The Night They Drove the Price of Electricity Down

Slate ^ | Daniel Gross

[Timpanagos1]

Wind power was so plentiful in Texas that producers sold it at a negative price. What?

Photo by Spencer Platt/Getty Images

In the wee hours of the morning on Sunday, the mighty state of Texas was asleep. The honky-tonks in Austin were shuttered, the air-conditioned office towers of Houston were powered down, and the wind whistled through the dogwood trees and live oaks on the gracious lawns of Preston Hollow. Out in the desolate flats of West Texas, the same wind was turning hundreds of wind turbines, producing tons of electricity at a time when comparatively little supply was needed.

And then a very strange thing happened: The so-called spot price of electricity in Texas fell toward zero, hit zero, and then went negative for several hours. As the Lone Star State slumbered, power producers were paying the state’s electricity system to take electricity off their hands. At one point, the negative price was $8.52 per megawatt hour.

[wbarmy]

Alone among the 48 continental states, Texas runs an electricity grid that does not connect with those that serve other states.

Not true, Texas has several connections to the US grid. Texas sold electricity to California a few years ago at huge profits to Texas. And this is all because Gov George Bush gave licenses to build power plants all over Texas.

[abb]

Gosh, if only those stupid customers would buy and use electricity when WE want them to, instead of when THEY want to.

[lewislynn]

a federal production tax credit of 2.3 cents per kilowatt-hour that applies to every kilowatt of power produced. And that means that even if wind operators give the power away or offer the system money to take it, they still receive a tax credit equal to $23 per megawatt-hour

If that's such a good business plan they should just give their electricity away or pay you to use it all the time.

I guess the author thinks getting tax credits with no or negative earnings is money in the bank.

I'm also wondering who was paid the $8.52 per megawatt hour by the producer(s).

[okie01]

Not true, Texas has several connections to the US grid. Texas sold electricity to California a few years ago at huge profits to Texas.

As I recall, there is only one connection between Texas and the US grid -- but it isn't permanent. It is at a power plant located adjacent to the Texas-Louisana line -- which sells power to either Texas or Louisiana, whichever has the highest price at the moment. When the plant is sending its power east, the Texas connection is disconnected.

The California sale you cite might be an Enron sale to California back when California was struggling with brown-outs. While Enron was a Texas company, it didn't generate that power in Texas. It was generated in Nevada.

[okie01]

I'm also wondering who was paid the $8.52 per megawatt hour by the producer(s).

ERCOT

[quantumman]

You are incorrect. There are only two physical interconnects to ERCOT - one to LA and one to OK.

[EEGator]

T Boone Pickens?

[chopperman]

This is why wind and solar needs Fed subsidies. They can’t stand on their own. They produce the juice when you don’t need it and they’re not there when you need it.

[Texas Fossil]

This is why wind and solar needs Fed subsidies. They can’t stand on their own.

Yep. And remember this article is on "Slate", Leftie city.

[hadaclueonce]

Think about this, all the base loaded generators, the biggest are the 4 nuke plants, were paying to stay online.

I wonder how long they can afford to pay to generate?

No wonder new conventional generators cannot find financing to build new resources.

Thank you Production Tax Credit! The wind generators have very well financed Lobbyist.

[ProtectOurFreedom]

What a great technology. You can’t turn it down...it essentially runs out of control when there’s too much wind and you have to pay people to take the excess product or you’lll physically damage your capital plant or all ERCOT will go down.

With coal plants, you’ve got a buffer in the huge coal pile. It can grow larger or shrink depending on seasonality and demand. If you couldn’t control your coal buffer and had to take all your fuel supplier wanted to deliver to you regardless of electricity demand, the pile would grow so huge it would spill over and threaten to suffocate the adjoining town. At that point you would probably pay people to take your power until your coal supplier “died down” a bit. Fortunately, buyers have control of their fuel suppliers (unlike wind).

The idiot author is so stupid he doesn’t realize negative prices aren’t a benefit of wind, but are the enormous core problem.

[MeneMeneTekelUpharsin]

Interesting.

[chimera]

I wonder how long they can afford to pay to generate?

