go sky-high when electricity gets scarce, in theory motivating private investment.
So it’s on purpose as a way of sending market signals to build more power plants. Increased demand and extreme weather is making this need more acute, so thus higher prices more often.
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