Can Dynamic Pricing Help Manage Load And Prevent Rolling Blackouts?
- Aug 25, 2020 3:35 pm GMT
Between 2000 and 2001, a series of rolling blackouts hit California’s grid when traders from energy company Enron hijacked electricity markets for profits. The traders created artificial scarcity by taking critical power plants offline, leading to extremely high power prices.
Memories of those blackouts were rekindled two weeks ago as the state’s grid, whose composition has changed significantly in the last two decades, again experienced a series of blackouts in response to peak demand during a heat wave. Power prices in wholesale markets spiked briefly, doubling to $387 and subsequently climbing to $800 within the span of a few hours.
Profits, however, do not seem to be a motive for the blackouts this time around. Some blame the state’s insufficient reserve margin requirements. Others point to its reliance on energy imports and intermittent renewable energy. Still others point to California’s convoluted method to plan for, forecast and implement power requirements.
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