They can't. There are whole power plants, perfectly functional and reliable facilities, that are being thrown away in New England for the reasons mentioned in this article. Wind and solar get massive subsidies (PTC, feed-in tariffs, must-take provisions) that other producers don't get. This allows them to bid negative prices into the spot power auctions. Otherwise, they'd be the most expensive producers because of unreliability and intermittency, and go out of business. The latter is why Boone Pickens was pushing wind so hard a few years ago. You need all the infrastructure of the traditional grid as backup when the wind isn't blowing. That means quick-start, on-demand generators, and that means natural gas-fired turbines, and natural gas is what Pickens is all about.

[Senator_Blutarski]

... a federal production tax credit of 2.3 cents per kilowatt-hour that applies to every kilowatt of power produced.

Thanks to all of us generous taxpayers these utilities can sell electricity at a negative price and still make money.

Of course, the guys at Slate dismiss that angle and don't feel outrage at our funding this goat rodeo.

As a taxpayer I'm angry.

[Ben Ficklin]

There are parts of Texas that are not on the Texas grid. The sliver of east Texas adjacent to Louisiana you mention is one. It is part of the eastern grid and the Southwest Power Pool(SPP). Likewise there are parts of the panhandle that are also on the eastern grid/SPP. Likewise there are parts of the panhandle and west Texas that are on the western grid.

Power plants located on the adjacent grids(such as the one you mention in east Texas) are allowed to supply power to the Texas grid if they are dedicated to the Texas grid. But plants located within the Texas grid and dedicated to the Texas grid cannot export power to the adjacent grids.

There has long been emergency connections between the Texas grid and the eastern, western, and Mexican grids.

A few years ago FERC ruled that the Texas grid could supply commercial power to the Mexican grid if none of that power could find its way onto the western grid and a commercial connection was established.

FERC has also ruled that Texas power could be exported to the eastern and western grid if that power is DC, but no DC transmission lines have been built. The planned Tres Amigas project and the four Clean Lines Energy Partners projects are DC.

All of these DC lines are to carry wind power generated in New Mexico, the panhandle, western OK, and SW Kansas eastward and westward.

Wind power in Texas began in 1997 when Enron bought Zond Corp and Texas established renewable standards in 1999. When Enron went under the Zond holdings were sold to GE.

It was the natural gas shortages in 2000/2001 and after Katrina that set off windmill building in Texas. Everyone remembers how Enron was screwing CA on natural gas. All that ended the political career of Guv Gray Davis in CA and Texas Sen Phil Gramm, who was replaced by John Cornyn

In 2005, the state lege would authorize the Texas CREZ Project with new windlines. In 2009 the Texas PUC would contract to build the new windlines, which were completed in 2014.

When the economy collapsed in 2008, the price of natural gas collapsed and hasn't recovered. Cheap natural gas is detrimental to windmills so the renewable energy tax credit is critical to windmills. Everybody in Congress is talking about Planned Parenthood in the budget negotiations underway, but none of them are talking about tax credits.

They will probably pass a budget extension next week then come back after the election, and the public is focused on Christmas, and pass the 2016 budget bill. With lots of goodies and pork.

[Da Coyote]

Obviously the writer is not (nor ever will) be qualified to write anything about the physical sciences. As such, he has reached one of the prime requirements for a liberal.

[Tupelo]

I ride across West Texas, Northeast Colorado and Southern California regularly and those Windmill farms are an abomination to my eyes. Miles and miles of huge wind turbines destroying the beautiful vistas. Close up they sound like a busy airport. Closer up and you can see the carcasses of the birds that get caught.
Cheap? Not in my eyes.
Oh well, If it makes the righteous left feel better.........................................

[SeeSharp]

I guess the author thinks getting tax credits with no or negative earnings is money in the bank.

Failure to grasp simply economic principles is the very definition of a liberal. But hey! Don't worry. They'll make it up in volume.

[SeeSharp]

They produce the juice when you don’t need it and they’re not there when you need it.

And what they produce needs to be transported very long distances, resulting in huge power losses due to resistance.