Texas Struggles to Keep Up With Power Demand

Texas is an interesting situation for those interested in the economics of electricity supply.  They are isolated and fighting for a functional market (not contracting supply or creating a capacity market).  This year they have raised the ceiling market price to $4500/MWh (from $3000).  Alberta is similar, although it has substantial intertie capacity, particularly with adjacent provinces (it's cap is also only $1000/MWh).

An issue in both is the addition of wind (which does have price exposure to markets in both) does not negate the need for other generation (as it can be absent when demand is highest), so the capacity factors drop elsewhere and potential suppliers have little visibility of how frequently their projects would be productive.

Thus the need to allow very high rates to encourage the construction of peaking capacity.

Texas Struggles to Keep Up With Power Demand — Energy | The Texas Tribune:

"It is almost August. That means Texans are avoiding the heat, air conditioners are cranking and electrical power demand is going through the roof.
Hopefully, the power will stay on.

Texas likes to be No. 1 at everything. But we are currently dead last when it comes to the reliability of our electrical system, according to a recent assessment by the North American Electric Reliability Corporation, a group that keeps tabs on the country’s power situation, with the exception of Alaska and Hawaii.
That means that California — yes, California — is less likely to experience systemwide blackouts this summer than Texas. That even takes into account the ongoing problems at a major nuclear plant south of Los Angeles.
“I’ve been doing assessments for five years, and I have not seen this situation” on the Texas grid, said John Noura, the associate director of reliability assessments at NERC."

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